Djibouti seizes control of port from DP World

Monday, 26 February 2018 00:00 - - {{hitsCtrl.values.hits}}

The Government of Djibouti has illegally seized control of the Doraleh Container Terminal from a Dubai Ports World owned entity which designed, built and, since 2006, operated the terminal pursuant to a concession awarded by the Government in 2006, a DP World statement said.

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 Government’s campaign to force the DP World to renegotiate the terms of the concession, the DP world statement claimed.

"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," it said.

DP World has a 33% equity stake in the port of Doraleh (Djibouti) which has a capacity of 1.25 million TEU's.

DP World confirmed that there will be no material financial impact to the group.

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

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 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.

"We consider 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 us, in force since 2004, and international law. Moreover, the Government’s conduct is particularly oppressive and cynical. The Government only recently failed in its attempts to unravel the contracts by alleging the contracts were corrupt both before the High Court of England and 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," the DP World statement said.

"To protect our interests, we have been compelled to commence a new arbitration on 20v 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," it said.

"We demand that the Government will cease its unlawful conduct and continue to work as partners with us in the same spirit of cooperation that has been in place for the last 18 years, which has yielded hundreds of millions of dollars of direct and indirect benefits to Djibouti and enhanced its attractiveness as a leading investment destination in East Africa," it added.