Relations between the UAE and Djibouti have been strained by the decision of the East African state to unilaterally take back control of Doraleh Container Terminal from a DP World subsidiary that designed, built and, since 2006, operated the facility in line with a concession awarded in 2006.
DP World has labelled the actions of the Djibouti Government as being “illegal, oppressive and cynical.” The company points out the terminal is the largest employer and biggest source of revenue in the country and has operated at a profit every year since it opened.
According to a DP World statement: “The illegal seizure of the terminal is the culmination the Government’s campaign to force the DP World to renegotiate the terms of the concession. Those terms were found to be “fair and reasonable” by a London Court of International Arbitration tribunal led by Lord Leonard Hoffman and Sir Richard Aikens, both highly respected former English jurists.” The global port operator has commenced arbitration proceedings before the London Court of International Arbitration with the aim of either protecting its rights to the concession, or securing damages and compensation.
Earlier this year the Government of Djibouti issued a demand that the contract must be renegotiated by 21st February 2018. When this did not occur, the contract was terminated by Presidential Decree on 22nd February and all of the assets of Doraleh Container Terminal were expropriated.
The DP World statement urged the Djibouti government to “stop its unlawful conduct and continue to work as partner in the same spirit of cooperation that has been in place for the last 18 years.”
The Government of the UAE has rallied behind DP World, calling the decision “regrettable” and “arbitrary”. Diplomatic moves to try and resolve the impasse seem likely, although ultimately the case may end up in the courts.