Wednesday, July 31, 2019

'Stolen' Container Terminal Row Continues as Government Refuses to Acknowledge Court Rulings

East African Port Boldly Advertises Services Illegally Obtained
Shipping News Feature
DJIBOUTI – DUBAI – UK – In a case which seems destined to run and run, and has many in the legal profession scratching their heads, debate continues as to what more can be done. The strange situation which arose when the government of Djibouti decided to take port and logistics group DP World to Court in London, lost that and several subsequent actions brought against it, and then refused to accept those decisions, continues to unfold.

This week sees the government apply to its own country’s High Court intending to rule all previous international adjudications null and void, has been described by DP World as ‘a complete disregard for and contravention of the global legal system and existing contracts’, an argument that carries some weight.

The original contract between the government sponsored port authority and the UAE outfit stated all disputes would be settled by the Court of Arbitration in London. Failure to accept the rulings when every single decision and appeal went against them smacks more than a little of sour grapes. DP World says that any company considering investment in Djibouti should be aware that authorities there show complete disregard for recognised legal practice and respect for contracts.

The Doraleh terminal was seized by the government in February 2018 and management handed to one of its own operations now titled Société de Gestion du Terminal a conteneur de Doraleh (SGTD). This outfit boasts itself as ‘the best performing terminal on the east coast of Africa and the most modern and technologically advanced’, a little harsh as they stole all the technology from DP World after dismissing their staff.

Doraleh Container Terminal SA (DCT), a Djibouti port operator owned 33.34% by DP World Group, and 66.66% by Port de Djibouti S.A., an entity of the Republic of Djibouti, has been successful in five previous substantial rulings over the last three years by the London Court for International Arbitration in London and the High Court of England and Wales. All have been ignored by Djibouti despite the original contract for the concession being written under English law.

The most recent decision by an LCIA Tribunal on 29 March this year found that by developing new container port opportunities with China Merchants Port Holdings Co Limited (China Merchants), a Hong-Kong based port operator, Djibouti has breached DCT’s rights under its 2006 Concession Agreement to develop a container terminal at Doraleh, in Djibouti, specifically, its exclusivity over all container handling facilities in the territory of Djibouti.

The Tribunal ordered Djibouti to pay DCT $385.7 million plus interest for breach of DCT’s exclusivity by development of container facilities at Doraleh Multipurpose Terminal, with further damages possible if Djibouti develops a planned Doraleh International Container Terminal (DICT) with any other operator without the consent of DP World.

The Tribunal also ordered Djibouti to pay DCT $88 million for historic non-payment of royalties for container traffic not transferred to DCT once it became operational. Djibouti is also ordered to pay DCT’s legal costs.

Unfortunately for DP World the government of Djibouti seems of a mind that the loss of face it is suffering is worth the money it intends to save.

Photo: SGTD happily advertises its services using the equipment partially owned by DP World.