DP World vows to defend rights in port dispute with Djibouti

UAE ports operator DP World will continue to defend its rights as a shareholder in Djibouti’s Doraleh Container Terminal, after the African state’s government said it nationalised it.

The president of Djibouti enacted a decree on September 9 purporting to transfer the private entity Port of Djibouti's shareholding in the Doraleh terminal to the country's government.

"DP World will continue to pursue all legal means to defend its rights as a shareholder and concessionaire in Doraleh Container Terminal in the face of Djibouti's blatant disregard for the rule of law and respect for commercial contracts," the Government of Dubai said on Tuesday.

The port is majority-owned by the Djibouti government and its chief executive is chairman of the country's Ports and Free Zones Authority. Hong Kong's China Merchants Port Holdings Company has a 23.5 per cent stake. Djibouti has granted China Merchants operational control of the Djibouti free zone, in breach of Dubai-listed DP World's exclusive rights to operate the terminal for 30 years, said the port operator.

The move to nationalise the terminal and escalate the battle with the UAE company comes less than a week after a UK tribunal ruled that Djibouti's cancellation in February of DP World's contract to run Doraleh terminal was unlawful.

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It was the third legal ruling in relation to the terminal following two previous decisions from the London Court of International Arbitration – all of them in favour of DP World.

On August 31, the High Court of England and Wales issued an injunction against the Port of Djibouti ordering it not to wrest control of the terminal from DP World, or act as if the joint venture agreement with the port operator had been terminated. The court asked the Port of Djibouti to present its defence at the next hearing, scheduled on Friday. 

DP World said the transfer of ownership to the government of Djibouti appeared to have been made in an attempt to "flout" the injunction.

“Investors across the world must think twice about investing in Djibouti and reassess any agreements they may have with a government that has no respect for legal agreements and changes them at will without agreement or consent.” said the Dubai company.