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DP World has rejected claims by the Djibouti government that the latest ruling in the case of the concession agreement for the country’s Doraleh Container Terminal (DCT) has “ended the dispute”.
On Monday, the London Court of International Arbitration (LCIA) issued its final ruling on the dispute between the two parties that has been ongoing since 2018, when the Djibouti government terminated the 50-year concession agreement that the state port authority, PDSA, signed with DP World in 2006 and replaced it with port operator China Merchants Holdings.
In its latest ruling this week, although the LCIA confirmed that the seizure of DCT in 2018 was unlawful, it declined to award damages against PDSA on the basis that the harm was caused by the government of Djibouti rather than its port authority.
The government welcomed the LCIA’s ruling, and said: “The arbitral judge confirmed that PDSA, a private-law entity, had no connection with the end of this concession.
“This termination was a sovereign decision of the Republic of Djibouti, and PDSA was not liable for the ‘losses’ invoked by DP World.
“DP World’s application was therefore found to be unfounded and dismissed in its entirety,” it added.
However, DP World today said the ruling only dismissed PDSA’s liability, while the liability of the government and China Merchants remained, and it would continue to pursue them for damages. It described the government’s claim of victory represented a “false narrative”.
“Djibouti’s claims are at odds with reality, proven time and again in independent international tribunals,” said a DP World spokesperson.
“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.
“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,” the spokesperson added.
In addition to the $685m damages awarded to DP World by the LCIA, the company has further claims against the government and China Merchants, which it said amounted to around $1bn.
“This ruling brings the LCIA arbitration proceedings to a close, but does not end DP World’s wider dispute,” it said.
“DP World will pursue all available legal avenues to secure fair compensation and enforce its rights against the government of Djibouti and China Merchants.
“Multiple rulings by independent tribunals have confirmed the seizure was illegal and unlawful,” it added.
In 2013, China Merchants bought a 23.5% stake in DCT from the Djibouti government.
After its staff were forced out of the country, DP World launched arbitration proceedings against PDSA and China Merchants, and in January 2022 the LCIA ruled in DP World’s favour, awarding it damages of $200m from Djibouti for the period between 23 February 2018 to 31 December 2020, with total damages owed to DP World put at $686.5m, with interest accruing.
An appeal by China Merchants in a Hong Kong court in September 2022 was rejected.
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