Orca Shifts $167M Tanzanian Gas Dispute to London Arbitration

TORTOLA, British Virgin Islands – February 27, 2026 – Orca Energy Group Inc. has successfully moved a contentious and high-value legal dispute with a former partner out of public courtrooms and into the confidential chambers of international arbitration. The company announced it has reached an agreement with the liquidator of Swala Oil and Gas (Tanzania) plc to discontinue court proceedings in Tanzania and stay a related injunction in England, opting instead to resolve their differences through the London Court of International Arbitration (LCIA).

The move marks a pivotal moment in a complex saga involving allegations of fraud, breach of contract, and a claim totaling $167 million. By shifting the battleground from the High Court of Tanzania to a private tribunal in London, Orca is employing a common but crucial strategy for international firms looking to manage risk, control information, and seek resolution in a neutral forum. However, the unique fact that Swala is now in liquidation adds layers of complexity to the process and the potential outcome.

The Heart of the $167 Million Dispute

The conflict stems from a claim filed in the Commercial Division of the High Court of Tanzania by Swala's liquidator. The lawsuit alleged that Orca and its subsidiaries, PAE Pan African Energy Corporation and PanAfrican Energy Tanzania Limited (PAET), engaged in a conspiracy to defraud Swala, leading directly to its financial collapse.

At the core of the dispute is a 2015-2017 agreement through which Swala acquired a 7.933% stake in Orca's subsidiary, PAE Pan African Energy Corporation (PAEM). Swala’s liquidator claims that the Orca Group subsequently misused funds and assets from PAET, which operates the lucrative Songo Songo gas license, for its own benefit. These actions allegedly deprived Swala of its proportional share of revenues and ultimately pushed the Tanzanian-listed company into insolvency.

Swala's claim further contends that its collapse conveniently allowed Orca to regain the 7.933% interest at a discounted price. The $167 million figure also incorporates value linked to the renewal of the Production Sharing Agreement (PSA) for the Songo Songo field, a project Orca itself has publicly valued at over $1.2 billion. This legal battle is not the first sign of friction; in 2019, Orca rejected an unsolicited takeover bid from Swala, deeming it an undervaluation of the company.

In response to the Tanzanian lawsuit, Orca initiated its own legal action, filing an anti-suit injunction in the High Court of England and Wales on October 24, 2025, to halt the proceedings in Tanzania. The new agreement effectively stays Orca's English injunction and withdraws Swala's Tanzanian case, consolidating the entire dispute under the LCIA's confidential rules.

A Strategic Shift to Private Arbitration

For Orca Energy, a publicly traded company on the TSX Venture Exchange, moving the dispute behind the closed doors of arbitration offers significant strategic advantages. A public court case in Tanzania involving accusations of fraud and conspiracy could inflict serious reputational damage and create volatility in its stock price, regardless of the ultimate verdict. Confidential arbitration removes the dispute from the public eye, allowing management to address the claims without the constant glare of media and investor scrutiny.

Furthermore, international arbitration provides a neutral venue. The LCIA is a globally respected institution, and resolving the case in London mitigates any perceived risks of litigating in the home jurisdiction of the opposing party. Parties can also select arbitrators with specific expertise in complex energy contracts and international commercial law, which can lead to a more nuanced and technically proficient adjudication than might be available in a general commercial court.

This strategic pivot is a calculated measure to de-risk the company's position. Orca is currently navigating multiple significant legal challenges. In a separate case, a Tanzanian court recently ordered its subsidiary to pay $17.9 million in damages in a contractual dispute. More significantly, Orca has initiated its own $1.2 billion arbitration against the Tanzanian government and the Tanzania Petroleum Development Corporation (TPDC) over license extensions and gas agreements. Containing the Swala dispute within a confidential process allows Orca to better manage its extensive legal exposure and allocate resources more effectively.

Navigating a Legal Labyrinth with a Liquidated Foe

The liquidation of Swala Oil and Gas (Tanzania) plc introduces a profound layer of complexity. The company, once the first oil and gas firm listed on the Dar es Salaam Stock Exchange, entered liquidation in March 2023 after creditors representing 75% of its liabilities concluded it could not pay its debts. The company's appointed liquidator, Daniel Welwel, is now tasked with maximizing value for Swala's creditors and its roughly 2,000 Tanzanian shareholders.

Arbitrating against a liquidated entity is fundamentally different from suing a solvent company. The liquidator is pursuing the $167 million claim not to revive Swala, but to recover assets for its estate. Any award won by the liquidator would be distributed among Swala's creditors according to a legally defined hierarchy.

Conversely, the situation complicates any potential outcome for Orca. If Orca were to prevail in the arbitration and be awarded costs, it would become just another creditor filing a claim against a depleted estate, with little guarantee of full recovery. The primary goal for Orca in this arbitration may not be to win a monetary award, but to successfully defend against the massive claim and obtain a ruling that extinguishes its liability, thereby removing a significant financial overhang.

A Barometer for Tanzania's Investment Climate

This case serves as a critical barometer for the legal and investment climate in Tanzania's vital energy sector. The government of President Samia Suluhu Hassan has made strides in rebuilding investor confidence after a period of intense resource nationalism under the previous administration. A key part of this effort was the passage of the Arbitration Act of 2020, which modernized the country's legal framework to align with international standards and facilitate the enforcement of foreign arbitral awards under the New York Convention.

In theory, this legal reform should provide investors like Orca with confidence that an LCIA award would be recognized and enforceable in Tanzania. However, the broader context remains challenging. The fact that major international companies operating in the country are engaged in multiple, billion-dollar arbitrations—both among themselves and against the state—highlights the persistent risks. Foreign investors will be watching closely, not just for the outcome of Orca's dispute with the government, but for how this private commercial dispute is handled. The willingness of both parties to trust an international arbitral body over domestic courts is itself a telling indicator of the preferred path for resolving high-stakes conflicts in the region, underscoring the critical role that robust, neutral dispute resolution mechanisms play in securing foreign direct investment.