French Total drags Uganda to US tribunal

December 29, 2015 | Legal, Uganda

Kampala, Uganda |  – French oil and gas major Total has dragged Uganda to the US based International Centre for Settlement of Investment Disputes (ICSID) over a $5.7million tax wrangle.

Total filed the case under the controversial investor-to-state dispute settlement (ISDS) system that allows foreign investors to skip domestic courts and drag countries before a panel of arbitrators under the auspices of World Bank in Washington.

The country must have signed up to ISDS for it to be sued under the widely criticized legal system.

The dispute between Total and Uganda over stamp duty arose from the French firm’s purchase of 33% stake of Tullow petroleum assets in Uganda’s oil sector in 2012.

Tullow sold its 66% stakes to Total and China National Offshore Oil Corporation (CNOOC) for $2.9billion in 2012, two years after the British firm (Tullow) acquired the petroleum resources from Heritage Oil and Gas for $1.45billion in 2010 in the Albertine basin.

However, the French company has refused to pay the tax, arguing that it was exempted from honouring the tax obligation in the production sharing agreement with Government. An official from Total confirmed that the company is fighting a legal battle with the Government over tax.