Tuesday, January 14, 2020

Bleak Look in Cash Terms as Container Terminal Dispute Starts to Resemble Jarndyce v Jarndyce

Logistics Operator Wins Sixth Court Victory but Will Government Pay Up?
Shipping News Feature

DJIBOUTI – UK – DUBAI – If the court battle between DP World, the international ports and logistics operator, and the government of Djibouti over the Doraleh container terminal was a test match series, by now the latter's captain and selectors would have been dismissed, their supporters quit and quite possibly many fans suicidal.

This however, is not about a game of cricket. Having both formulated and signed a contract between them that any and all disputes be settled by the Court of Arbitration in London the government, which has just lost the sixth successive case against it, will probably continue to ignore this latest judgement, just as it has the previous five.

Regular readers may have followed the saga from its commencement in February 2017 when the Djiboutian authorities prosecuted DP World for misconduct, only to be soundly beaten and dressed down in Court, and left facing the ignominy of paying all associated costs, something they allegedly failed to do. A year later the Djiboutians ejected all DP World staff from the facility (those unfamiliar can just type Doraleh into our News Search box) and seized it for themselves.

The five subsequent cases have all been brought by the Dubai headquartered group but, despite every judgement in DP World's favour in the London Court of International Arbitration and the High Court of England and Wales, no staff have been allowed to return and no compensation or legal costs awarded have been forthcoming.

The Court ordered Djibouti to restore the rights and benefits under the 2006 Concession Agreement to DP World and Doraleh Container Terminal SA within two months, or pay damages and now an independent expert has estimated the losses to DP World at more than $1 billion.

The Doraleh Container Terminal is the largest employer and biggest source of revenue in the country and has operated at a profit every year since it opened. The Doraleh Container Terminal was found by an English Court to have been a ‘great success’ for Djibouti under DP World's management, but there are dark forces at work here and accusations are rife that the seizure was caused by Chinese involvement.

The Port of Djibouti is, at least partially, under the control of the China Merchants Group, a state owned company, and a major Chinese naval base is under construction alongside the port itself, much to the chagrin of the US, particularly the military and security services.

DP World says it now awaits proposals from Djibouti about how it intends to comply with the latest legal ruling. If Djibouti does not comply with the ruling, the Tribunal has stated it will proceed to issue an award of damages.

Photo: An artist’s impression of how the Port of Djibouti sees itself.