The High Court of England and Wales in London has continued the injunction first made on 31st August 2018, prohibiting the Government of Djibouti’s port company, Port de Djibouti S.A. (PDSA) from interfering with the management of the joint venture company, Doraleh Container Terminal (DCT).
Following a hearing on 14th September 2018, at which PDSA reportedly failed to appear despite being notified, the Court ordered that the injunction will continue until it makes a further order or an award of the arbitration tribunal at the London Court of International Arbitration that will shortly consider the shareholding dispute with DP World.
On DP World’s application, the Court also extended the injunction to include any ‘affiliate’ of PDSA. Under the joint venture agreement, PDSA’s affiliates include the Government of Djibouti. The decision follows the enactment of an “emergency” ordinance by the President of Djibouti on 9th September this year, which purported to transfer PDSA’s shares in DCT to the Government of Djibouti. PDSA is 23.5% owned by China Merchants Port Holdings Company of Hong Kong.
The Court further ordered that PDSA must ensure that any recipient of DCT shares is legally bound by the Joint Venture Agreement and Articles of Association in the same way as PDSA. The ruling means, the Dubai government confirms, that neither the Government nor PDSA can control DCT or give valid instructions to third parties on behalf of DCT without DP World’s consent.
DP World has said it will continue to pursue all legal means to defend its rights as shareholder and concessionaire in DCT, in the face of the Djibouti Government’s “blatant disregard for the rule of law and respect for binding commercial contracts.” A DP World spokesperson, said: “This is yet another in a series of rulings – all in favour of DP World – that demonstrate Djibouti’s continuing disregard for the rule of law.”
The 2006 Concession Agreement that the Government of Djibouti awarded to DP World is governed by English law. It provides that all disputes relating to the Agreement are to be resolved through binding arbitration at the LCIA, with two such LCIA proceedings already completed.
In the first, the Djibouti Government filed an arbitration against DP World seeking to rescind the Concession Agreement, claiming its terms were unfair and were procured through bribery. The LCIA tribunal ruled against the Government, finding the terms were fair and there was no bribery. In a separate proceeding, another LCIA Tribunal held that the 2006 Concession Agreement was valid notwithstanding the Government’s attempts to terminate it through special legislation and decrees.
DP World’s claims for damages against the Government will now be determined in these proceedings. To date, the Djibouti Government has not made any offer to compensate DP World.