13 September 2018
DP World has warned investors to “think twice” about investing in Djibouti following the enactment of a decree which transferred the shareholding of Port de Djibouti SA (PDSA) in Doraleh Container Terminal SA (DCT) to the Government of Djibouti.
English High Court law restrains PDSA, 23.5% owned by China Merchants Port Holdings Company Ltd of Hong Kong, from using its shareholding to take control of DCT but DP World suggested the transfer on 9 September was made to try and flout this injunction. It said the move was part of the Government’s campaign to take the 2006 Concession Agreement away from DCT, through which DP World operated, and part owns the Doraleh Container Terminal.
“Investors across the world must think twice about investing in Djibouti and reassess any agreements they may have with a government that has no respect for legal agreements and changes them at will without agreement or consent,” a DP World spokesperson said.
Djibouti’s Government seized control of DCT from DP World in February, arguing the terms of the agreement had been broken and that DP World had underperformed, however, in August the London Court of International Arbitration (LCIA) ruled that the seizure was illegal because DP World’s concession agreement remains valid.
DP World maintains it will “continue to pursue all legal means to defend its rights as a shareholder and concessionaire.”
Last month, the High Court of England & Wales issued an injunction against PDSA, ordering that it shall not act as if the joint venture agreement with DP World has been terminated; appoint new directors or remove DP World’s nominated directors without its consent, cause the DCT joint venture company to act on the “Reserved Matters” without DP World’s consent; and instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti.
Arbitration proceedings are ongoing. DP World stated that the Djibouti Government has not made it any compensation offers.