UK high court rules that Djibouti cannot terminate JV with Dubai’s DP World

The Djibouti ports authority seized the Doraleh Container Terminal from DP World in February

A UK court has ruled in favour of Dubai’s DP World in the company’s ongoing dispute with Djibouti’s port company, Port de Djibouti SA (PDSA).

The High Court of England & Wales has granted an injunction restraining PDSA from terminating its joint venture DP World, the Dubai ports operator said in a statement on Wednesday.

The court has also prohibited PDSA from removing directors of the Doraleh Container Terminal (DCT) joint venture company who were appointed by DP World.

The Djibouti company has called for an extraordinary shareholders’ meeting on September 9 to replace the DP World-appointed directors of the JV.

PDSA is “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, the statement said.

Under the ruling issued by the court without PDSA’s participation, the Djibouti authority also cannot instruct or cause the DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti, the statement added.

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

The issue began when the government of Djibouti seized the Doraleh Container Terminal from DP World in February over a dispute dating back to 2012.

DP World has called the move illegal and unlawful.

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

The latest ruling is the third in relation to the DCT following two previous decisions from the London Court of International Arbitration (LCIA).

All of them have been in favour of the Dubai company.

Read more: London court rules DP World Djibouti contract ‘valid and binding’

“If PDSA disobeys the court’s order and seeks to replace DP World nominated directors of DCT on September 9, it may be in contempt of court and face a fine or the seizure of its assets and its officers and directors may be imprisoned,” the statement on Wednesday said.

The court has ordered PDSA to present its defence at another hearing on September 14.

DP World said it is notifying Standard Chartered Bank to reject any instructions that may be sent to them after the September 9 meeting.

China Merchants, who have been given operational control of the Djibouti Freezone, will also be informed about the ruling.