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Court restrains Djibouti’s port company from terminating joint venture with DP world


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…Port Company also
prohibited from replacing DP World directors in joint venture company
The High Court of England & Wales has
granted an injunction restraining Djibouti’s port company, Port de Djibouti
S.A. (PDSA), from treating its joint venture shareholders’ agreement with
global trade enabler DP World as terminated. 

The High Court has further
prohibited PDSA from removing directors of the Doraleh Container Terminal
(DCT) joint venture company who were appointed by DP World pursuant to that
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:

  • Cannot act as if the joint venture
    agreement with DP World has been terminated
  • Cannot appoint new directors or remove
    DP World’s nominated directors without its consent
  • Cannot cause the DCT joint venture
    company to act on the “Reserved Matters” without DP World’s consent
  • Cannot instruct or cause DCT to give
    instructions to Standard Chartered Bank in London to transfer funds to

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

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

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

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.

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