Ruling by Tribunal says Djibouti acted illegally

DP World has won a further legal hearing against the Government of Djibouti over the Doraleh Container Terminal. A Tribunal of the London Court of International Arbitration ordered Djibouti to restore the rights and benefits under the 2006 Concession Agreement to DP World and Doraleh Container Terminal SA within two months, or pay damages.

An independent expert has estimated the losses to DP World at more than USD 1 billion. The ruling by the Tribunal said Djibouti had acted illegally when it forcibly removed DP World from management of the terminal in February 2018, claimed it had terminated the Concession Agreement and transferred the Terminal assets to a state-owned entity.

The latest tribunal ruling is the sixth substantive ruling in DP World’s favour in the London Court of International Arbitration and the High Court of England and Wales. To date all have been ignored by Djibouti despite the original contract for the concession being written under and governed by English law.

The Doraleh Container Terminal is the largest employer and biggest source of revenue in the country and has operated at a profit every year since it opened. The Doraleh Container Terminal was found by an English court to have been a “great success” for Djibouti under DP World’s management.

DP World now awaits proposals from Djibouti about how it intends to comply with the latest legal ruling. If Djibouti does not comply with the ruling, the Tribunal has stated it will proceed to issue an award of damages.

DP World is a leading enabler of global trade and an integral part of the supply chain. It operates multiple related businesses – from marine and inland terminals, maritime services, logistics and ancillary services to technology-driven trade solutions.

With a portfolio of 78 operating marine and inland terminals supported by over 50 related businesses in over 40 countries across six continents with a significant presence in both high-growth and mature markets, the company enjoys strong relationships with governments around the world, working in partnership to strengthen economies through investment in infrastructure and the implementation of smart trade solutions.

DP World Doraleh (Djibouti) – facts at a glance

• Concession agreement signed in 2006
• Shareholding structure: 67% Government of Djibouti and 33% DP World
• Quay length: 1,050 metres
• Number of berths: 3
• Annual capacity: 1.2 million TEU
• Built and operated by DP World, Doraleh Container Terminal (DCT), is widely recognised as the most advanced container terminal on the east coast of Africa, enabling safe, smooth and efficient movement of cargo in and out of the country. The terminal is Djibouti’s single biggest employer and is responsible for creating thousands of jobs – both directly and indirectly – for people in the local community

Background

• 2009: Official opening of Doraleh Container Terminal in the presence of the President of Djibouti Ismail Omar Guelleh; HH Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum; and Sultan Ahmed bin Sulayem, Group Chairman and Chief Executive Officer of DP World and Chairman of Ports, Customs and Free Zone Corporation.
• The ceremony was attended by more than 400 local and foreign guests. President Guelleh’s statement on DP World and Dubai’s contribution to Djibouti’s growth: ”By constructing and inaugurating this terminal, the long-thought dream of the people of Djibouti has turned into a tangible reality thanks to support lent by Vice President and Prime Minister of the UAE and Ruler of Dubai HH Sheikh Mohammed bin Rashid Al Maktoum, for whom we harbour deep respect and gratitude.”

• 2000: DP World and the Djibouti Government establish a joint venture with DP World awarded a concession to operate the Port of Djibouti.
• The partnership leads to the joint venture building the nearby Doraleh Container Terminal.
• Stimulates the economy, supports trade, creates jobs.
• Doraleh has capacity to handle 1.2 million TEU (twenty-foot equivalent container units) annually, the largest and most modern terminal in East Africa. Its 18 metre draft and 1050 metre quay handle the largest ships in service, including 10- 15,000 TEU “Super-Post-Panamax” vessels. Capacity at the terminal is set to grow in line with market demand to around 3m TEU over time.
• Djiboutian trainees contribute to operations at the company’s other African terminals, such as Dakar, Senegal.
• Following the official opening, DP World Chairman launches the newest wing of the Kempinksi Djibouti Palace Hotel, a Nakheel Hotels project.
• Djibouti President and Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum open a 16 km road linking Djibouti with the new terminal, donated by Sheikh Mohammed and named after him. The USD 21 million road has four lanes in both directions

DP World’s Contribution to Djibouti’s Economy

• As a foreign investor, DP World has invested hundreds of millions of US dollars in the country, and added greatly to the economy of Djibouti throughout the years.
• It has consistently contributed 12% to Djibouti’s GDP
• It has grown origin and destination cargo by 380% in the last 14 years
• It grew volumes over 70% in 2017 and was aiming for 80% in 2018
• % in 2018