Containers at a port in Djibouti. Djibouti’s port company was directed by a court not to interfere with the management of the joint venture with DP World until further orders from the court or until the dispute is resolved by a tribunal. Image Credit: Gulf News Archives

Dubai: The High Court of England and Wales issued a restraining order to stop the government of Djibouti from terminating its deal with Dubai’s DP World to operate a port in the African country.

The High Court prohibited Djibouti’s port company, Port de Djibouti S.A., from removing the directors appointed by DP World to head a joint venture company in Djibouti. Port de Djibouti S.A. is also not to interfere with the management of the joint venture until further orders from the Court or until the dispute is resolved by a tribunal.

33%
was to be DP World’s ownership of the terminal

The ruling is for the dispute between DP World and government-owned Port de Djibouti, which in late February illegally seized control of the Doraleh Container Terminal from a DP World entity that built and operated the terminal. Port de Djibouti later gave operational control of the Djibouti Freezone to China Merchants Group in breach of DP World’s exclusivity rights.

DP World at the time said the government appeared to be terminating the concession deal, and described the actions as “unfortunate” and “illegal.”

DP World won a concession deal to design, build, and operate the container terminal in 2006. Under the deal, Djibouti’s government retains 67 per cent ownership of the terminal, while DP World owns 33 per cent.

The latest ruling is the third one on the Doraleh Container Terminal following two previous decisions from the London Court of International Arbitration that were also in favour of DP World.

In early August, the London Court of International Arbitration ruled that the Djibouti government’s seizure of control of the terminal from DP World was illegal, but the government refused to acknowledge the ruling. DP World responded, saying the government’s refusal means it does not “recognise the international rule of the law.”

Less than a month earlier, Djibouti opened the first phase of the Chinese-built International Free Trade Zone, a move DP World described at the time as being in violation of its exclusive management rights.

As per the latest ruling, if the Port de Djibouti violates the court order and seeks to replace DP World-nominated directors, it may be in contempt of court and face a fine or the seizure of its assets. Its officers and directors may also be imprisoned.

Additionally, the ruling says that Port de Djibouti cannot act as if the joint venture agreement with DP world has been terminated, and cannot appoint new directors without DP World’s consent.

The English court ordered Port de Djibouti to present its defence at another hearing on September 14.