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.
With unemployment rates in urban areas, at around 60 percent, a chronic problem, initial charges for uniforms were seen as astronomical.
DJIBOUTI CITY, Djibouti, September 11, 2018 – THE autocratic regime of President Ismaïl Omar Guelleh has yielded to public pressure to lower the price of uniforms for students at basic education level but this is seen as a smokescreen to divert attention from major issues afflicting the impoverished East African country
Minister of Education, Moustapha Mohamed Mahamoud, announced parents will pay some 2 000 Djibouti Franc (DJF) (equivalent to R171 or US$11,25) down from the initial 3 500 FDJ.
With unemployment rates in urban areas, at around 60 percent, a chronic problem, initial charges for uniforms were seen as astronomical.
Analysts believe the announcement, made on Monday as the students returned for the 2018/19 academic year, is only a ploy by government to deflect scrutiny from inherent failure to make available schools for the youth population as well as rampant drought, inadequate sanitation and food insecurity, all which have prevailed despite massive financial loans running into government coffers.
Critics lay the aforementioned problems on the lavishness of Gueleh, in power since 1999 at the death of his uncle Hassan Gouled Aptidon, who had been in power since independence from France in 1977.
His administration is synonymous with brutality against opposition and media and discrimination against persons with disabilities as well as restrictions on unions.
“The announcement of the reduction of uniform prices is all a smokescreen, coming in the criticism of the government’s extravagancy in the face of mounting social challenges,” said political analyst Beran Omar.
Mahamoud meanwhile portrayed the administration as thoughtful of the challenges by the populace.
Mahamoud said uniform prices had been slashed after Guelleh heard the grievances of parents.
“He gave clear instructions in this direction,” the minister said.
However, despite the government’s claimed commitment to education, net student enrollment at the primary level, representing the percentage of children of official school age who are enrolled in primary school, is around 60 percent, according to latest World Bank figures.
The number reveals an even more challenging situation with enrollment rates lower and dropout rates higher for girls, those living in rural areas and those living in poverty.
“Djibouti is not on track to meet the Millennium Development Goals and is at risk of remaining in a low-level equilibrium in terms of both access and quality (education) for years to come,” World Bank stated.
The tiny country of slightly less than 1 million people is also on the throes of an eruption of waterborne diseases and rampant food deficit. It is also enduring the aftermath of the Cyclone Sagar, which ravaged the region in May, with southeastern neighbor, Somalia, the epicentre.
Floods affected at least 15 percent of the capital Djibouti City.
Schools and other social infrastructure have been affected with the total damage estimated at $30 million
Some 20 000 children under the age of five, out of almost 200 000 affected people, are impacted by drought.
Djibouti has one of the world’s highest levels of malnutrition for children, particularly among those under the age of five living in rural areas.
Port Company also prohibited from replacing DP World directors in joint venture Company.
DUBAI, United Arab Emirates, September 5, 2018 – The High Court of England & Wales has granted an injunction restraining Djibouti’s port company, Port de Djibouti S.A. (PDSA), from treating its joint venture shareholders’ agreement with global trade enabler DP World as terminated. The High Court has further prohibited PDSA from removing directors of the Doraleh Container Terminal (DCT) joint venture company who were appointed by DP World pursuant to that agreement. PDSA is not to interfere with the management of DCT until further orders of the Court or the resolution of the dispute by a London-seated arbitration tribunal.
PDSA is owned in majority by the Government of Djibouti and its CEO is the Chairman of the Ports & Free Zones Authority of Djibouti. Hong Kong-based China Merchants is the minority shareholder in PDSA.
The High Court’s order follows the unlawful attempt by PDSA to terminate the joint venture agreement with DP World and the calling of an extraordinary shareholders’ meeting on 9 September by PDSA to replace DP World appointed directors of the DCT joint venture company. This is the third legal ruling in relation to the Doraleh Container Terminal following two previous decisions from the London Court of International Arbitration (LCIA), all of them in favour of DP World. It recognises that although PDSA is the majority shareholder of the DCT joint venture company, it is DP World that has management control of the company, in accordance with the parties’ legally binding contracts.
The new ruling against PDSA, issued by the Court without PDSA’s participation, makes clear that PDSA:
If PDSA disobeys the Court’s order and seeks to replace DP World nominated directors of DCT on 9 September, it may be in contempt of court and face a fine or the seizure of its assets and its officers and directors may be imprisoned.
The Court has ordered PDSA to present its defence at another hearing on 14 September.
Meanwhile, DP World is notifying Standard Chartered Bank so that the bank will reject any instructions that may be sent to them after the 9 September meeting. China Merchants, who have been given operational control of the Djibouti Freezone in breach of DP World’s exclusivity rights, will also be informed given its minority shareholding in PDSA.
China is actively positioning itself as a major supplier of arms to the African continent and is stepping up its shipments of weapons to conflict zones through Djibouti in the Horn of Africa.
LONDON, United Kingdom, September 3, 2018 – EXX Africa (https://www.EXXAfrica.com) published a special report on the secret Chinese arms trade in the Horn of Africa.
Download the report: bit.ly/2PvgfDy
Beyond the commercial objective of increasing sales of Chinese manufactured weapons and military equipment, China also seeks to control a greater share of the weapons trade in Africa in order to protect its extensive infrastructure investments on the continent. On the back of the One Belt, One Road initiative, China has made massive investments in East Africa, including railway lines, hydropower dams, and new port projects in countries such as Kenya, Sudan, and Ethiopia.
Central to this strategy is China’s military logistics base in Djibouti, which China is preparing to facilitate large-scale shipments of weapons and military equipment to African countries, in particular Sudan and South Sudan.
Djibouti’s own strategically important port, which lies in a major shipping lane, is also set to move towards the centre of the regional arms trade.
Following a new investigation that included collection of intelligence from well-placed security sector sources in the Horn of Africa, we have found evidence that Chinese weapons are making their way from the Chinese PLA Support Base in Djibouti and the commercial Port of Djibouti towards African conflict zones that have been placed under an arms embargo.
For any further comment or a full copy of the report, please contact https://www.EXXAfrica.com/
EXX Africa published a special report on the arms trade in the Horn of Africa.
LONDON, United Kingdom, September 3, 2018 – EXX Africa (EXXAfrica.com) published a special report on the arms trade in the Horn of Africa.
Download the report: bit.ly/2CcF7hr
The trade of illegal weapons implicates senior government officials in Djibouti, which suggests that the Doraleh port terminal, which is now under government control and suffers from porous customs checks, will increasingly be leveraged as an arms trade hub. However, the most significant flows of illegal weapons will continue to be moved in smaller dhows via the fishing communities in the south-east coast and via the Garacad port project.
So far, and over the past few years, the DP World operated Doraleh terminal was not used for arms trafficking. However, local intelligence suggests that the terminal, which is now under government control, may in future be leveraged as a processing center for the illegal arms trade.
There is some evidence that the Doraleh terminal will increasingly be used for the weapons trade. The Chairman of the Djibouti Ports and Free Zone Authority (DPFZA), Aboubaker Omar Hadi, is a close friend of Ali Abdi Aware, who is a three times presidential candidate of Puntland, as well as a very prominent businessman. They are jointly involved in a venture where Aware is personally in charge of former Yemen president Ali Abdallah Saleh’s bank CAC International. This bank is headquartered in Djibouti. Local intelligence suggests that Omar Hade helped with the registration of the bank and owns shares in it (“part of the investment components”). Moreover, Omar Hadi has established a bank branch in Bosaso that can launder money for underground institutions dealing with weapon imports from Yemen, as the bank hails from Yemen originally.
Aware is also very well established in the Guelleh government and he was the one who set up Puntland’s assistance to Djibouti donating 900 camels to Djibouti when it had an armed dispute with its Eritrean rival over the disputed Doumeira Islands. He also helped Djibouti secure an investment commitment for road construction from the Saudi government back in 2009 when late General Adde Muse Hersi was Puntland’s president.
Indeed, the trade in illegal weapons in Djibouti stretches t the highest echelons of the government. Local intelligence confirms that one company, which in the public version of this report will only be names as Company Z, is owned by the Guelleh family and handles arms trade. Company Z only deals with weapons imports into Somalia. Those same weapons are then often distributed to political factions backed by the government.
All this suggests that the Doraleh terminal will start to play a more prominent role in regional arms trafficking. Local intelligence suggests that the main port of Djibouti is not secure and that customs procedures are porous, which facilitates illegal shipments. Yet, since this terminal will remain one of Djibouti’s main import-export hubs, international scrutiny of cargo flows is high here, which will limit the port’s use as a weapons trade center. However, sources say that much of the illegal arms trade does not need to be moved through Djibouti’s main port. It is moved in smaller dhows via the fishing communities in the south-east coast.
Moreover, Djibouti is also now involved in the construction of Garacad Port. Djibouti became following a political disagreement with the Somali government with regards to the Eritrea-Ethiopia-Somalia rapprochement following the meeting between the Somali President and his counterpart Afewerki in Asmara. Djibouti are taking advantage of the Puntland disagreement with the Somali government here over the Garacad port. Prime Minister Hassan recently visited the region and was invited to the grand opening of the Garacad Project but refused to do so as the Somali government recently began the Hobyo port construction plan, only 90 km down the road.
There is a lot of tension between the Somali government and Djibouti over their involvement in this project. Local intelligence suggests that the Somali government is rightly worried about Djibouti using this as a base for moving weapons from the Gulf of Aden into Puntland and then onwards into Somalia proper (see previous comments on support for destabilising factions within Somalia such as al-Shabaab). Also, Garacad is a regional hotspot for weapons shipments landing, as it was pirate territory from 2008 – 2011. Boats disguised as fishing vessels still land there for smuggling purposes.
It is at Garacad that Djibouti plays its heaviest role in regional arms trafficking. The logistics, freight, and construction companies involved in the Garacad Port Project are often owned by senor Djibouti government officials and military officers. Most of the construction materials for the project will be transported overland from Djibouti or shipped to the coast off Garacad. There is ample opportunity here for weapons smuggling. Again, the UN Monitoring Group reports for this region include names of some entities which local intelligence suggests are still accurate.