Thursday, September 20, 2018

Government of Djibouti Continues to Ignore High Court Rulings Over Container Terminal

Doraleh Facility Row Gets Ever Nastier
Shipping News Feature
DJIBOUTI – DUBAI – UK – The ongoing saga of the Doraleh Container Terminal, seized by the government of Dubai in February from the contracted operator DP World, shows no sign of relenting. Having won three successive Court hearings in London, the first brought by the government against the operator, the matter went to the High Court earlier this month, and resulted in another legal drubbing for the authorities in the Horn of Africa.

Despite a High Court injunction restraining Djibouti’s port company, Port de Djibouti S.A. (PDSA), from treating its joint venture shareholders’ agreement with port and logistics specialist DP World as terminated, all such restrictions seem to have been studiously ignored.

The High Court further prohibited PDSA from removing directors of the Doraleh Container Terminal (DCT) joint venture company who were appointed by DP World pursuant to the contract and instructed PDSA not to interfere with the management of the Doraleh Terminal until further orders of the Court or the resolution of the dispute by a London-seated arbitration tribunal.

The High Court’s order followed the attempt by PDSA, deemed unlawful, to terminate the joint venture agreement with DP World and the calling of an extraordinary shareholders’ meeting on 9 September by PDSA to replace DP World appointed directors. Full details of the Court’s instructions, including the freezing of funds held by the Standard Chartered Bank, were given in a previous story.

On 9 September, 5 days before it was due to present its defence to the Court, the President of Djibouti enacted a decree which purportedly transferred the shareholding of Port de Djibouti SA (PDSA) in Doraleh Container Terminal SA (DCT) to the Government of Djibouti. PDSA is 23.5% owned by China Merchants Port Holdings Company Ltd of Hong Kong which is establishing strongholds in the region with the suspended development of Bagamoyo Port in Tanzania apparently back on the development agenda again.

DP World said the transfer of stock appeared to have been made in an attempt to flout the Court’s injunction and now the company has launched a video telling potential investors in the country that they will likely enter a trap in which the authorities will fail to fulfil its contractual obligations, and saying the country offers little protection for foreign investors, the government having now run up huge debts with China which dominate the economy. Although we include a link the video seems now to have been withdrawn from YouTube.

Whatever else this situation seems to be one which will run and run.