Djibouti nationalises port terminal amid row with Dubai
NAIROBI - Djibouti has ordered the nationalisation of the Doraleh Container Terminal (DCT), a vital port facility, after a long spat with leading global operator Dubai Ports World.
The terminal is an essential facility for supplies to neighbouring landlocked Ethiopia. The Djibouti government had a two-thirds stake in the venture but claimed that the terminal had come under the de facto control of DP World.
On Monday, the Djibouti government announced it had taken control of all shares of Port de Djibouti SA (PDSA), an entity that owns a two-thirds stake in the company that operated the terminal. The other third of the company that ran the port is owned by DP World, which is majority owned by the Dubai government.
"The Republic of Djibouti following a presidential decree dated September 9, has decided to nationalise with immediate effect the shares," a statement said Monday.
The Sept. 9 order from the office of Djibouti's President Ismaïl Omar Guelleh called for the immediate nationalization of all the shares and social rights of PDSA in the Doraleh Container Terminal.
The Doraleh terminal is now being run by a public company that is solely owned by the Republic of Djibouti, the government said. It said the government would name a new set of company officials.
The terminal was run by DP World since 2006. But in late February Djibouti cancelled the contract saying its national sovereignty was being compromised.
Djibouti said it terminated the contract due to what it calls “severe irregularities.”
It says the contract was prejudicial to the country's development and its ability to control its most strategic infrastructure asset.
Dubai says the move is illegal and has lodged a case at the London Court of International Arbitration (LCIA).
It also says an injunction issued by the High Court of England and Wales on Sept. 5 means that Djibouti cannot interfere in the terminal's management, or name new directors without the approval of DP World, until further orders of the Court or the resolution of the dispute by the LCIA.
That was the third legal ruling in relation to the DCT following two previous decisions from the LCIA, all of them in favor of DP World.
DP World said Tuesday it will pursue all "legal means" to defend its claim to the DCT.
The Dubai-based firm said Tuesday that nationalising Doraleh amounted to "an attempt to flout an injunction of the English High Court," which barred Djibouti authorities from taking control over the facility.
The concession agreement between DP World and Djibouti signed in 2006 is governed by English law and through the LCIA, the port operator said.
Djibouti has accused the Gulf state of waging a judicial and media "guerrilla" war.
“DP World’s ‘strategy,’ which consists in trying to oppose the will of a sovereign state, is both unrealistic and destined to fail,” the government of Djibouti said in its statement.
Djibouti's government said it had not been warned that DP World had initiated any legal proceeding and described the injunction as “merely a provisional measure.”
“A fair compensation outcome is the only possible option for DP World, in line with the principles of international law,” the government said.
The fight over the Doraleh terminal highlights the growing strategic importance of Djibouti, which is close to some of the world’s busiest maritime shipping lanes in the Red Sea and Gulf of Aden connecting Asia, Africa and Europe, the gateway to the Suez canal.
Djibouti's proximity to volatile regions in the Middle East and Africa also makes it strategically important to military superpowers, including the US and China, who have set up military bases here.
Currently, Hong Kong-based China Merchants Port Holdings Company also owns a 23.5-percent stake in the Doraleh facility.