DP World blasts Djibouti’s ‘blatant disregard’ for international law as port spat rumbles on

The port of Djibouti. Credit: Getty Images
The port of Djibouti. Credit: Getty Images

DP World on 11 September said that it will continue to pursue all legal means to defend its rights as a shareholder and concessionaire in Doraleh Container Terminal (DCT) in the face of Djibouti’s “blatant disregard” for the rule of law and respect for commercial contracts.

The statement was issued in response to the government of Djibouti’s decision to nationalise the shares in the Port of Djibouti (PDSA), the latest move in an increasingly bitter confrontation with DP World over management and ownership of DCT.

On 10 September, the office of Djibouti’s presidency issued the following statement: “The Republic of Djibouti has decided to nationalise with immediate effect all the shares and social rights of PDSA in the DCT company to protect the fundamental interests of the nation and the legitimate interests of its partners, and to ensure that the situation of the DCT company, which is no longer in charge of the Doraleh Container Terminal since the contract termination, aligns with reality.”

“DP World will therefore have the state of Djibouti as a single interlocutor for all the discussions regarding the consequences of the concession contract termination.”

After winning an adjudication process with the London Court of International Arbitration in August, DP World said last week that it had obtained a UK High Court judgement forcing Djibouti to abide by the original 2006 agreement.

Djibouti said the injunction was obtained by DP World without PDSA having been given prior warning of the introduction of the legal procedure. “DP World’s press release [of 5 September] does not emphasise, though, that the decision of the English Court is merely a provisional measure that is neither final nor res judicata and is therefore not conclusive,” the government said.

“In an apparent attempt to circumvent the injunction, on 9 September, the government of Djibouti transferred PDSA’s shares in DCT to itself. The new decree was accompanied by a press release replete with untrue statements. It also refers to DP World being paid fair compensation in accordance with international law,” DP World said.

“The 2006 concession agreement, which is governed by English law, provides that disputes relating to the agreement are to be resolved through binding arbitration in the London Court of International Arbitration. Such arbitration proceedings are ongoing. To date, the government has not made any offer to compensate DP World.”

This could be the first hint from DP World that it is prepared to walk away from the protracted dispute, especially as its third attempt to establish a Gulf of Aden-Red Sea transhipment hub is now well under way in Berbera, Somaliland. Ethiopia is also a shareholder in that project, despite the fact that Djibouti would normally be considered the landlocked country’s prime point of maritime access. DP World’s terminal venture in Yemen was terminated by the Yemeni government in 2013.

Djibouti terminated DP World’s concession and management contracts, which were based on a 33.33% stake in PDSA, in February. “This shareholders agreement had granted all powers to the minority shareholder and transformed the majority shareholder into a mere observer. The termination was made in the strictest compliance with Djiboutian law, which governs the joint venture and the statutes of DCT,” the government said.

“In practice, DCT has been exploited, through the shareholders agreement, for the sole purpose of serving DP World’s interests. DP World Group is involved in a judicial and media guerrilla warfare against the Republic of Djibouti, in an attempt to come back to Doraleh at any cost,” the government added.

Djibouti has now set up a public company to manage DCT, SGTD (Société de Gestion du Terminal de Doraleh). “SGTD, whose sole shareholder is the state of Djibouti, has successfully taken over the operations of the Doraleh container terminal,” it said. “DP World’s ‘strategy’, which consists of trying to oppose the will of a sovereign state, is both unrealistic and destined to fail.”