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Abu Dhabi, UAESunday 23 September 2018

London court bars Djibouti from considering DP World's pact terminated

The court also restrained Djibouti from removing directors appointed by DP World for the container terminal joint venture

In February, authorities in Djibouti abruptly cancelled DP World’s contract to run the terminal and seized its facilities, which the port operator had designed, built and operated. Reuters

DP World said on Wednesday a London court has barred Djibouti’s port company from treating its joint venture shareholders’ agreement with the Dubai port operator as “terminated”.

The High Court of England and Wales has restrained the Port de Djibouti (PDSA) from removing directors appointed by DP World for the Doraleh Container Terminal JV, the company said in a statement .

The court order follows an attempt by PDSA to terminate the agreement with the port operator and calling of an extraordinary shareholders’ meeting on September 9 to replace the DP World appointed directors of the JV.

The Nasdaq Dubai-listed company is locked in a legal dispute with Djibouti after authorities in the African state abruptly cancelled in February DP World’s contract to run DTC and seized its facilities, which the operator had designed, built and operated.

“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,” the company statement said.

"If PDSA disobeys the court’s order and seeks to replace DP World nominated directors of DCT on September 9, it may be in contempt of court and face a fine or the seizure of its assets and its officers and directors may be imprisoned.”

PDSA is majority owned by the Government of Djibouti and its chief executive is the chairman of the country’s Ports & Free Zones Authority. Hong Kong’s China Merchants is the minority shareholder in PDSA.

This is the third legal ruling in relation to the terminal following two previous decisions from the London Court of International Arbitration - all of them in favour of DP World.

The London court recognises that although PDSA is the majority shareholder of the DCT JV, it is DP World that has management control, in accordance with the parties’ legally binding contracts.

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Read more:

DP World wins London tribunal case over Djibouti port seizure

Djibouti rejects London court ruling over DP World's Doraleh terminal

DP World warns of legal action on Djibouti violation of concession

DP World denies out-of-court settlement in Djibouti port dispute

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The court has asked PDSA to present its defence at the next hearing scheduled on September 14. The court ruling, issued without PDSA’s participation, makes it clear that PDSA cannot appoint new directors or remove DP World’s nominated members without its consent.

PDSA also cannot “instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti”, the company statement said.

DP World said it is notifying Standard Chartered to reject any instructions that may be sent to them after the September 9 meeting.

China Merchants, who have been given operational control of the Djibouti free zone in breach of DP World’s exclusivity rights, will also be informed given its minority shareholding in PDSA, said to the statement.

In August, DP World insisted its contract to run the port in Djibouti remains in “full force and effect”. However, Djibouti state authorities have refused to recognise the LCIA tribunal decision saying the concession agreement contained irregularities and threatened the national interest of Djibouti, according to the statement from the press office of the Presidency of Djibouti.

The Government of Djibouti and its ports authority have been trying to negotiate a compensation deal with DP World, the presidency said. But DP World has rejected an out-of-court settlement with the authorities of the African nation.

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