After Seizure of Container Terminal Logistics Group Issues Legal Notice Over Future Port Development

DJIBOUTI – UAE – The row between Dubai based logistics outfit DP World and the government of Djibouti has taken another turn for the worse with the latest proclamation from the international port management company which was unceremoniously evicted from the Doraleh Container Terminal (DCT), situated in the Port of Djibouti, by the authorities in February. DP World is sending a clear message to anyone who chooses to step in and assist in the management or development of the port that legal proceedings will undoubtedly follow.

DP World has insisted that the Concession Agreement to operate DCT, a joint venture controlled by DP World, remains in full force and effect. That Agreement conferred on DCT the right to operate the port, which it designed and built, and in turn DP World was mandated to manage the port. The Agreement apparently also gave DCT and DP World exclusive rights to build and operate any other container ports and free zones in Djibouti.

The Concession Agreement was recently upheld as a valid and binding contract under English law by a tribunal of arbitrators (one a former member of the United Kingdom Supreme Court, another a member of the English Court of Appeal, and the third a leading Queens Counsel and independent arbitrator) under the auspices of the London Court of International Arbitration or LCIA, which rejected the Government of Djibouti’s attempt to rescind the Concession Agreement based on what are termed ‘false allegations of corruption’.

In a related proceeding an English High Court Justice agreed that the Concession Agreement had been a great financial success for Djibouti. The Port of Djibouti’s own website appears to bear this out with figures commencing in 2010 showing an annual throughput of around 425,000 TEU. By 2016, the last year for which figures are available, this total had risen steadily year by year to a height of 987,000 TEU, comfortably doubling turnover.

After the government seized the terminal on February 22 the DP World staff managing DCT were forced to leave the country resulting in a further LCIA arbitration application being lodged by DP World and DCT, accusing the Djibouti authorities of unlawful seizure and falsely declaring the Concession Agreement terminated. Apparently DP World has received information that the Djibouti government has been contacting other companies regarding further development and operations at the port, something DP World says is expressly forbidden in the original agreement.

DP World has stated that it and DCT are ‘the lawful holders of rights in respect of the ownership and operation of the container shipping terminal at Doraleh, Djibouti, and will pursue all available legal recourse, including claims for damages, against any other entities that tortiously interfere or otherwise violate their rights with respect to the Concession Agreement’.