London court orders Djibouti to pay $385m to DP World JV for breach

A London court has ordered Djibouti to pay $385m plus interest to Doraleh Container Terminal (DCT), a port operator partly owned by Dubai’s DP World, it was announced on Thursday.

The London Court of International Arbitration found that by developing new container port opportunities with Hong-Kong based port operator China Merchants, Djibouti “breached” DCT’s exclusivity rights under its 2006 concession agreement to develop a container terminal at Doraleh, a statement said.

“In respect of the development of the Djibouti Multipurpose Port (DMP) facility, the facts are clear. At no stage before the decision was made to go ahead with that facility with China Merchants did … Djibouti … offer … DCT … the right to develop the proposed container facilities at the DMP. Djibouti was therefore in breach of clause 3.6.3 of the [Concession Agreement]”, the court ruled.

The Tribunal also ordered Djibouti to pay DCT $148m 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 Tribunal also ruled that that Djibouti may also have to pay further if it develops a planned Doraleh International Container Terminal (DICT) with any other operator without the consent of DP World.

DCT is 33.34 per cent owned by DP World Group, and 66.66 per cent by Port de Djibouti.

The concession was awarded by the Djibouti government in 2006 and in February 2018, the African nation ended its contract with DP World to run the Doraleh Container Terminal, citing failure to resolve a dispute that began in 2012.

But DP World called the move an illegal seizure of the terminal and began arbitration proceedings in London.

Also read: Dubai’s DP World will not consider settlement with Djibouti over port

This is the fifth ruling in DCT and DP World’s favour on disputes relating to the Doraleh terminal, the statement said.

“DCT and DP World continue to seek to uphold their legal rights in a number of legal fora, following Djibouti’s unlawful efforts to expel DP World from Djibouti and transfer the port operation to Chinese interests,” it added.

China Merchants also operates a $3.5bn free trade zone it developed pursuant to an agreement with Djibouti, in contravention of DP World’s exclusive right to develop and operate such a free zone under its own concession, which is the subject of other litigation proceedings, the statement added.

Litigation against China Merchants also continues before the Hong Kong courts.