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            june 20, 2019

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DP World vows legal battle to counter Djibouti's seizure of terminal


Dubai's DP World has accused the Republic of Djibouti of 'blatant disregard' of law and promised to use every legal means possible to recover control of the Doraleh Container Terminal (DCT) that the Djibouti government seized, disregarding two UK court rulings.
In a press release issued by the Government of Dubai on Tuesday, DP World said it will continue to pursue all legal means to "defend its rights as a shareholder and concessionaire in Doraleh Container Terminal SA (DCT)."
In that statement, DP World accused the government of Djibouti of "blatant disregard for the rule of law and respect for commercial contracts", reported American Shipper.
The President of Djibouti on Sunday had enacted a decree which transferred the shareholding of Port de Djibouti SA (PDSA) to the government.
PDSA is 23.5 per cent owned by Hong Kong's China Merchants. DP World said the transfer "appears to have been made in an attempt to flout an injunction of the English High Court, which restrains PDSA from using its shareholding to take control of DCT," the press release said.
"This is the latest step in the government of Djibouti's five-year campaign to take the 2006 concession agreement away from DCT, through which DP World operated and part owns the Doraleh Container Terminal."
DP World said that on August 31 the High Court of England & Wales issued an injunction against PDSA, as shareholder in DCT, ordering it "not act as if the joint venture agreement with DP World has been terminated".
Nor should it "appoint new directors or remove DP World's nominated directors without its consent, nor cause the DCT joint venture company to act on the "reserved matters" without DP World's consent".
Nor "shall it instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti".
DP World also said: "The 2006 concession agreement, which is governed by English law, provides that disputes relating to the agreement are to be resolved through binding arbitration in the London Court of International Arbitration. Such arbitration proceedings are ongoing. To date the government has not made any offer to compensate DP World."
The government of Djibouti said in early August that the concession agreement granted to DP World in 2006 to operate the Doraleh Container Terminal in its capital city "contained severe irregularities and threatened the national interest and sovereignty of Djibouti," leading it to terminate the concession in February this year.
Djibouti said that it, the Djibouti Ports and Free Zones Authority "have repeatedly tried to negotiate a fair compensation with DP World. We are now more convinced than ever that a compensatory settlement is the only option in line with international law."
Djibouti insisted that its termination of the contract with DP World "conforms to international law", and said it had not participated in the arbitration proceeding before the UK-based London Court of International Arbitration, which rendered the decision in DP World's favour.
"International law recognises the ability of a sovereign nation to unilaterally cancel a concession contract on the grounds of public interest, subject to the payment of fair compensation to the other party," the statement from Djibouti said.

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