London court finds Doraleh seizure illegal

Doraleh Container Terminal Doral DP World designed, built and operated the Doraleh container terminal following a concession awarded in 2006. Credit DP World
Industry Database

An arbitral tribunal of the London Court of International Arbitration (LCIA) has ruled that the Government of Djibouti’s seizure of the Doraleh Container Terminal from DP World is illegal because the latter’s concession agreement remains valid.

The decision follows a long running dispute between DP World and Djibouti’s Government, which took control of the terminal in February, arguing the terms of the agreement had been broken and that DP World had underperformed.

The LCIA tribunal has ruled that Doraleh Container Terminal’s Concession Agreement “remains valid and binding notwithstanding Law 202 and the 2018 Decrees.” It is believed that Law 202, which provides the power to terminate infrastructure agreements, and the decrees were enacted by Djibouti in a bid to enable it to cease meeting the terms of the contract.

DP World, which designed, built and operated the terminal following a concession awarded in 2006, is now expected to reflect on the ruling and review its options.

The seizure of the terminal followed the Government of Djibouti’s attempt to force DP World to renegotiate the terms of the concession. The concession terms were found to be “fair and reasonable” in 2017 by another LCIA tribunal.

Following the enactment of Law 202 in Djibouti, DP World started a new arbitration in February, seeking a declaration that the concession agreement was valid and binding on the Government.

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