Court hits Port de Djibouti with restraining order

Djibouti’s port company, Port de Djibouti
S.A. (PDSA), has been restrained from treating its joint venture
shareholders’ agreement with global trade enabler DP World as terminated

 

The restraining order was granted by the High Court of England & Wales which

further prohibited PDSA from removing
directors of the Doraleh Container Terminal (DCT) joint venture company
who were appointed by DP World pursuant to that agreement.

 

PDSA is not to interfere with the
management of DCT until further orders of the Court or the resolution of
the dispute by a London-seated arbitration tribunal.

 

PDSA is owned in majority by the
Government of Djibouti and its CEO is the Chairman of the Ports &
Free Zones Authority of Djibouti. Hong Kong-based China Merchants is the
minority shareholder in PDSA.

 

The High Court’s order follows the
unlawful attempt by PDSA to terminate the joint venture agreement with
DP World and the calling of an extraordinary shareholders’ meeting on 9
September by PDSA to replace DP World appointed
directors of the DCT joint venture company.

 

This is the third legal ruling in
relation to the Doraleh Container Terminal following two previous
decisions from the London Court of International Arbitration (LCIA), all
of them in favour of DP World.

 

It recognises that although PDSA is the
majority shareholder of the DCT joint venture company, it is DP World
that has management control of the company, in accordance with the
parties’ legally binding contracts.

 

The new ruling against PDSA, issued by
the Court without PDSA’s participation, makes clear that PDSA could not
act as if the joint venture agreement with DP World has been terminated.

 

Also it could not appoint new directors
or remove DP World’s nominated directors without its consent and also
could cause the DCT joint venture company to act on the “Reserved
Matters” without DP World’s consent.

 

“It cannot instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti.’’

 

If PDSA disobeys the Court’s order and
seeks to replace DP World nominated directors of DCT on 9 September, it
may be in contempt of court and face a fine or the seizure of its assets
and its officers and directors may be imprisoned.

 

The Court has ordered PDSA to present its defence at another hearing on 14 September.

 

Meanwhile, DP World is notifying Standard
Chartered Bank so that the bank will reject any instructions that may
be sent to them after the 9 September meeting.

 

China Merchants, who have been given
operational control of the Djibouti Freezone in breach of DP World’s
exclusivity rights, will also be informed given its minority
shareholding in PDSA.