PortandTerminal.com, August 1, 2019
At stake is the Doraleh Container Terminal, a major port facility in the Port of Doraleh in Djibouti. China is muscling in and wants DP World out of the picture.
LONDON – DP World on Wednesday called a decision to be taken later this week by the government of Djibouti, which would ask the country’s high court to rule all previous international adjudications null and void, “a complete disregard for and contravention of the global legal system and existing contracts.”
Terminal Seizure – What happened?
In February 2018 Djibouti ended its 50-year concession agreement with DP when it seized the terminal after claiming sovereignty violations against the Dubai-based port operator.
“On 22 February 2018, the Government of Djibouti unlawfully seized control of the Terminal, forced DP World employees to leave the country and purported to terminate the Concession Agreement”
DP World controlled 33.34% in DCT and Port de Djibouti S.A., an entity of the Republic of Djibouti, 66.66%.
The move was “a clear example by the Djiboutian Government of violating its contractual obligations and the rights of foreign investors.” said DP World at the time.
The London Court for International Arbitration in London and the High Court of England and Wales has ruled in favour of DP World claims that its 2006 Concession Agreement to develop a container terminal at Doraleh is valid in five previous substantial rulings over the last three years.
Djibouti is essentially saying that the contract that they signed with DP World is meaningless and the ruling of international courts to enforce it is invalid and inapplicable
Later this week, the government of Djibouti is to take a decision to apply to the country’s high court to rule all previous international judgements concerning the matter null and void. Essentially, Djibouti is saying that the contract that they signed with DP is meaningless and the ruling of international courts to enforce it is invalid and inapplicable.
DP World believes that this is “a complete disregard for and contravention of the global legal system and existing contracts.”
Courts find Djibouti at fault and order payments to DP World
The tribunal ordered Djibouti to pay DCT USD 385.7 million plus interest for breach of DCT’s exclusivity, 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 USD 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.
The court recognized that the 2006 concession agreement remains valid and binding.
Context: China working with Djibouti to oust DP World
Djibouti is a tiny nation strategically located at the entrance to the Red Sea on the route to the Suez Canal through which 10 per cent of the world’s oil exports and 20 per cent of all commercial goods travel.
The country became home to China’s first overseas military base in 2017. A U.S. base located just miles away stages operations against Islamic State, al-Qaida and other militant groups.
“To be considered a global power, a country must be seen as a player in the Middle East,” said Andrew Scobell, a Rand Corporation senior political scientist. “For China, the base has greater significance because it is China’s sole military foothold in the region – part of what some have dubbed its soft military footprint.”
Two prominent U.S. senators expressed alarm about the military and political consequences if China gains control of the port terminal in Djibouti, saying it could further boost Beijing’s influence in East Africa.
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