DP WORLD ASSERTS DJIBOUTI RULING AS BINDING

▶ African state is refusing to accept a London court decision on Doraleh container terminal seizure

DP World, the fourth biggest port operator globally, said ruling by a London court against the seizure of its Doraleh Container Terminal in Djibouti is binding both on the African nation and any other third party under international law.

“The court’s decision upholding the continuing validity of the concession [awarded to DP World] is based on recognised principles of international law,” DP World said in a statement.

“[It] is internationally binding both on the Djibouti government and so far as third parties are concerned.”

The London Court of International Arbitration declared the concession agreement awarded in 2006 to DP World to operate the terminal as “valid and binding notwithstanding Law 202 and the 2018 decrees [issued by the Djibouti government]”, the port operator said in a statement last week, citing the LCIA tribunal ruling.

The Djibouti government’s bid to evade its contractual obligations through the law and decrees were found to be ineffective and DP World will now “reflect on the ruling and review its options”, it said, without providing further details of what those options are.

However, Djibouti state authorities have refused to recognise the LCIA arbitral tribunal decision saying the concession agreement contained irregularities and threatened the national interest of Djibouti, according to the press office of the Presidency of Djibouti.

“The Republic of Djibouti does not accept this sentence, which has ruled that the law of a sovereign state cannot be enforced by that state,” a statement issued last week said.

Nasdaq Dubai-listed DP World insists that its contract to run the port in Djibouti remains in “full force and effect”.

“As the court has held, Djibouti does not have sovereignty over a contract governed by English law. It is well established that, in the absence of an express term to that effect, an English law contract cannot be unilaterally terminated at will,” the port operator said on Saturday.

In February, authorities in Djibouti abruptly cancelled DP World’s contract to run the terminal and seized its facilities, which the port operator had designed, built and operated.

The government of Djibouti and its ports authority have been trying to negotiate a compensation deal with DP World, according to the presidency statement.

“We are now more convinced than ever that a compensatory settlement is the only option in line with international law,” it said last week.

However, in June DP World said it would not consider an out-of-court settlement in its dispute with the Djibouti government and it remains committed to operating Doraleh port as per the original agreement of the concession.

The company in July threatened legal action against third parties if they violated its contract for Doraleh Terminal, following news reports regarding the opening of the first phase of the Chinese-built International Free Trade Zone.

The concession terms were found to be “fair and reasonable” in 2017 by another LCIA tribunal led by Lord Leonard Hoffmann, Peter Leaver and Richard Aikens.

“In light of that indisputable success, and the fair and reasonable terms of the concession, the government’s attempts to terminate it cannot have anything to do with the fundamental interests of the people of Djibouti,” DP World said.

As the court has held, Djibouti does not have sovereignty over a contract governed by English law DP WORLD