(MENAFN- Khaleej Times)

The long-running legal battle between global port operator DP World and the government of Djibouti has taken a fresh turn after the London Court of International Arbitration (LCIA) confirmed that Djibouti acted illegally in seizing the Doraleh Container Terminal (DCT) from the Dubai-based logistics giant in 2018.

The tribunal's final ruling reinforces that DP World's 50-year concession agreement for the port remains valid and binding, while the African nation still owes the company hundreds of millions of dollars in damages.

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The LCIA ruling concludes one strand of arbitration involving Djibouti's state-owned Port de Djibouti SA (PDSA), but the dispute is far from over. The court said the 2018 seizure of DCT was unlawful, rejecting Djibouti's claim that it had the right to terminate the concession. However, it declined to award damages against PDSA, ruling that the harm was directly caused by the government rather than its corporate arm.

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As a result, DP World's broader $1 billion claims against the Government of Djibouti and its Chinese partner, China Merchants Port Holdings, remain active.

The Doraleh Container Terminal, located on the Red Sea coast near one of the world's busiest shipping routes, was jointly developed by DP World and PDSA under a concession signed in 2006 to manage and operate the facility for 50 years. In February 2018, the government abruptly terminated the agreement and forcibly took control of the terminal, accusing DP World of undermining national sovereignty-an allegation the company strongly denied. Since then, a series of international tribunals, including the LCIA, have ruled that Djibouti's expropriation was unlawful and that DP World was the rightful concessionaire.

DP World's total enforceable awards against Djibouti now stand at about $685 million, but the government has so far refused to pay, defying multiple binding decisions. The company said the government's continued refusal to honour international rulings amounts to contempt for the rule of law and undermines investor confidence in the country. Despite the latest LCIA verdict, Djibouti has continued to assert that it acted lawfully and that the dispute is over - a claim DP World dismissed as“false and misleading.”

In response to Djibouti's September 30 statement claiming victory, DP World issued a sharp rebuttal, clarifying that the tribunal's dismissal applied only to PDSA, not to the ongoing billion-dollar claims against the government and China Merchants. It said the case remains far from resolved, as the underlying question - Djibouti's liability for the illegal seizure and unpaid damages - still stands before other arbitration panels.

A DP World spokesperson said the ruling reaffirmed the company's faith in the global arbitration system and the sanctity of contracts.“Djibouti's claims are at odds with reality, proven time and again in independent international tribunals. It is extraordinary that the government continues to spread a false narrative despite overwhelming evidence. This undermines investor confidence, damages Djibouti's reputation, and ultimately hurts its people,” the spokesperson said.

DP World added that the case has significance beyond a commercial dispute - it represents a crucial test of whether governments can unilaterally tear up binding contracts with foreign investors and disregard international law. The company has invested billions of dollars in ports and logistics infrastructure across Africa, including in Senegal, Egypt, Mozambique and Somaliland. Industry experts say the Djibouti case has become a cautionary tale for global investors, illustrating how political interference and failure to respect arbitration rulings can threaten economic development and international credibility.

While the LCIA's latest verdict closes proceedings with PDSA, DP World's pursuit of justice continues. The company said it will exhaust all legal avenues to recover damages and ensure enforcement of prior awards.

The dispute, now in its seventh year, remains one of the most high-profile international investment arbitration cases in Africa - one that has come to symbolise the broader struggle between commercial contracts and sovereign power.

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