Galp is grounding its international arbitration case against the Mozambican state in bilateral investment protection agreements signed by Mozambique with Portugal and the Netherlands, in a tax dispute stemming from the Portuguese energy company's sale of its stake in Area 4 of the Rovuma Basin.
According to Lusa, the case was registered on 26 June at the International Centre for Settlement of Investment Disputes (ICSID), a World Bank Group institution. The claimants are Galp Energia SGPS, headquartered in Portugal, along with Galp Energia Portugal Holdings B.V. and Galp East Africa B.V., both incorporated in the Netherlands, with the Republic of Mozambique as the respondent.
At the centre of the dispute is Galp's sale of its 10% interest in Area 4 to Abu Dhabi National Oil Company (ADNOC) — a transaction that generated at least €760 million for the Portuguese group. Following the deal, the Mozambique Tax Authority (Autoridade Tributária) assessed a tax liability of $175.9 million, a charge Galp has rejected.
The dispute escalated into enforcement proceedings, prompting the Portuguese group to seek resolution through international investor-state arbitration.
According to information published by ICSID, Galp is citing two legal instruments as the jurisdictional basis for the case: the Agreement on the Reciprocal Promotion and Protection of Investments between Mozambique and Portugal, signed in September 1995, and the bilateral investment treaty concluded between Mozambique and the Netherlands in December 2001.
Both instruments establish mechanisms for the protection of investments and the resolution of disputes between investors and states, forming the jurisdictional foundation invoked by the Galp group entities to bring the case before international arbitration.
The agreement with Portugal sets out principles designed to create favourable conditions for investment and to strengthen economic cooperation between the two countries. It covers a range of assets including equity stakes, economic rights, and concessions related to the exploitation of natural resources.
The treaty with the Netherlands encompasses, among other provisions, the protection of rights related to the prospecting, exploration, and extraction of natural resources, as well as the principle of fair and equitable treatment of investments.
This framework is consistent with the classification assigned by ICSID to the case, which is identified as a dispute relating to a natural gas concession in the oil, gas, and mining sector.
In the proceedings, Galp is represented by Portuguese law firm PLMJ Advogados and London-based counsel Saadeh Rahman, while the Mozambican state is represented by the Office of the Attorney General.
The case originates in Galp's decision to exit Area 4 of the Rovuma Basin — one of Mozambique's flagship natural gas projects — through the sale of its 10% interest to ADNOC. Following completion of the transaction, Mozambican tax authorities determined that the operation was subject to domestic taxation, and the Tax Authority set the tax obligation at $175.9 million.
Galp rejected the legal basis for the assessment, and the matter subsequently moved to enforcement proceedings. With no agreement reached between the parties, the company filed the case with ICSID on 26 June 2026.
The Mozambican government has maintained that the company is required to settle the amount claimed by the Tax Authority. In July, government spokesman Inocêncio Impissa reiterated that payment represents a right of the state, given that the transaction involves the exploitation of a national resource.
"What the government has said is that it must be paid. That is all. It is the right of Mozambicans. It is a national resource and it must be paid," Impissa stated.
The minister nonetheless acknowledged that arbitration could help to bring the positions of both sides closer together, with the tribunal now tasked with examining the legal arguments put forward by each party.
Galp, for its part, has maintained that there is no legal basis for the tax claim as presented by the Mozambican authorities. In October 2025, the company's co-chief executive João Diogo Silva said Galp saw no legal foundation for the fiscal claim, while indicating a willingness to reach a negotiated settlement.
The arbitration now places at the heart of the dispute not only the interpretation of Mozambican tax legislation as applied to the transaction, but also the scope of the protections afforded to Galp under the international investment treaties invoked in the proceedings.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/08/14/negocios/empresas/area-4-galp-invoca-acordos-com-portugal-e-paises-baixos-em-litigio-fiscal-com-mocambique/
