DP World said its Doraleh Container Terminal was illegally seized Friday by the Djibouti government in attempts to force the terminal operator to renegotiate the terms of its concession.
DP World said the Djibouti government on Friday illegally seized control of its Doraleh Container Terminal.
The Dubai-based terminal operator said it “designed, built and, since 2006, operated the terminal pursuant to a concession awarded by the government in 2006.”
DP World holds a 33 percent equity stake in the port, which has a capacity to handle 1.25 million TEUs.
Seizure of the terminal under a decree from Djibouti’s president “is the culmination the government’s campaign to force DP World to renegotiate the terms of the concession,” DP World said.
The Doraleh terminal is the largest employer and biggest source of revenue in Djibouti, and has operated at a profit every year.
According to ocean carrier schedule and capacity database BlueWater Reporting, DP World Doraleh is called by 10 of the 14 direct region-to-region liner services that frequent the Port of Djibouti: the OCEAN Alliance’s Red Sea Express 2 (REX2); Maersk Line’s Horn of Africa and MECL loops; MSC’s Australia Express and jointly operated EPIC1/IPAK service with CMA CGM and Hapag-Lloyd; CMA CGM’s Mona Express, joint Swahili Express (SWAX2/GIA) with Emirates, and joint India Middle East Mediterranean Express (INDIAMED/IPM) with COSCO; and PIL’s Red Sea Gulf Service (RGS) and joint Red Sea Express (RSS/RES3) loop with COSCO and Yang Ming.
DP World said, “We demand that the government will cease its unlawful conduct and continue to work as partners with us in the same spirit of cooperation that has been in place for the last 18 years, which has yielded hundreds of millions of dollars of direct and indirect benefits to Djibouti and enhanced its attractiveness as a leading investment destination in East Africa.”
The terms of DP World’s concession were found “fair and reasonable” by a London Court of International Arbitration tribunal, the terminal operator said.
Since December 2017, Djibouti has sought to enforce the law against the concession contract, and made a final demand that the contract be renegotiated by Feb. 21, DB World said. On Thursday, the contract was terminated by presidential decree and the assets of the terminal were expropriated.
“We consider the law, the attempt of the government to enforce its terms, the purported termination and expropriation to be in breach of the government’s obligations under its agreements with us, in force since 2004, and international law,” DP World said, adding how Djibouti’s conduct was “oppressive and cynical.”
It said the country had failed in attempts to unravel the contracts by alleging they were corrupt both before the High Court of England & Wales and before an arbitration tribunal in London.
It said it commenced a new arbitration on Feb. 20, “seeking a declaration that the contracts are valid and binding on the government and to obtain urgent interim relief.”
Djibouti is holding legislative elections Friday, according to the Voice of America (VOA). It noted that there are “deepening concerns that democracy in the East African nation isn’t working” and that the main opposition party, the Movement for Democratic Renewal and Development (MRD), said it will not participate in the legislative elections.
The current president of Djibouti, Ismaïl Omar Guelleh, has held office for almost two decades, making him one of Africa’s longest serving leaders, according to the VOA.
“In the most recent presidential election, in 2016, he won more than 86 percent of the vote,” the VOA said. “He succeeded his uncle, who led for 22 years following independence from French colonial rule. The National Assembly, Djibouti’s legislative body, has 65 seats and also holds significant power. With the opposition boycotting the election, the candidates for the legislature will represent the ruling party.”
Despite being one of Africa’s smallest countries, Djibouti is strategically located where the Red Sea meets the Gulf of Aden. The U.S., France, China and Italy each have bases in Djibouti, “giving it an outsized footprint in a region with much larger economies and more advanced militaries,” the VOA said.
Djibouti government seizes container terminal
