Djibouti faces September 14 deadline over port wrangle

In Summary

September 6, 2018—A British court has asked the Djibouti government to defend itself for a decision […]

September 6, 2018—A British court has asked the Djibouti government to defend itself for a decision to throw out its former Dubai-based logistics partners to takeover running Doraleh Container Terminal (pictured), Africa’s most technologically advanced facility.

The Djibouti government legal representatives are expected to appear on September 14, but to date there has been no public statements indicating attendance.

In February 2018, Djibouti terminated its contract with Dubai’s DP World, one of the world’s biggest port operators, with authorities citing a failure to resolve a protected dispute as the main reason.

In 2014 the Djibouti government accused DP World of bribing the port authority Abdourahman Boreh, and stated the operating contract was unfair. A London commercial court cleared Boreh of misconduct in 2016. However in 2017, a tribunal at the London Court of International Arbitration threw out a claim by the Djibouti government that DP World’s agreement was unfair, and ordered the government to pay DP World damages.

Early this week the High Court of England and Wales granted an injunction restraining Djibouti’s port company, Port de Djibouti S.A. (PDSA), from treating its joint venture shareholders’ agreement with DP World as terminated.

PDSA is owned in majority by the Djibouti government and its CEO is the Chairman of the Ports and Free Zones Authority of Djibouti. Hong Kong-based China Merchants is the minority shareholder in PDSA.

This is the third legal ruling in relation to Doraleh following two previous decisions from the London Court of International Arbitration (LCIA), all of them in favour of DP World. It recognizes that although PDSA is the majority shareholder of the DCT joint venture company, it is DP World that has management control of the company, in accordance with the parties’ legally binding contracts.

PDSA has been ordered not to interfere with the management of DCT until further orders of the Court or the resolution of the dispute by a London-seated arbitration tribunal.

Plans to hold an extraordinary shareholders’ meeting on September 9 to replace DP World appointed directors has also been deemed illegal.

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