Tunisia to face sand mining claim
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CDR | 8 January 2025
Tunisia to face sand mining claim
by Robert Li
Minerali Industriali is taking action under the Italy-Tunisia bilateral investment treaty for alleged mistreatment related to its sand mining and processing business.
Italian natural resources company Minerali Industriali (MI) has officially launched an investment claim against the government of Tunisia.
Registered on 23 December last year at the International Centre for Settlement of Investment Disputes (ICSID) under case ARB/24/52, Minerali Industriali v Republic of Tunisia has invoked the Italy-Tunisia bilateral investment treaty (BIT) in force from June 1989, with the company retaining the services of international firm CMS.
Headquartered in the north-west Italian city of Novara, MI traces its history back to the early 20th century and has since grown to 600 employees, with commercial interests in over 30 jurisdictions across Europe, Asia, Africa and Latin America. One of its principal activities is the mining and processing of sands and clays for use in the glass and ceramics industries.
MI’s Tunisian investment journey began in 2001 and led to the development of successful operations in the Tunisian locations of Oueslatia and Sousse. Things only changed substantially for the worse when the Tunisian authorities revised the tax code in 2019, leading to a range of disputes over the taxation applied to MI’s operations.
The situation escalated, leading to audits, investigations and even criminal charges, but it was the imposition of a new 150% tax on sand sales in 2023 which proved disastrous, and culminated in MI’s Tunisian operations being mothballed indefinitely.
MI asserts that Tunisia’s tax and customs bodies applied the local law arbitrarily and incorrectly. The company characterised the ensuing disruptive audits as retaliatory, and the new sand tax as unreasonable, and posits that this entire course of conduct amounts to expropriation of MI’s investment. It seeks reparations for its losses which are not yet fully accounted for, but which are expected to exceed EUR 31 million.
CMS investor-state dispute resolution practice head Sarah Vasani, who is leading the legal team for MI on the case, provided a statement: “Minerali Industrali is a highly regarded family-owned business that was instrumental in establishing the silica mining industry in Tunisia. It successfully operated in, and contributed to, the country for decades.”
Vasani continued: “Notwithstanding MI’s longstanding investments, Tunisia’s recent actions have contravened international and domestic law, making it impossible for MI to continue its operations in country. Despite MI’s numerous efforts to resolve this dispute amicably, it has become necessary to resort to ICSID arbitration to seek justice for the many wrongs that MI has suffered at the hands of Tunisia.”
CDR has contacted the Tunisian government for comment.
Assisting Vasani on the CMS team are senior associate Lindsay Reimschussel and associate Marc Gervers, who have also instructed barrister Ali Al-Karim of Brick Court Chambers. Legal advisers to the Tunisian government are still to be named.
Also this month, potash company Emmerson secured up to USD 11 million in third-party funding to facilitate its ICSID arbitration against Morocco, for which it has retained Boies Schiller Flexner as legal counsel. In October, the England and Wales Court of Appeal denied Spain and Zimbabwe’s bid to overturn substantial prior ICSID arbitral awards made against them.
