UAE to the Rescue of DP World’s Container Terminal in Djibouti

Media reports yesterday said that Dubai has accused Djibouti of illegally seizing a port operated by one of its state-owned shipping companies and started legal action against the African government.

“Djibouti government’s seizure of the Doraleh port is regrettable,’’ Minister of State for Foreign Affairs Anwar Gargash wrote on Twitter.

According to a press statement from DP World, the Government of Djibouti illegally seized control of the Doraleh Container Terminal from a Dubai Ports World (DP World) owned entity that designed, built and, since 2006, operated the Terminal pursuant to a concession awarded by the Government in 2006. 

The state-of-the-art Terminal is the largest employer and biggest source of revenue in the country. It has operated at a profit every year since it opened.

The illegal seizure of the Terminal is the culmination the Government’s campaign to force the DP World to renegotiate the terms of the concession. Those terms were found to be “fair and reasonable” by a London Court of International Arbitration tribunal led by Lord Leonard Hoffman and Sir Richard Aikens, both highly respected former English jurists.

DP World has commenced arbitration proceedings before the London Court of International Arbitration to protect their rights, or to secure damages and compensation for their breach or expropriation.

Since December 2017, the Government of Djibouti has sought to enforce the law against the concession contract entered into between DP World and Doraleh Container Terminal SA and the Government, related to the container terminal at Doraleh. 

This effort culminated in a final demand that the contract be renegotiated by 21 February 2018, and the termination of that contract by Presidential Decree on 22 February 2018 and expropriation of all of the assets of Doraleh Container Terminal SA.

"We consider the law, the attempt of the Government to enforce its terms, the purported termination and expropriation to be in breach of the Government’s obligations under its agreements with us, in force since 2004, and international law. Moreover, the Government’s conduct is particularly oppressive and cynical. The Government only recently failed in its attempts to unravel the contracts by alleging the contracts were corrupt both before the High Court of England & Wales and before an arbitral Tribunal in London (comprising Sir Richard Aikens, Peter Leaver QC, Lord Hoffman), which dismissed the Government’s allegations that the contracts were unfair in their entirety.," it said.

"To protect our interests, we have been compelled to commence a new arbitration on 20 February 2018 against the Government in London, seeking a declaration that the contracts are valid and binding on the Government and to obtain urgent interim relief."

"We demand that the Government will cease its unlawful conduct and continue to work as partners with us in the same spirit of cooperation that has been in place for the last 18 years,  which has yielded hundreds of millions of dollars of direct and indirect benefits to Djibouti and enhanced its attractiveness as a leading investment destination in East Africa," the statement said.

DP World has a 33% equity stake in the port of Doraleh (Djibouti) which has a capacity of 1.25 mn TEU's. DP World can confirm that there will be no material financial impact to the Group.