Investors across the world must think twice about investing in Djibouti.
DUBAI, United Arab Emirates, September 12, 2018 – DP World (http://web.dpworld.com) said today that it will continue to pursue all legal means to defend its rights as a shareholder and concessionaire in Doraleh Container Terminal SA (DCT) in the face of Djibouti’s blatant disregard for the rule of law and respect for commercial contracts.
On 9 September the President of Djibouti enacted a decree which purportedly transferred the shareholding of Port de Djibouti SA (PDSA) in Doraleh Container Terminal SA (DCT) to the Government of Djibouti. PDSA is 23.5% owned by China Merchants Port Holdings Company Ltd of Hong Kong (“China Merchants”).
DP World said the transfer appears to have been made in an attempt to flout an injunction of the English High Court which restrains PDSA from using its shareholding to take control of DCT. This is the latest step in the Government of Djibouti’s five-year campaign to take the 2006 Concession Agreement away from DCT, through which DP World operated, and part owns the Doraleh Container Terminal.
“Investors across the world must think twice about investing in Djibouti and reassess any agreements they may have with a government that has no respect for legal agreements and changes them at will without agreement or consent,” a DP World spokesperson said.
On 31 August, the High Court of England & Wales issued an injunction against PDSA, as shareholder in DCT, ordering that it:
- Shall not act as if the joint venture agreement with DP World has been terminated
- Shall not appoint new directors or remove DP World’s nominated directors without its consent
- Shall not cause the DCT joint venture company to act on the “Reserved Matters” without DP World’s consent.
- Shall not instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti.
In an apparent attempt to circumvent the injunction, on 9 September 2018, the Government of Djibouti transferred PDSA’s shares in DCT to itself. The new decree was accompanied by a press release replete with untrue statements. It also refers to DP World being paid fair compensation in accordance with international law.
The 2006 Concession Agreement, which is governed by English law, provides that disputes relating to the Agreement are to be resolved through binding arbitration in the London Court of International Arbitration. Such arbitration proceedings are ongoing. To date the Government has not made any offer to compensate DP World.