Wow: International Court orders Djibouti to pay $400 million to DP world .

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A London-based international court has ordered Djibouti to pay $385 million in compensation to UAE global ports operator DP World over a breach of contract, the Dubai government said on Thursday.

The London Court of International Arbitration also ordered the African nation to pay interest for unilaterally scrapping a 50-year concession contract with state-owned DP World to manage and develop Doraleh Container Terminal, a statement said.

The ruling gave DP World the right to claim further possible damages if Djibouti goes ahead with plans to develop the container port with any other operator, the statement said.

The Horn of African nation, which controlled a two-thirds stake in Doraleh, nationalised the joint venture in September after scrapping the concession agreement, claiming that the terminal had effectively come under the control of DP World.

The terminal is an essential facility for supplies to neighbouring landlocked Ethiopia.

It had been run by DP World since 2006, but in late February Djibouti cancelled the contract, saying its national sovereignty was being compromised.

Currently, Hong Kong-based China Merchants Port Holdings Company owns a 23.5-percent stake in the facility.

DP World operates some 80 terminals and logistics centres in around 40 countries and is involved in scores of terminal development projects.

The Dubai government said DP World is engaged in another legal battle with Djibouti over a free trade zone in the same area.

It said that China Merchants Co. operates the $3.5 billion free trade zone that DP World had developed under an agreement with Djibouti.

AFP





How will this dispute be resolved because that a good percentage of DJB GDP

@amboli
 

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LOCKED HORNS AND BAD BLOOD IN DJIBOUTI




DP World’s unceremonious eviction from Djibouti sends a chilling message to other foreign investors. Alex Hughes reports

DP World’s decision, announced in February, that it is to sue China Merchants in Hong Kong’s High Court over the Djibouti debacle caused major shock waves in the global terminal operator sector. The Dubai-based operator is accusing the Hong Kong-headquartered company of causing the Djibouti government to unilaterally revoke its concession to handle containers at the Doraleh Container Terminal (DCT) in the Port of Djibouti.

Olivier Milland, senior analyst for sub-Saharan Africa at A2 Global Risk, tells Port Strategy that the move by the authorities in Djibouti to effectively re-nationalise the commercial port is highly unusual. But he acknowledges that the relationship between the company and the state had been “shaky for several years prior to last year’s decision to expropriate the port concession”.

Indeed, bad blood first emerged in 2014 when the government accused DP World of having paid bribes to a prominent Djiboutian businessman, Abdourahman Boreh, in order to win contracts. However, there was much speculation at the time of a political motivation behind those proceedings, following a very public falling-out between the president and the businessman.

To make matters worse, China Merchants has held a one-third stake in Port of Djibouti throughout this whole process meaning that it clearly has had some behind-the-scenes influence in the ousting of DP World, although Mr Milland concedes that it is difficult to gauge exactly what that influence has been.

“Given Djibouti’s strategic location and its modern port facilities compared to other countries in the region, it is a possibility that it did play a role, albeit indirectly through a position of influence rather than interference. But that is merely analytical speculation at this point,” he says.

Nevertheless, Mr Milland says that the latest move by the government could also have been prompted by its fears that DP World was under-investing in the port in favour of other ports the Dubai-based company operates on the Red Sea, which was its official explanation.

“It is ultimately up to the decision-makers to explain why they moved to seize control of the port and ultimately DP World’s shares; only they really know exactly what motivated them,” he says.

Pyrrhic victories

The row with businessman Abdourahman Boreh, who was then in charge of the country’s free trade zone, eventually went to international arbitration, with a London high court making a very high profile ruling against the government’s claim in 2016.

The seizure of DCT also ended up at the London Court of International Arbitration (LCIA), which again found in favour of DP World, although Mr Milland believes these may have been pyrrhic victories at best.

“I don’t think there is a possibility that DP World will now return to Djibouti, unless the company meets both the government’s and the state-owned company’s demands for further investment in the DCT port terminal to meet growing demand. And that” – given the recent decision by DP World to take legal action against China Merchants in Hong Kong – “now seems very unlikely,” he says.

Significantly, DP World has invested in other ports in the region. These include the ports of Berbera, Republic of Somaliland, and Bosaso in Somalia’s autonomous Puntland region. The latter is being operated by the company’s subsidiary P&O Ports, which is looking to modernise it. In this, it very much has the backing of Ethiopia, since Ethiopian businesses currently have to ship 95% of their goods through Djibouti’s ports.

“It would therefore be understandable if DP World looked for business opportunities elsewhere,” says Mr Milland.

The Djiboutian authorities have moved quickly to replace DP World, inviting in new investment partners from Asia. Asked what message this sends to potential investors in Djibouti, Mr Milland points out that “the decision to nationalise a key port and allow in a major Chinese investor is likely to spook some Western investors. This is particularly so during a period when competition is growing between Australia, New Zealand, the EU and US on one side, and China, Russia and their allies on the other.”

PwC Africa ports expert Andrew Shaw adds that Djibouti is one of the fastest growing countries in the Horn of Africa, therefore its interest for investors cannot be overstated.

Government concerns

Mr Milland notes that competition is epitomised through infrastructure developments in Africa in particular, but even more so along Beijing’s Belt and Road Initiative where Djibouti is a key point connecting the Horn of Africa to the rest of the world.

“The government’s actions to nationalise the port despite two LCIA rulings against it, and its intention to continue to expand DCT with Chinese operators, set a worrisome precedent in the country. It suggests that long-term contracts are at risk, even under the same administration, and might even mean that those with long-running relationships with the government could be quickly side-lined without any clear reason,” says Mr Milland.

Chinese investors have already begun construction of a free trade zone within the Port of Djibouti, partially on land that formed part of the DP World concession. Chinese investors are present across Sub-Saharan Africa, and especially so in the Horn of Africa. “Since a lot of their investment is in critical infrastructure, their presence in Djibouti does not strike me as surprising; in fact, it makes sense,” says Mr Milland.

He adds that it also makes sense from a historical perspective, in that the Chinese have been present in Djibouti for many years, and the relationship between both governments is close; for instance, Djibouti hosts China’s only overseas military base. China also pursues close ties with Ethiopia, where Chinese construction companies have built the African Union headquarters and a standard gauge railway between Addis Ababa and Djibouti City.

“The problem is that other investors from other parts of the world are facing increasingly tough competition from investors from China and that is likely to damage Djibouti’s relations with investors from other countries that have a long-running presence in Djibouti, such as France or the US, with which it also pursues close ties.”

Strategic move

The move to invest in Djibouti also reflects a much broader trend in Chinese investment, which initially concentrated on countries that had much needed raw materials.

“Djibouti may not hold a lot of natural resources, but it is situated in a highly strategic location, through which 12%-20% of global trade passes, and a lot of Chinese goods are shipped to ports on the Red Sea,” says Mr Milland.

He also notes that, for security purposes, Djibouti is also strategic in that it lies mid-way between the Middle East and Sub-Saharan Africa. This location could help air-based missions in the Levant or Yemen but also act as a launch for vessels to fight maritime threats from pirates in the Gulf of Aden or in the Indian Ocean. These launchpads could additionally be used to protect commercial shipments, for instance for oil coming from the Gulf.

Both DP World and China Merchants were asked to contribute to this article, but neither responded.

 

CaliTedesse

I ❤️ Islam & Aabo Kush. Anti-BBB Anti-Inbred
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DP can't do China anything. It's like a dog barking at a elephant.
 

DRACO

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DP can't do China anything. It's like a dog barking at a elephant.
London international court of arbitration can seize Djibouti’s bank accounts , investments and properties around the world . It’s also suing corrupt in Guelleh in Hong Kong .
 
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CaliTedesse

I ❤️ Islam & Aabo Kush. Anti-BBB Anti-Inbred
VIP
London international court of arbitration can seize Djibouti’s investments / properties around the world . It’s also suing corrupt in Guelleh in Hong Kong .
That fat man Guelleh is in for a treat
 
Funny thing is if the corrupt elite in SL/PL try the same thing I don't think DP World can do anything about it. Considering they're not considered "countries" and the FGS publicly forbade them from operating.

Though that's probably the reason the ports aren't developing - why would UAE spend money on an extremely insecure investment?
 

Cityviews

The Prodigy
This judgement against Djibouti we don’t give a fuck , of course the whteman will side with the Arab man.

But for the corrupt officials that aided UAE in destabilizing Djibouti , it’s on sight.

Djibouti First
 

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