Djibouti, DP World spar over new Doraleh terminal ruling

By AT editor - 6 August 2018 at 12:05 am
Djibouti, DP World spar over new Doraleh terminal ruling

The government of Djibouti and the Dubai-based DP World firm exchanged fire in a battle of words at the weekend, following the London Court of International Arbitration (LCIA) ruling on Friday that Djibouti’s seizure of the Doraleh Container Terminal violates the parent company’s “valid and binding” agreement to operate the strategic port near the Bab al-Mandab Strait.

The new LCIA decision on Djibouti’s February 2018 lockout of DP World, after unsuccessful demands to renegotiate its contract, followed a previous LCIA decision to uphold the existing terms of an agreement that began in 2006. Djibouti again said it refuses to accept the LCIA ruling in a release issued late Friday.

“The Republic of Djibouti does not recognize this arbitral award which consists in qualifying the law of a sovereign state as illegal,” the government said, referring to legislation passed by Djibouti’s parliament that would make the contract termination legal in the context of protecting state interests.

“Indeed, the arbitral award seems to consider that the terms of the concession contract, entered into between the Port of Djibouti and DCT, are above Djiboutian law. It disregards the sovereignty of the Republic of Djibouti and takes no account of public international law rules,” the government added.

That drew a response from DP World on Saturday condemning Djibouti’s failure, they said, to recognize international law. “Djibouti does not have sovereignty over a contract governed by English law,” the company said. “It is well established that, in the absence of an express term to that effect, an English law contract cannot be unilaterally terminated at will. The contract therefore remains in full force and effect.”

The frosty exchange is the latest in the parties’ dispute over the 30-year agreement to operate the Doraleh terminal. It also 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 with Eritrea and 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

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