High Court of England & Wales restrains Djibouti’s port company from terminating joint venture with DP world

September 05, 2018 - 14:34
High Court of England & Wales restrains Djibouti’s port company from terminating joint venture with DP world

Port Company alsoprohibited from replacing DP World directors in joint venture company


DUBAI, UNITED ARAB EMIRATES - EQS - 5 September 2018- The High Court of England & Wales has granted an injunctionrestraining Djibouti's port company, Port de Djibouti S.A. (PDSA), fromtreating its joint venture shareholders' agreement with global trade enabler DPWorld as terminated. The High Court has further prohibited PDSA from removingdirectors of the Doraleh Container Terminal (DCT) joint venture company whowere appointed by DP World pursuant to that agreement. PDSA is not to interferewith the management of DCT until further orders of the Court or the resolutionof the dispute by a London-seated arbitration tribunal.


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


The High Court's order follows the unlawful attemptby PDSA to terminate the joint venture agreement with DP World and the callingof an extraordinary shareholders' meeting on 9 September by PDSA to replace DPWorld appointed directors of the DCT joint venture company.  This is thethird legal ruling in relation to the Doraleh Container Terminal following twoprevious decisions from the London Court of International Arbitration (LCIA),all of them in favour of DP World. It recognises that although PDSA is themajority shareholder of the DCT joint venture company, it is DP World that hasmanagement control of the company, in accordance with the parties' legallybinding contracts.


The new ruling against PDSA, issued by the Courtwithout PDSA's participation, makes clear that PDSA:

  • Cannot act as if the joint venture agreement with DP World has beenterminated
  • Cannot appoint new directors or remove DP World's nominated directorswithout its consent
  • Cannot cause the DCT joint venture company to act on the "ReservedMatters" without DP World's consent
  • Cannot instruct or cause DCT to give instructions to Standard CharteredBank in London to transfer funds to Djibouti


If PDSA disobeys the Court's order and seeks toreplace DP World nominated directors of DCT on 9 September, it may be incontempt of court and face a fine or the seizure of its assets and its officersand directors may be imprisoned.


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


Meanwhile, DP World is notifying Standard CharteredBank so that the bank will reject any instructions that may be sent to themafter the 9 September meeting. China Merchants, who have been given operationalcontrol of the Djibouti Freezone in breach of DP World's exclusivity rights,will also be informed given its minority shareholding in PDSA.