Dubai (Al-Ittihad) The Court of Arbitration of the London Court of International Arbitration (LCIA) issued a judgment against the Port of Djibouti Company (Port de Djibouti SA) (PDSA), in its dispute with DP World, Proving the illegality of its attempts to terminate the joint venture agreement and transfer the ownership of its shares to the state.
The arbitral tribunal ruled that the Djibouti Port Company had breached the joint venture agreement by its unlawful attempt to terminate it, and by being involved in an attempt to transfer ownership of its shares to the government. The Djibouti Port Company is 23.5% owned by China Merchants Port Holdings Company Ltd in Hong Kong, while the rest of its shares are owned by the Government of Djibouti.
The arbitration court’s decision confirmed that the joint venture agreement had not been terminated and that it was still in full force and effect, and also ruled that the Djibouti Port Company is still a shareholder in the joint venture, and that its attempt to transfer ownership of its shares to the government has no effect. The arbitration will begin the second stage to determine the compensation owed to DP World from the Port of Djibouti Company. The Djibouti Port Company has also been ordered to pay DP World’s £1.7m legal costs so far.
The new ruling is the seventh decision issued by an international court or judicial body in favor of DP World in its dispute with the government of Djibouti.
This ruling follows another ruling on July 31, 2018 by another arbitral tribunal of the London Court of International Arbitration (LCIA) that the Doraleh Container Terminal concession agreement remains in effect and binding despite the government’s efforts to evade its contractual obligations, and another ruling issued in January 10, 2020 orders the government to return the container terminal to DP World.
A third arbitral tribunal also ordered the government to pay compensation to the joint venture company (in which DP World owns a third) in the amount of $485.7 million for violating its exclusive concession rights, as a result of the construction of the multi-purpose port of Doraleh, including some unpaid fees for container traffic handled. in other ports in Djibouti, while the government of Djibouti has not yet complied with any of those provisions, and continues to violate its international obligations.
Doraleh Container Terminal
DP World reiterated that it will continue to pursue all legal means to defend its rights as a shareholder and concessionaire in Doraleh Container Terminal in the face of the government’s blatant disregard for the rule of law and non-observance of binding commercial contracts. It also made clear that despite the passage of three years, the Government of Djibouti has not yet made any offer of compensation in an attempt to find a negotiated settlement of the dispute.
The Doraleh Container Terminal is Djibouti’s largest employer and largest source of revenue, and its operation has turned a profit every year since its opening, and an international arbitration court as well as the English Commercial Court found it to be a “huge success” for Djibouti under DP World’s management.
Details of this legal dispute date back to February 23, 2018, when the government of Djibouti illegally seized the Doraleh Container Terminal from DP World, which designed, built and operated the terminal after obtaining its concession in 2006. Prior to its takeover, the container terminal was managed Under a joint venture between DP World and the Port of Djibouti Company. In July 2018, the Port of Djibouti Company announced the unilateral termination of the joint venture agreement between it and DP World. The Djibouti Port Corporation has also sought to remove DP World managers appointed by the joint venture company in an attempt to gain control of that company.
DP World went to the High Court of England and Wales and obtained an injunction against the Djibouti Port Company to prevent it from doing so so that the arbitration court could adjudicate the dispute. In an attempt to circumvent the effect of the injunction, the Djibouti Port Company sought to transfer ownership of its shares in the joint venture to the Government of Djibouti, based on a decree issued by the President of Djibouti. DP World sued Djibouti Port Company over these issues through arbitration.
DP World enjoys strong relationships with governments around the world through its portfolio of 81 operating marine and inland container terminals supported by more than 148 companies in 60 countries across six continents.