UK high court blocks Djibouti’s attempts to terminate DP World concession

The development comes after PDSA attempted to terminate the joint venture agreement with DP World for the management of the Doraleh Container Terminal. The government of Djibouti has claimed the terms of the agreement were unfair.
Djibouti
Djibouti

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The High Court of England & Wales has granted an injunction restraining Djibouti’s port company, Port de Djibouti S.A. (PDSA), from treating its joint venture shareholders’ agreement with DP World as terminated.

The High Court also prohibited PDSA from removing directors of the Doraleh Container Terminal (DCT) joint venture company who were appointed by DP World as part of the agreement.

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 court ruled.

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

The development comes after PDSA attempted to terminate the joint venture agreement with DP World for the management of the Doraleh Container Terminal. The government of Djibouti has claimed the agreement previously formed was unfair.

PDSA has called a shareholders meeting for September 9th to replace DP World appointed directors of the DCT joint venture company. 

The court ruling means that if PDSA disobeys the Court’s order and seeks to replace DP World nominated directors of DCT 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 Court has ordered PDSA to present its defence at another hearing on September 14th.

This is the third legal ruling in relation to the Doraleh Container Terminal following two previous decisions from the London Court of International Arbitration (LCIA), all of them in favour of DP World.

It recognises that although PDSA is the majority shareholder of the DCT joint venture company, it is DP World that has management control of the company, in accordance with the parties’ legally binding contracts.

DP World welcomed the ruling in a statement and said it is notifying Standard Chartered Bank so that the bank will reject any instructions that may be sent to them after the September 9th meeting.

China Merchants, who have been given operational control of the Djibouti Freezone in breach of DP World’s exclusivity rights, will also be informed, given its minority shareholding in PDSA, DP World said.