Djibouti dispute will continue despite ruling

London court confirms terminal seized illegally

Reacting to statements issued by the Government of Djibouti relating to a court ruling on the matter between DP World and Port de Djibouti SA (DPSA), DP World has issued a statement challenging claims that the dispute was dismissed and that the matter is now closed.

In its September ruling, the London Court of International Arbitration (LCIA) found that the 2018 seizure of the Doraleh Container Terminal (DCT) was unlawful, but declined to award damages against PDSA on the basis that the harm was caused by the Government of Djibouti, not PDSA.

DP World’s claims worth around $1 billion against the government and its partner China Merchants Port Holding, therefore, remain active. The Government of Djibouti has nevertheless issued statements lauding the ruling as a “significant victory for the Republic of Djibouti”.

According to the Djibouti Government: “This decision once again reaffirms the legitimate rights of the Republic of Djibouti. It thwarts DP World's strategy of abusive court action and media pressure against the Djiboutian government and companies operating in the national port sector.”

However, DP World contends that existing arbitration awards of approximately $685 million against the government of Djibouti remain valid and enforceable. “The Government has so far refused to honour these binding awards, a clear act of contempt for the rule of law and international business standards,” they contend, adding that the LCIA has confirmed that the 50-year concession agreement for Doraleh is legally valid and still binding, and the attempt to terminate it is unlawful.

PDSA was awarded costs in this specific proceeding. However, earlier rulings by the LCIA found PDSA’s attempt to terminate DP World’s 2006 Joint Venture Agreement for DCT were unlawful. The net effect is that PDSA still owes DP World a substantial sum. 

This ruling brings the LCIA arbitration proceedings to a close but does not end DP World’s wider dispute. DP World will pursue all available legal avenues to secure fair compensation and enforce its rights against the Government of Djibouti and China Merchants. 

“Djibouti’s claims are at odds with reality, proven time and again in independent international tribunals. It is extraordinary that the Government continues to spread a false narrative despite overwhelming evidence. This undermines investor confidence, damages Djibouti’s reputation, and ultimately hurts its people. DP World has successfully invested billions across Africa and globally, creating jobs, infrastructure and growth. But this case is bigger than DP World — it is about whether governments can tear up binding contracts and ignore international law without consequence. Djibouti’s behaviour is a clear warning to serious investors,” said a DP World spokesperson.

PHOTO credit: ardasavasciogullari - stock.adobe.com

Moves towards port productivity