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Doraleh Container Terminal (DCT), a Djibouti port operator owned 33.34% by DP World Group, has been successful in the London Court of International Arbitration in proceedings against the Republic of Djibouti. The Tribunal has found that by developing new container port opportunities with China Merchants Holdings, a Hong-Kong based port operator, Djibouti has breached DCT’s rights under its 2006 Concession Agreement, and specifically its exclusivity over all container handling facilities in the territory of Djibouti.
The Tribunal ordered Djibouti to pay DCT US $385 million plus interest for breach of DCT’s exclusivity by developing container facilities at Doraleh Multipurpose Terminal. Further damages are possible if Djibouti develops the planned Doraleh International Container Terminal (DICT) with any other operator without the consent of DP World.
China Merchants also operates a US $3.5 billion free trade zone it developed pursuant to an agreement with Djibouti. This is alleged to be in contravention of DP World’s exclusive right to develop and operate such a free zone under its own concession, and is the subject of other litigation proceedings.
The Tribunal also ordered Djibouti to pay DCT US $148 million for historic non-payment of royalties for container traffic not transferred to DCT once it became operational. Djibouti was also ordered to pay DCT’s legal costs.
The Tribunal’s Award recognises that the 2006 Concession Agreement remains valid and binding, as has also been confirmed by another LCIA arbitration tribunal and the London courts. This is the fifth substantial ruling in DCT and DP World’s favour on disputes relating to the Doraleh terminal. DCT and DP World continue to seek to uphold their legal rights in a number of legal fora, following Djibouti’s efforts to expel DP World from Djibouti and transfer the port operation to Chinese interests.
