In a continuing battle between two companies majority owned by the governments of Dubai and Djibouti, a British court has granted an injunction restraining Djibouti’s port company, Port de Djibouti S.A. (PDSA), from treating its
joint venture shareholders’ agreement with the global port operator DP
World as terminated.
PDSA is majority owned by the government of Djibouti, with Hong
Kong-based China Merchants as a minority shareholder.
DP World is majority owned by the government of Dubai through its global holding company Dubai World. DP World was granted a concession in 2006 to build and operate the Doraleh Container Terminal in Djibouti’s capital city, also named Djibouti. DP World owned a 33 percent equity stake in the terminal.
In February 2018, the government of Djibouti seized the terminal and terminated the concession agreement, alleging it “contained severe irregularities and threatened the national
interest and sovereignty of Djibouti.”
Djibouti said, “International law recognizes the ability of a sovereign nation to
unilaterally cancel a concession contract on the grounds of public
interest, subject to the payment of fair compensation to the other
party.”
DP World contends its contract “remains in full force and effect.”
A statement issued by the government of Dubai on Wednesday said if PDSA disobeys the court’s order and seeks to replace DP World-nominated directors of the container terminal at a shareholders meeting on Sept. 9, “PDSA may be in contempt of
court and face a fine or the seizure of its assets and its officers and
directors may be imprisoned.”
Dubai said the High Court ruling was issued “without PDSA’s participation” and “makes clear that PDSA cannot act as if the joint venture agreement with DP World has been terminated, cannot appoint new directors or remove DP World’s nominated directors without its consent, cannot instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti.”
Dubai said the court ordered PDSA to present its defense at another hearing on Sept. 14.