Djibouti disputi: A London court orders Djibouti to pay port operator DP World $533m

A London court awarded DP World $533m after the port of Djibouti unlawfully seized control of one of its key shipping channels.

April 15, 2019

A court in London awarded the Dubai global ports operator, DP World, $385m for the government of Djibouti’s plan to block it from doing business at the Doraleh Container Terminal (DCT) in the horn of Africa.

This isn’t your drunk uncle’s seaport… the Port of Doraleh is an important gateway to the Gulf of Aden, and a key route for global shipping operations (It’s the most profitable extension of the Port of Djibouti)– and DP World built it.

For reneging on the deal, Djibouti will also pay an additional $148m in unpaid royalties and legal costs, bringing the total fine to $533m.

Lost on legal island

The Court of International Arbitration ruled that Djibouti breached the rights of DP World to manage the DCT when, last year, it ended a 30-year agreement after just 12 years.

The 2006 deal gave DP World the clearance to exclusively design, build, and manage the DCT (which officially became operable in 2009).

But following various disputes over the agreement, Djibouti launched an arbitration case in 2012, accusing DP World of offering bribes to secure the deal. The port operator denied the allegations.

Then, the tipping point

Last year, a month after Djibouti canceled its contract with DP World, the government of Djibouti took ownership of all shares held by Port de Djibouti, accusing DP World of employing the terminal for its own interest and causing harm to the country’s growth.

The fight comes as Djibouti (and its Chinese backers) aims to become the largest trading port in Africa.

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