Djibouti rejects London court ruling over DP World's Doraleh terminal

The African state seized the facility in February

A picture shows a general view of Doraleh Multi-Purpose Port in Djibouti, on July 4, 2018.  East Africa's smallest country Djibouti launched on July 5, the first phase of Africa's biggest free-trade zone, seeking to capitalise on its strategic position on one of the world's busiest trade routes located at the intersection of major international shipping lines connecting Asia, Africa and Europe, the gateway to the Suez canal. / AFP / Yasuyoshi CHIBA
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The government of Djibouti has refused to recognise a London arbitral tribunal ruling against the African state’s seizure of Doraleh Container Terminal from DP World in February.

A tribunal of the London Court of International Arbitration has ruled that the concession agreement awarded to DP World in 2006 to operate the terminal “remains valid and binding notwithstanding Law 202 and the 2018 decrees [issued by the Djibouti government]”, DP world said on Thursday, citing the LCIA ruling.

The law and decrees enacted by the Djibouti government to evade its contractual obligations 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, the government of Djibouti and the Djibouti Ports and Free Zones Authority said the concession agreement contained “severe irregularities and threatened the national interest and sovereignty of Djibouti”, a press office of the Presidency of Djibouti statement said. “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," the statement said.

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.


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The government of Djibouti and its ports authority have been trying to negotiate a compensation deal with DP World, the statement said. “We are now more convinced than ever that a compensatory settlement is the only option in line with international law,” it added.

DP World, the fourth-biggest port operator globally, in June said it would not consider an out-of-court settlement in its dispute with the Djibouti government.

“We remain committed to operating Doraleh port as per the original agreement of the concession, and we will not consider any other alternative settlement option,” a company spokesperson said at the time.

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

DP World said it is in violation of its exclusive management rights it holds and it “reserves the right to take all available legal actions, including claims for damages against any third parties that interfere or otherwise violate its contractual rights.”