16 October 2014
The long-standing dispute between Djibouti, one of the world’s smallest nations, and Total, one of the world’s O&G giants, has resurfaced once again.
Dating back to 1997 the case was opened just two years before current President Ismail Omar Guelleh came to power and appears to rear its head now and again.
The Djiboutian court took 14 years to deliver a verdict, finally sentencing two Total subsidiaries in 2011 to pay US$272 million in fines and damages for alleged pollution caused back in the 1990s. A subsequent appeal was thrown out earlier this year.
Potential international investors are watching the case closely amid growing concern over the government’s actions, which seem at odds with a leader who claims he wants to attract foreign investment. The government’s pursuit of Total seems unlikely to help it in this quest.
The subsidiaries have now filed a declaration of insolvency before Djibouti’s commercial court, leading to reports suggesting Total’s future in the country looks uncertain, with speculation that ultimately they will decide to exit on the basis that the size of the market really doesn’t warrant such protracted legal wrangling.
No doubt other international companies will be watching on closely to see how the case plays out, particularly given the delicate political situation and the number of other litigation cases currently in the pipeline.