(MENAFN- Khaleej Times) Violating international norms, Djibouti's government has illegally seized control of Doraleh Container Terminal from DP World, forcing the Dubai-based company to resort to London Court of International Arbitration to protect its rights.
As part of an agreement between the two parties, DP World designed, built and operated the terminal since 2006, which resulted in creation of thousands of direct and indirect jobs in the East African nation.
According to DP World, Doraleh Container Terminal has been operating at a profit since its opening and the African government was on a campaign, of late, to force it to renegotiate the terms of the concession. The two parties had signed the concession agreement for 30 years.
But the government of Djibouti violated the agreement and issued a final demand that the contract be renegotiated by February 21, 2018, and terminated that contract by presidential decree on February 22, 2018, and expropriation of all of the assets of Doraleh Container Terminal.
"The government's (of Djibouti) conduct is particularly oppressive and cynical. The government only recently failed in its attempts to unravel the contracts by alleging the contracts were corrupt both before the High Court of England & Wales and before an arbitral tribunal in London (comprising Sir Richard Aikens, Peter Leaver QC, Lord Hoffman), which dismissed the government's allegations that the contracts were unfair in their entirety," DP World said in a statement.
DP World said it had commenced arbitration proceedings before the London Court of International Arbitration to protect their rights, or to secure damages and compensation for their breach or expropriation.
DP World said Djibouti government's decision will not impact its finacials.
However, Djibouti government's move to seize the port will impact foreign direct investment inflows into the African nation that seeks to improve government finances and create more job opportunities for its citizens as it strives to become the commercial hub for Eastern Africa.
DP World stock closed slightly up at $25.10 a share on Thursday.
The terminal - where DP World holds a 33.33 per cent stake - is one of the most technologically advanced container terminals in the African continent and is just 11km south of International Autonomous Port of Djibouti. Its lies on the major East-West trade route with minimal deviation.
The global ports operator DP World asked the government of Djibouti to cease its unlawful conduct and continue to work as partners in the same spirit of cooperation that has been in place for the last 18 years.
Recently, the Dubai firm signed $3 billion worth of agreements with India's National Investment and Infrastructure Fund, reflecting the company's professional expertise in running port operations of the world.
In 2017, DP World handled 70.1 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals in the full year of 2017, with gross container volumes growing by 10.1 per cent year-on-year. From its Europe, Middle East and African region, it handled 29.35m TEUs last year as compared to 26.33 million TEU in the previous year.
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