Djibouti ‘dismisses’ UK court decision on port management

Friday 10th August, 2018
Ismael Omar Guelleh Djibouti

By Desmond Davies, GNA London Bureau

London, Aug 10, GNA – The government of Djibouti is refusing to accept a British court decision on who controls the Doraleh Container Terminal (DCT) it took over in February, this year.

The London Court of International Arbitration (LCIA) has ruled that the decision by the government to take control of the Terminal from DP World which has had the concession to operate it since 2006 is illegitimate.

DP World designed and built the DCT - the largest employer and biggest source of revenue in that country.

The company said it had operated the terminal at a profit every year since it opened, and had been found to have been a “great success” for Djibouti.

However, the government attempted to renegotiate the terms of the DP World concession, claiming that as it stood it was inimical to the nation’s economic welfare.

Doraleh enjoys a strategic location at the crossroads of the main shipping lanes connecting Asia, Africa and Europe.

The port lies on the major east-west trade route and provides a secure hub within the region for transhipment and relay activities.

A government statement said after the court ruling that: “The implementation of this concession contract has proved to be contrary to the fundamental interests of the Republic of Djibouti.

The continuation of the concession contract was seriously prejudicial to the country's development imperatives and to the control of its most strategic infrastructure.

Several attempts to renegotiate the concession with DP World, initiated by the government, were unsuccessful because of DP World's repeated refusal to hear the legitimate objections and requests of the Djiboutian state.”

The government argued that since parliament in Djibouti had passed legislation in November, last year, to terminate the contract, English law had no precedence over this.

“The Republic of Djibouti does not recognise this arbitral award, which consists in qualifying the law of a sovereign state as illegal,” the government statement said.

“Indeed, the arbitral award seems to consider that the terms of the concession contract entered into between the Port of Djibouti and DCT are above Djiboutian law.

It disregards the sovereignty of the Republic of Djibouti and takes no account of public international law rules.”

“Following the arbitral award’s reasoning, it is also understood that a sovereign state would not have the right to terminate a contract the implementation and performance of which is considered contrary to its fundamental interests, but would however authorise the other party to it (DP World) to terminate the said contract to protect its commercial interests.”

“In other words, a contract would have a higher value than a law adopted in the name of a sovereign nation,” the government statement added.

DP World argued, however, that the British court’s decision in its favour “is based on recognised principles of international law and is internationally binding both on the Djibouti government and so far as third parties are concerned”.

The company said in a statement: “As the court has held, Djibouti does not have sovereignty over a contract governed by English law”.

“It is well established that, in the absence of an express term to that effect, an English law contract cannot be unilaterally terminated at will. “The contract therefore remains in full force and effect.”

“The Djibouti government’s repeated statements that the port concession has proved contrary to the fundamental interests of the Republic of Djibouti do not bear scrutiny.”

“As the Court’s decision records, the government’s own representatives have given evidence that the port has been ‘a great success for Djibouti.”

“The terms of the concession have also been held in two previous cases brought by the government itself to have been ‘even-handed and fair’.

“In light of that indisputable success, and the fair and reasonable terms of the concession, the government’s attempts to terminate it cannot have anything to do with the fundamental interests of the people of Djibouti,” DP World added in its statement.

Djibouti itself had turned to the British Commercial Court in 2012 when it was pursuing multi-millionaire Djiboutian businessman, Abdourahman Boreh, who had brokered the DCT deal with DP World.

The government accused him of fraud, bribery and corruption relating to the DCT, charges that were denied by Mr Boreh who said the claims were politically motivated.

After a five-year legal battle in the British courts, including an appeal by the Djiboutian government, which spent almost US$70 million in legal fees, Mr Boreh was cleared of all charges.

Mr Boreh told the GNA in 2017: “I feel vindicated by the ruling, although the sad thing was that having brought a world-renowned port management company to Djibouti to help in its port development, the government then decided to make allegations against me and DP World that were not true.”

GNA