London tribunal rules in favour of DP World but Djibouti rejects ruling

These developments come several months after tensions between Djibouti and DP World over the terms of the concession agreement came to a head with Djibouti seizing control of Doraleh Container Terminal.
Dp world, Doraleh Container Terminal, Djibouti

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An Arbitral Tribunal of the London Court of International Arbitration has confirmed the illegitimacy of the Government of Djibouti’s action of seizing control of the Doraleh Container Terminal from DP World.

The Tribunal has ruled that Doraleh Container Terminal’s Concession Agreement “remains valid and binding notwithstanding Law 202 and the 2018 Decrees”. 

Law 202 and the referenced decrees were devices enacted by Djibouti to seek to evade Djibouti’s contractual obligations, and these have been found to be ineffective in law. 

The Government of Djibouti has responded, saying it does not acknowledge the decision of the London Court of International Arbitration.

DP World has in turn replied, saying in a statement released to the media that the Djibouti government is showing disregard for international law.

“The Court’s decision upholding the continuing validity of the Concession is based on recognised principles of international law and is internationally binding both on the Djibouti government and so far as third parties are concerned,” DP World said in a statement, adding that its concession to operate Doraleh Container Terminal remain in effect.

“Djibouti does not have sovereignty over a contract governed by English law. It is well established that, in the absence of an express term to that effect, an English law contract cannot be unilaterally terminated at will. The contract therefore remains in full force and effect,” it said.

These developments come several months after tensions between Djibouti and DP World over the terms of the concession agreement came to a head with Djibouti seizing control of the terminal, accusing DP World of underutilisation and various other complaints.

However, the tribunal in London found the terms of the concession agreement to be “fair and reasonable”, which upheld the verdict of another tribunal in 2017 led by Lord Leonard Hoffmann, Peter Leaver QC and Sir Richard Aikens, all highly respected English jurists.

The Terminal is the largest employer and biggest source of revenue in the country, and has operated at a profit every year since it opened according to DP World.

“As the Court’s decision records, the government’s own representatives have given evidence that the port has been a great success for Djibouti. The terms of the concession have also been held in two previous cases brought by the Government itself to have been ‘even handed and fair’,” DP World said in a statement.

“In light of that indisputable success, and the fair and reasonable terms of the concession, the government’s attempts to terminate it cannot have anything to do with the fundamental interests of the people of Djibouti,” it added.