The London Court of International Arbitration (LCIA) has ruled that the Djibouti government’s seizure of Doraleh Container Terminal (DCT) from DP World in February 2018 was illegal.
An arbitral tribunal ruled that DCT’s concession agreement remains “valid and binding” notwithstanding a law and several decrees, which were meant to empower the government to terminate its infrastructure agreements.
Law 202 and the 2018 Decrees were found to be ineffective in law by the tribunal, comprised of Professor Zachary Douglas QC.
DP World, which designed, built and operated the terminal following a concession awarded in 2006, will now reflect on the ruling and review its options.
The facility is the largest employer and biggest source of revenue in the country, has operated at a profit every year since it opened.
In February 2018, the Djibouti government said it had the legal right to assume management of the terminal, stating that the original agreement was for a joint venture between DP World and Port Autonome International de Djibouti, with the former owning a 33.3% stake and the latter taking the remainder.
It added that since 2008, DCT has only achieved 57% of its total capacity and claimed the operator was deliberately slowing down operations at DCT in favour of its main terminal in Jebel Ali.
At the time, it also hit out at “irregularities” in the operational agreement and restrictions on Djibouti developing new ports, which it declared were “a serious threat to Djibouti’s national sovereignty”.