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Djibouti to pay $54m annually for not returning Doraleh terminal to DP World

AN arbitral tribunal of the London Court of International Arbitration (LCIA) has awarded $200,752,000 (Sh23 billion) in interim damages to DP World and joint venture company Doraleh Container Terminal for being excluded from the Doraleh terminal, Djibouti.

The damages cover the period from February 18, 2018, to December 31,  2020.

According to the AllAfrica news website, DP World’s rights, under a 2006 concession agreement, to operate the terminal remain valid and binding, leaving the door open to DP World being reinstated.
The damages stem from the illegal seizure by the Djiboutian government of the Doraleh terminal in February 2018 and comprise DP World’s lost dividends, management fees and interest, in the sum of $164,594,955, as well as compensation for cash balances illegally taken by the Djiboutian government from Doraleh Container Terminal, in the sum of $36,158,028.

This is yet another in a string of several rulings from the LCIA and the High Court of England and Wales over the last four years, all in DP World’s favour.

To date, all have been ignored by Djibouti despite the concession remaining valid and in force, under English law.

With the effect of this latest ruling that Djibouti’s illegal actions are accruing liability for damages in excess of USD 54 million per year, DP World remains optimistic that Djibouti will see the light and recognise that it must respect its legal obligations.

Meanwhile, on 14 January 2022, the Court of Appeal of Hong Kong dismissed an appeal filed by China Merchants upholding a decision that DP World’s suit against China Merchants should be heard before the Hong Kong Courts.

DP World and Doraleh Container Terminal are bringing multi-billion dollar claims against China Merchants alleging that it induced the government of Djibouti to expel DP World from the country and hand over the Doraleh terminal to China Merchants.

China Merchants surprisingly argued that the case should be heard by the Djibouti courts, notwithstanding that Hong Kong is its home jurisdiction.

The Hong Kong Court of Appeal agreed with DP World’s arguments that the case should proceed in Hong Kong and ordered China Merchants to pay its legal costs.

Having sought to delay the proceedings for nearly three years, China Merchants must now file its defence by 11 February 2022.

The Doraleh Container Terminal is the largest employer and biggest source of revenue in the country and has operated at a profit every year since it opened.

The Doraleh Container Terminal was found by an English court to have been a “great success” for Djibouti under DP World’s management.

 

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