WASHINGTON, May 3, 2019—The World Bank today announced an additional US$6 million additional financing for the continuation of its Improving Health Sector Performance Project in Djibouti. Since its approval in April 2013, 143,000 women and children have received essential health, nutrition and population services in Djibouti. The program has supported improvements in access to quality health care services for maternal and child health and communicable disease control programs (HIV/AIDS and tuberculosis). The additional financing will allow the program to continue serving all of Djibouti, including refugee populations.
The additional financing includes US$1 million in International Development Association (IDA) credit, the World Bank’s arm for the poorest countries, and a US$5 million grant from the IDA18 Sub-Window for Refugees and Host Communities. Djibouti is one of 14 countries eligible to access this financing. The IDA18 Sub-Window for Refugees and Host Communities was created in response to demands from refugee-hosting countries, like Djibouti, as a mechanism for development assistance and concessional financing from the WBG.
“The Government of Djibouti has been committed to addressing the increasing health needs of refugees and host communities,” said Atou Seck, World Bank Resident Representative in Djibouti. “The capacity of health centers throughout Djibouti is under severe strain. In certain communities in Djibouti, displaced populations including refugees make up to 40% of the health service users.”
The new financing will support the Government of Djibouti’s efforts to mitigate the negative health impacts of the protracted refugee crisis and ensure that refugees and host communities have access to quality and equitable health services. The project is implemented by the Ministry of Health.
This is the second additional financing to the project. The first additional financing came in the form of a grant US$7 million from the Health Results and Innovation Trust Fund. The original project, approved in April 2013, was a five-year results-based financing project funded by a US$7 million IDA credit. The program is performance-based, whereby funds are disbursed directly to health care providers based on the number and quality of services delivered. The aim of this design is to encourage healthcare service providers to improve child health services such as immunization, management of childhood illnesses, and treatment of malnutrition. In addition, there is a focus on maternal health services such as prenatal care, family planning, and skilled birth attendance. “With six years of experience with the results based financing in Djibouti we have seen a marked increase in the utilization of maternal and child health services. The increased autonomy of health facilities has led to improved health worker performance and an overall increase in the quantity and quality of health services,” said Elizabeth Mziray, World Bank Task Team Leader for the program. “With the additional financing, the support will extend to reach more vulnerable populations and those most in need.”
The large influx of refugees from neighboring countries into Djibouti and the protracted humanitarian crisis have strained an already fragile health system and have further stretched the limited capacity of the health system to provide basic health and nutrition services. The limited coverage of health services and the absence of essential nutrition and water and sanitation facilities have increased the risk of disease outbreaks.
Kadar Mouhoumed Omar
Tribunal orders Djibouti to pay DCT $385 million plus interest for breach of Doraleh Container Terminal SA (DCT)’s exclusivity.
DUBAI, United Arab Emirates, April 4, 2019 – Doraleh Container Terminal SA (DCT), a Djibouti port operator owned 33.34% by DP World Group, and 66.66% by Port de Djibouti S.A., an entity of the Republic of Djibouti, has been successful in the London Court of International Arbitration proceeding against the Republic of Djibouti. The Tribunal has found that by developing new container port opportunities with China Merchants Holdings International Co Limited (China Merchants), a Hong-Kong based port operator, Djibouti has breached DCT’s rights under its 2006 Concession Agreement to develop a container terminal at Doraleh, in Djibouti, specifically, its exclusivity over all container handling facilities in the territory of Djibouti.
The Tribunal ordered Djibouti to pay DCT $385 million plus interest for breach of DCT’s exclusivity by development of container facilities at Doraleh Multipurpose Terminal, with further damages possible if Djibouti develops a planned Doraleh International Container Terminal (DICT) with any other operator without the consent of DP World. The Tribunal found that “In respect of the development of the Djibouti Multipurpose Port (DMP) facility, the facts are clear. At no stage before the decision was made to go ahead with that facility with China Merchants did … Djibouti … offer … DCT … the right to develop the proposed container facilities at the DMP. Djibouti was therefore in breach of clause 3.6.3 of the [Concession Agreement]”. China Merchants also operates a $3.5 billion free trade zone it developed pursuant to an agreement with Djibouti, in contravention of DP World’s exclusive right to develop and operate such a free zone under its own concession, which is the subject of other litigation proceedings.
The Tribunal also ordered Djibouti to pay DCT $148 million for historic non-payment of royalties for container traffic not transferred to DCT once it became operational. Djibouti is 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 unlawful efforts to expel DP World from Djibouti and transfer the port operation to Chinese interests. Litigation against China Merchants also continues before the Hong Kong courts. DP World has previously issued public notices, following the confirmation of the validity of the 2006 Concession Agreement in a judgment in 2018, warning others against interfering with its and DCT’s concession rights.
China Merchants Port Holdings controls the controversial 1,150-hectare Port of Hambantota, which Sri Lanka handed over to China on a 99-year lease.
HONG KONG, China, February 13, 2019 – One of the world’s largest port operators has sued a Chinese state enterprise in Hong Kong over infringement of its exclusive port agreement with a strategically located African nation, in the city’s first court case involving China’s Belt and Road Initiative.
FactWire (www.FactWire.org) has obtained a legal filing by United Arab Emirates’ DP World (FRA: 3DW) at the Hong Kong High Court against China Merchants Port Holdings Company Ltd (HKEX 0144), accusing it of causing the Djibouti government to revoke the firm’s exclusive right to run the country’s ports.
Hong Kong-based China Merchants Port Holdings, a subsidiary of state enterprise China Merchants Group, deals mainly in the construction of ports, marine container logistics and operating container terminals.
It has actively participated in large-scale port infrastructure projects in multiple countries under China’s ambitious Belt and Road Initiative in recent years.
China Merchants Port Holdings controls the controversial 1,150-hectare Port of Hambantota, which Sri Lanka handed over to China on a 99-year lease.
Its inroads into Djibouti, located strategically between the Arabian Sea and the Mediterranean Sea, has for years been at the centre of legal disputes between the African nation and the UAE state enterprise.
In the writ of summons filed to the Hong Kong court in August last year, DP World accused the company for causing the Djibouti government to nationalise the Doraleh Container Terminal, despite the 30-year concession agreement that allowed DP World to exclusively run the terminal.
DP World, which operates 78 ports in 42 countries including Terminal 3 in Kwai Chung, Hong Kong, said under its agreement with the Djibouti government, it would have “full and exclusive right to establish, develop, and operate the Doraleh site”.
The concession agreement also said Djiboutian authorities cannot grant concessions for any other port capable of handling ocean-going vessels or free zone facilities within the country for the duration of the agreement.
The concession agreement took effect in February 2004 for a period of 30 years with the option for two 10-year renewals.
Joint-venture company Doraleh Container Terminal S.A. (DCT) was created to develop and operate the terminal.
The Djibouti government held 66.66 percent of DCT’s shares under state enterprise Port Autonome International de Djibouti (PAID), while DP World held 33.34 percent through its subsidiary Dubai (International) Djibouti FZE (DID).
Despite being a minority shareholder, DP World had the right to appoint most board members of DCT, thereby retaining control of the company’s operations and management.
Two years later, both parties signed a 2006 Concession Agreement in which DID relinquished their role in the development of the Doraleh Container Terminal.
However, DID’s exclusivity right over other port and free zone projects remained in full force.
Doraleh Container Terminal commenced operations on February 2009 but the Djibouti government began expressing dissatisfaction with its agreement with DP World.
It said the concession agreement “gave a foreign company the opportunity to oppose the fundamental interests of the Republic of Djibouti by hindering its economic and social development process”.
Three years later in 2012, China Merchants Port Holdings began negotiating a partnership with Djiboutian authorities over the development of ports and free-trade zone projects in the nation. In July that year, they signed a strategic partnership agreement.
The Chinese firm is a direct competitor of DP World and was actively looking to invest in ports to strengthen its position in East Africa.
Djiboutian authorities sold 23.5 percent of its shares in DCT to China Merchants Port Holdings, effectively allowing the Chinese firm to hold 15.67 percent of the shares, contradicting the concession agreement, the legal filing said.
With China Merchants Port Holdings acquiring an indirect shareholding in DCT, Djibouti was bypassing its contractual obligations and implementing its partnership with the Chinese firm, the filing said.
In 2014, China Merchants Port Holdings and Djibouti decided to build Doraleh Multipurpose Port next to the Chinese People’s Liberation Army Support Base in Djibouti.
Chinese firms China Civil Engineering Construction Corporation Ltd and China State Construction Engineering Corporation began construction on the multipurpose port in the same year.
Operations at this port began in mid-2017, also in contradiction of the agreement between Djibouti and DP World, the UAE firm said.
At the multipurpose port’s launching ceremony, the Djibouti government signed a deal with China Merchants Port Holdings to build a new Doraleh International Container Terminal, to be located between the Doraleh Container Terminal and the multipurpose port.
According to the official Belt and Road Initiative website, the then Executive Director and Vice Chairman of China Merchants Port Holdings Hu Jianhua suggested plans to build a new port to Djibouti president Ismail Omar Guelleh in 2013.
Hu’s proposal was to build a new Shekou, part of the China (Guangdong) Pilot Free Trade Zone, complete with a new port, a free trade area and to transform an old port terminal into a business and residential centre.
The website said China Merchants Port Holdings invited Guelleh and other Djibouti stakeholders to inspect the “thriving” Shekou port. It said by learning about the history of Shekou, Djibouti will decide to cooperate with China Merchants.
According to DP World’s legal filing, Djibouti attempted to revoke DP World’s exclusive agreement by using allegations of corruption, while it developed its partnership with China Merchants Port Holdings on various projects.
In 2012, Djibouti sued Abdourahman Boreh, a former presidential confidante who was involved in the negotiation and execution of the agreement between DP World and Djibouti, for corruption at the High Court of England and Wales. The case was thrown out.
Djibouti again sued Boreh in 2017 at the London Court of International Arbitration for bribery and those charges were again dismissed. The court found no corruption was involved.
Nevertheless, Djiboutian authorities seized control of the Doraleh Container Terminal on February 22, 2018 and transferred concession staff and assets to Societe de Gestion du Terminal (SGTD), a public company created to manage the terminal.
“SGTD, whose sole shareholder is the State of Djibouti, has successfully taken over the operations of the Doraleh container terminal,” the Djibouti government had said in a press release, which highlighted the unfairness of its concession agreement with DP World.
“The implementation of this concession agreement was severely prejudicial to the fundamental interests of the Republic of Djibouti, to the development of the country and to the control of its most strategic infrastructure asset.”
DP World in February last year sued Djibouti at the London Court of International Arbitration over the takeover of the terminal.
Seven months later, the court ruled in favour of DP World and stated that its agreement with Djiboutian authorities is still valid and binding.
DP World, China Merchants Port Holdings and Djiboutian authorities did not respond to FactWire’s questions.
An International Monetary Fund report said Djibouti’s external public debt to GDP ratio has already reached 85 percent.
At the end of 2016, 32 percent of this debt was owed by the central government. Sixty-eight percent consisted of government-guaranteed debt of public enterprises, 77 percent of which was owed to China’s EximBank, which is directly under China’s State Council.
In other words, the debt that Djibouti owes China is about 44 percent of its GDP.
Located on the Horn of Africa, Djibouti’s strategic location by the Bab-el-Mandeb Strait, which acts as a gateway between the Gulf of Aden and the Red Sea and the adjacent Suez Canal, makes it a desirable location for foreign military bases.
China’s first overseas military base was set up there in 2017.
The US established their base in Djibouti following the attacks on Sept 11, 2001.
It is also home to French and Japanese military bases.
Court extends Order to prohibit interference with DP World’s right to manage Doraleh Container Terminal S.A. (“DCT”).
DUBAI, United Arab Emirates, September 23, 2018 – The High Court of England and Wales in London has continued the injunction first made on 31 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 S.A. (“DCT”).
On 31 August, the Court issued a without notice injunction against PDSA, as shareholder in DCT, prohibiting the following actions:
Following a hearing on 14 September 2018, at which PDSA 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 (“LCIA”) that will be formed imminently to 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 JV Agreement, PDSA’s affiliates include the Government. The decision follows the enactment of an “emergency” ordinance by the President of Djibouti on 9 September. This ordinance purported to transfer PDSA’s shares in DCT to the Government of Djibouti.
PDSA is 23.5% owned by China Merchants Port Holdings Company Ltd of Hong Kong (“China Merchants”).
The Court further ordered that PDSA must ensure that any transferee of DCT shares is legally bound by the Joint Venture Agreement and Articles of Association in the same way as PDSA. The ruling means 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 confirmed last week it will continue to pursue all legal means to defend its rights as shareholder and concessionaire in the Doraleh Container Terminal in the face of the 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. We underline our belief that companies intending to operate in such a country or already operating there need to seriously consider their dealings with this Government in the face of such behaviour.”
The 2006 Concession Agreement that the Government 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 proceeding, the Government filed an arbitration against DP World seeking to rescind the Concession Agreement, claiming its terms were unfair to the Government and were procured through bribery. The LCIA tribunal (comprising Sir Richard Aikens, Lord Hoffmann, Peter Leaver QC) ruled against the Government, finding the terms were fair and there was no bribery. Certain counterclaims raised by DCT and DP World in relation to DP World’s exclusive right to container handling facilities in Djibouti remain to be decided by the Tribunal.
In a separate proceeding, another LCIA Tribunal (comprising Professor Zachary Douglas QC) 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 Government has not made any offer to compensate DP World.
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:
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.