Tribunal Sets The Cost Of Djibouti'S Refusal To Return Doraleh Terminal To Dp World At Us$ 54 Million A Year

24 January 2022
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DP World wins over USD 200 million in damages from London tribunal over exclusion from Doraleh terminal, Djibouti

DP World also defeats China Merchants’ effort to block its multi-billion dollar suit in Hong Kong from going ahead

An arbitral tribunal of the London Court of International Arbitration (LCIA) has awarded USD 200,752,000 in interim damages to DP World and joint venture company Doraleh Container Terminal covering the period from February 18, 2018 to 31 December 2020 caused by being excluded from the Doraleh terminal, Djibouti.  DP World’s rights under a 2006 concession agreement to operate the terminal remain valid and binding, leaving the door open to DP World being reinstated.

The damages stem from the illegal seizure by the Djiboutian government of the Doraleh terminal in February 2018 and comprise DP World’s lost dividends, management fees and interest, in the sum of USD USD 164,594,955, as well as compensation for cash balances illegally taken by the Djiboutian government from Doraleh Container Terminal, in the sum of USD 36,158,028.

This is yet another in a string of several rulings from the LCIA and the High Court of England and Wales over the last four years, all in DP World’s favour.  To date, all have been ignored by Djibouti despite the concession remaining valid and in force, under English law.  With the effect of this latest ruling that Djibouti’s illegal actions are accruing liability for damages in excess of USD 54 million per year, DP World remains optimistic that Djibouti will see the light and recognise that it must respect its legal obligations.

Meanwhile, on 14 January 2022, the Court of Appeal of Hong Kong dismissed an appeal filed by China Merchants, upholding a decision that DP World’s suit against China Merchants should be heard before the Hong Kong Courts.  DP World and Doraleh Container Terminal are bringing multi-billion dollar claims against China Merchants alleging that it induced the government of Djibouti to expel DP World from the country and hand over the Doraleh terminal to China Merchants.

China Merchants surprisingly argued that the case should be heard by the Djibouti courts, notwithstanding that Hong Kong is its home jurisdiction.  The Hong Kong Court of Appeal agreed with DP World’s arguments that the case should proceed in Hong Kong and ordered China Merchants to pay its legal costs.  Having sought to delay the proceedings for nearly three years, China Merchants must now file its defence by 11 February 2022.

The Doraleh Container Terminal is the largest employer and biggest source of revenue in the country and has operated at a profit every year since it opened. The Doraleh Container Terminal was found by an English court to have been a “great success” for Djibouti under DP World’s management.

Notes to the Editors

DP World Doraleh (Djibouti) – facts at a glance

  • Concession agreement signed in 2006
  • Shareholding structure: 66.66% government of Djibouti and 33.34% DP World
  • Quay length: 1,050 metres
  • Number of berths: 3
  • Annual capacity: 1.2 million TEU
  • Built and operated by DP World, Doraleh Container Terminal (DCT), is widely recognised as the most advanced container terminal on the east coast of Africa, enabling safe, smooth and efficient movement of cargo in and out of the country. The terminal is Djibouti’s single biggest employer and is responsible for creating thousands of jobs – both directly and indirectly – for people in the local community

Background

  • 2009: Official opening of Doraleh Container Terminal in the presence of The President of Djibouti Ismail Omar Guelleh, Sultan Ahmed bin Sulayem, Sheikh Ahmed Bin Mohammed bin Rashid Al Maktoum.
  • The ceremony was attended by more than 400 local and foreign guests. President Guelleh’s statement on DP World and Dubai’s contribution to Djibouti’s growth: ''By constructing and inaugurating this terminal, the long-thought dream of the people of Djibouti has turned into a tangible reality thanks to support lent by Vice President and Prime Minister of the UAE and Ruler of Dubai H. H. Sheikh Mohammed bin Rashid Al Maktoum, for whom we harbour deep respect and gratitude.
  • 2000: DP World and the Djibouti Government establish a joint venture with DP World awarded a concession to operate the Port of Djibouti.
  • The partnership leads to the joint venture building the nearby Doraleh Container Terminal.
  • Stimulates the economy, supports trade, creates jobs.
  • Doraleh has capacity to handle 1.2 million TEU (twenty-foot equivalent container units) annually, the largest and most modern terminal in East Africa. Its 18 metre draft and 1050 metre quay handle the largest ships in service, including 10- 15,000 TEU “Super-Post-Panamax” vessels. Capacity at the terminal is set to grow in line with market demand to around 3m TEU over time.
  • Djiboutian trainees contribute to operations at the company’s other African terminals, such as Dakar, Senegal.
  • Following the official opening, DP World Chairman launches the newest wing of the Kempinksi Djibouti Palace Hotel, a Nakheel Hotels project.
  • Djibouti President and Sheikh Ahmed Bin Mohammed Bin Rashid Al Maktoum open a 16 km road linking Djibouti with the new terminal, donated by Sheikh Mohammed and named after him. The USD 21 million road has four lanes in both directions

DP World Contribution to Djibouti’s Economy

  • As a foreign investor DP World has invested hundreds of millions of US dollars in the country, and added greatly to the economy of Djibouti throughout the years.
  • It has consistently contributed 12% to Djibouti GDP
  • It has grown origin and destination cargo by 380% in the last 14 years
  • It grew volumes over 70% in 2017 and was aiming for 80% in 2018

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