Djibouti govt seizes control of DP World-owned port

The dispute between Dubai Ports World and the Djibouti government over the Doraleh Container Terminal has taken a new turn with the Government of Djibouti seizing control of the Terminal owned by DP World, an action the Dubai company described as illegal. The part was designed, built and operated by DP World since 2006 pursuant to a concession awarded by the government. The state-of-the-art terminal is the largest employer and biggest source of revenue in the country. It has operated at a profit every year since it opened.

The illegal seizure of the terminal is the culmination of the Djibouti government’s campaign to force the DP World to renegotiate the terms of the concession. Those terms were found to be “fair and reasonable” by a London Court of International Arbitration tribunal led by Lord Leonard Hoffman and Sir Richard Aikens, both highly respected former English jurists.

DP World said in a statement it has commenced arbitration proceedings before the London Court of International Arbitration to protect their rights, or to secure damages and compensation for their breach or expropriation.

Since December 2017, the Government of Djibouti has sought to enforce the law against the concession contract entered into between DP World and Doraleh Container Terminal SA and the Government, related to the container terminal at Doraleh. This effort culminated in a final demand that the contract be renegotiated by 21 February 2018, and the termination of that contract by Presidential Decree on 22 February 2018 and expropriation of all of the assets of Doraleh Container Terminal SA.

DP World said it considers the law, the attempt of the Government to enforce its terms, the purported termination and expropriation to be in breach of the Government’s obligations under its agreements with it, in force since 2004, and international law.  It described the Government’s conduct is particularly oppressive and cynical.

The Government had alleged that the contracts were corrupt both before the High Court of England & Wales and before an arbitral Tribunal in London (comprising Sir Richard Aikens, Peter Leaver QC, Lord Hoffman), which dismissed the Government’s allegations that the contracts were unfair in their entirety.

DP World said it has commenced a new arbitration on 20 February 2018 against the Government in London, seeking a declaration that the contracts are valid and binding on the Government and to obtain urgent interim relief.

DP World has a 33 percent equity stake in the port of Doraleh (Djibouti) which has a capacity of 1.25 mn TEU’s. DP World can confirm that there will be no material financial impact to the group.

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