Djibouti’s government has opened legal proceedings against DP World to rescind the Dubai-owned port operator’s 20-year concession in the Doraleh Container Terminal, Africa’s largest container handling facility, in an unexpected dispute over how the contract was awarded.
The legal case was brought before the London Court of International Arbitration after a statement from the government of Djibouti informed DP World that it had rescinded the operator’s concession over alleged bribes paid by the operator while securing the contract.
“We categorically reject the allegations made and will vigorously defend our position during the arbitration procedure,” refuted DP World in its own statement.
“We are disappointed that the Djiboutian government has chosen to take this action after working so closely with us as partners over the past 14 years. We have invested significantly in Djibouti over those years and have been a major contributor to its economy and to its community.”
DP World operates some 65 ports around the world, mostly in emerging markets, and owns a third of the Doraleh Container Terminal, which is both the largest and most technologically-advanced container terminal on the continent and Djibouti’s biggest employer.
In September Djibouti President Ismail Omar Guelleh also officially launched a $300m expansion of the DP World terminal aimed at further relieving the Port of Djibouti by adding, in its first phase, a 1,200m-long port with seven berths for ships and a 12 million tonne annual cargo capacity.
In the current quite unexpected dispute, though no evidence of irregularities or wrongdoing has yet been presented, the case follows a litany of legal actions against the Dubai-based Abdourahman Boreh, the chairman of the Djibouti Ports and Free Zones Authority between 2003 and 2008.
Djibouti claimed in its statement that it had uncovered evidence of “financial incentives” between DP World and Boreh while the latter was involved with “negotiating the Doraleh Container Terminal concession agreement with DP World, as well as afterwards.”
It remains to be seen whether there is any substance to the allegations, but in October 2013, the Dubai International Financial Centre Courts enforced their first ever asset freeze order on Boreh on the basis of a ruling in a foreign court, restricting $5m within the free zone.
Sir David Steel, the DIFC judge in the case, said there was “a real risk of dissipation of assets” following a London court order the month before for a worldwide freezing of Boreh’s assets, which are estimated at some $111.5m.
DP World and Emirates National Oil Company (Enoc), the two Dubai companies that have shareholdings in the Doraleh Container Terminal, were not party to this separate action.
Djibouti’s government ratified its agreements with DP World to establish the Doraleh Container Terminal in a joint venture in 2006 and signed an initial 30-year concession for the operation of the facility, which subsequently opened on 15th December 2008.
DP World will continue to run and manage the Doraleh facility while the case is pending.