Port and Logistics Group Continue to Press for Compensation

Thursday, September 27, 2018

DJIBOUTI – Regular readers will be familiar with the situation regarding the Doraleh container terminal, the concession for which DP World held until February this year when the facility was seized by a government backed operation, following which all staff of the UAE headquartered port management and logistics group were summarily expelled from the country.

The 2006 contract to run the facility and its associated development was cast under English law by both parties, it provided that all disputes relating to the Agreement were to be resolved through binding arbitration at the London Court of International Arbitration (LCIA) and indeed it was to this very English Court that the Djibouti's turned when first they sought legal redress for perceived offences by way of corruption of officials. Having lost that case we have witnessed a succession of hearings, latterly in the High Court, all of which have gone against the current port managers, Port de Djibouti S.A. (PDSA).

Details of the restrictions imposed by the Court on August 31 against the PDSA included not behaving as if the joint venture contract was terminated, no new directors could be appointed, no ‘reserved matters’ to be acted on without the consent of DP World and no funds to be transferred from the corporate bank accounts in London.

At the subsequent hearing on September 14 the PDSA failed to appear, the government having stated that it did not recognise the authority of the Court, and an order was made to continue the injunction until the making of a further order, or an award of the next arbitration tribunal at the London Court of International Arbitration, a panel that will be formed imminently to consider the ongoing shareholding dispute with DP World.

On DP World’s application, the Court also extended the injunction to include any ‘affiliate’ of PDSA. Under the JV Agreement, PDSA’s affiliates include the Government. The decision follows the enactment of an ‘emergency’ ordinance by the President of Djibouti on 9 September. This ordinance purported to transfer PDSA’s shares in DCT to the Government of Djibouti, clearly transgressing against the Court’s instructions.

The Court further ordered that PDSA must ensure that any transferee of DCT shares is legally bound by the Joint Venture Agreement and Articles of Association in the same way as PDSA. This last ruling means neither the Government nor PDSA can control DCT or give valid instructions to third parties on behalf of DCT without DP World’s consent. A DP World spokesperson, said:

“This is yet another in a series of rulings, all in favour of DP World, that demonstrate Djibouti’s continuing disregard for the rule of law. We underline our belief that companies intending to operate in such a country or already operating there need to seriously consider their dealings with this Government in the face of such behaviour.”

DP World tell us that there has been no offer of compensation for the loss of what they claim was the success story of cargo handling in the region.