DP World Wins Another Case in Long Legal Battle With Djibouti

Global port operator DP World has won another ruling against the government of Djibouti in connection with the seizure of the Doraleh Container Terminal (DCT), a joint venture facility it built and operated until its expropriation three years ago. 

In February 2018, the government of Djibouti - acting through its seaport corporation, Ports de Djibouti SA (PDSA) - seized control of DCT from DP World, without compensation. DP World had obtained a JV concession from PDSA to build and operate the facility in 2006, and the JV agreement was still in force. PDSA declared that the agreement was terminated and attempted to remove the DP World-nominated directors of the JV company in order to seize its control. 

DP World sued PDSA in the High Court of England & Wales to reinstate the JV agreement and prevent PDSA from transferring its ownership of DCT to the government of Djibouti. In its ruling, the court found in favor of DP World, concluding that the agreement is still in effect and that the share transfer was unlawful. It also ordered PDSA to compensate DP World for its legal costs up to this point, a sum amounting to about $2.3 million. 

The case will now move to arbitration to determine an award for damages. So far, PDSA has not offered any compensation for its seizure of DCT, according to DP World. 

The decision is the seventh in a series of court and arbitration wins for the port company. A previous arbitration panel found that the Djiboutian government had violated an exclusivity agreement for the DCT / DP World joint venture by building another nearby terminal with a Chinese port operator; that case resulted in a $485 million penalty, which Djibouti has not yet paid. 

Locked out of Doraleh, DP World has set up a competing facility in neighboring Somaliland, aiming at the same Ethiopian cargo targeted by DCT. Its venture has backing from the Ethiopian government, and a connecting road to the Ethiopian border has been underwritten by the UK Department for International Development (DFID).