Dubai’s DP World slams Djibouti’s plan to disregard international adjudications

Dubai-based ports operator DP World has slammed a new decision set to be adopted by the Djibouti government even as the dispute over the Doraleh Container Terminal continues.

A decision to be taken later this week by Djibouti will allow the country’s high court to rule all previous international adjudications null and void.

“The move is proof of Djibouti’s complete disregard for recognised legal practice and respect for contracts calling into question any investment in the country both now and in the future,” DP World said in a statement.

The dispute relates to the Doraleh Container Terminal SA (DCT), a Djibouti port operator owned 33.34 per cent by DP World Group and 66.66 per cent by state-owned Port de Djibouti.

The concession was awarded by the Djibouti government in 2006 and in February 2018, the African nation ended its contract with DP World to run the Doraleh Container Terminal, citing failure to resolve a dispute that began in 2012.

But DP World called the move an illegal seizure of the terminal and began arbitration proceedings in London.

There have been five rulings over the last three years by the London court for International Arbitration (LCIA) and the high court of England and Wales – all in favour of the DP World JV.

All have been ignored by Djibouti despite the original contract for the concession being written under English law, the statement said.

The most recent decision by an LCIA tribunal on March 29 this year found that by developing new container port opportunities with China Merchants, a Hong-Kong based port operator, Djibouti has breached DCT’s rights under its 2006 concession agreement.

The tribunal ordered Djibouti to pay DCT $385.7m plus interest for breach of exclusivity, with further damages possible if Djibouti develops a planned Doraleh International Container Terminal (DICT) with any other operator without the consent of DP World.

It also ordered Djibouti to pay $88m to DCT for historic non-payment of royalties for container traffic not transferred to DCT once it became operational.

Djibouti is also ordered to pay DCT’s legal costs.

Read: London court orders Djibouti to pay $385m to DP World JV for breach

“DCT and DP World continue to seek to uphold their legal rights in a number of legal fora, following Djibouti’s unlawful efforts to expel DP World from Djibouti and transfer the port operation to Chinese interests,” the statement said.

China Merchants also operates a $3.5bn free trade zone it developed pursuant to an agreement with Djibouti, in contravention of DP World’s exclusive right to develop and operate such a free zone under its own concession, which is the subject of other litigation proceedings, the statement added.

Litigation against China Merchants also continues before the Hong Kong courts.