Doraleh Container Terminal SA (DCT), a Djibouti port operator owned 33.34% by DP World Group, and 66.66% by Port de Djibouti S.A., an entity of the Republic of Djibouti, succeeded in the London Court of International Arbitration against the Republic of Djibouti.
Specifically, the Court discovered that by developing new container port opportunities with China Merchants Holdings International Co Limited, a port operator based on Hong Kong, Djibouti has breached DCT’s rights under its 2006 Concession Agreement to develop a container terminal at Doraleh, in Djibouti, specifically, its exclusivity over all container handling facilities in the territory of Djibouti.
Therefore, Djibouti is ordered to pay DCT $385 million plus interest for breach of DCT’s exclusivity by development of container facilities at Doraleh Multipurpose Terminal, with further damages possible if Djibouti develops a planned Doraleh International Container Terminal (DICT) with any other operator without the consent of DP World.
The Tribunal stated
In respect of the development of the Djibouti Multipurpose Port facility, the facts are clear. At no stage before the decision was made to go ahead with that facility with China Merchants did … Djibouti … offer … DCT … the right to develop the proposed container facilities at the DMP. Djibouti was therefore in breach of clause 3.6.3 of the [Concession Agreement]
Moreover, the Court ordered Djibouti pay DCT $148 million for non-payment of royalties for container traffic not transferred to DCT once it became operational. Djibouti is also ordered to pay DCT’s legal costs.
In the meantime, the Tribunal’s Award highlights that the 2006 Concession Agreement remains valid and binding, which has also been confirmed by an additional LCIA arbitration tribunal and London Courts.
DCT and DP World continue to seek to uphold their legal rights in a number of legal fora, following Djibouti’s unlawful efforts to expel DP World from Djibouti and transfer the port operation to Chinese interests. Litigation against China Merchants also continues before the Hong Kong courts. DP World has previously issued public notices, following the confirmation of the validity of the 2006 Concession Agreement in a judgment in 2018, warning others against interfering with its and DCT’s concession rights.
