DP World said Thursday that it will be reviewing its options after the London Court of International Arbitration ruled that Djibouti’s seizure of the Doraleh Container Terminal in February violates the “valid and binding” agreement to operate the strategic port near the Bab al-Mandab Strait.
The LCIA decision finds that laws passed by Djibouti concerning DP World’s 30-year agreement to operate Doraleh were “devices enacted by Djibouti to seek to evade Djibouti’s contractual obligations, and these have been found to be ineffective in law,” according to a statement issued by the Dubai-based global shipping company.
The new ruling follows a previous LCIA decision to uphold the existing terms of that agreement, which began in 2006. DP World said the February 22 seizure of port operations was a breach of the agreement and a violation of international law, and followed a final unsuccessful demand from Djibouti to renegotiate the contract.
The decision comes amid strategic shifts in the Horn of Africa, where renewed diplomatic relationships among Eritrea, Ethiopia and Somalia are a foundation for emerging port deals including a Somali-Ethiopian Red Sea partnership announced in June. Djibouti, still immersed in a decade-long border dispute with Eritrea, has bristled at some developments including Somalia’s recent call to end United States sanctions imposed on Asmara.
Djibouti’s position is further complicated by regional interests beyond those of China and the United States, both sparring over the future of Doraleh earlier this year. That geopolitical landscape also includes port investments by the United Arab Emirates and Turkey. The latter’s USD$650 million deal to develop Sudan’s Red Sea island port of Suakin sparked concerns in Egypt – aligned with Saudi Arabia and the UAE in opposition to Qatar’s interests – with the region closely watched by Iran as well.
Image: DP World file