On 5 September 2018, the High Court of England and Wales issued an injunction prohibiting the Djibouti port company, Port of Djibouti SA (PDSA), from terminating its shareholding agreement with DP World.
The High Court also prohibited PDSA from dismissing the directors of the joint venture Doraleh Container Terminal (DCT) appointed by DP World under this agreement. PDSA shall not interfere with the management of the CSD until further notice of the Court or resolution of the dispute by an arbitral tribunal sitting in London.
PDSA mainly belongs to the Djibouti government and its CEO is the president of the Authority of ports and free zones of Djibouti. China Merchants, based in Hong Kong, is the minority shareholder of PDSA.
The High Court order follows the illegal attempt by PDSA to terminate the joint venture agreement with DP World and the convening of an extraordinary general meeting on 9 September by PDSA to replace DP World.
This is the third court decision concerning the Doraleh container terminal following two previous decisions of the London-based International Arbitration Court (LCIA), all of which favor DP World. It acknowledges that while PDSA is the majority shareholder in the DCT joint venture, it is DP World that controls the management of the company in accordance with the parties’ legally binding contracts.
If PDSA disobeys Court order and seeks to replace DPCT directors appointed by DP World on September 9, it could be charged with contempt of court and fined or seized . The Court ordered PDSA to present its defense at another hearing on September 14th.
Meanwhile, DP World notifies Standard Chartered Bank that the bank will reject any instructions that may be sent to it after the 9 September meeting. China Merchants, which has had operational control of the Freezone of Djibouti in violation of the exclusive rights of DP World, will also be informed because of its minority stake in PDSA.
