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International Shipping
High court tells Djibouti to back off DP World or risk assets and jail
Date:2018-09-07 Readers:
THE High Court of England & Wales has granted an injunction restraining Djibouti's port company, Port de Djibouti SA (PDSA) from treating its joint venture shareholders' agreement with global trade enabler DP World as terminated.

If the Doraleh Container Terminal (DCT) disobeys the court's order and seeks to replace DP World directors of DCT as they are supposed to do on September 9, the company directors and officers risk seizure of assets and imprisonment for contempt of court.

Hong Kong-based China Merchants, with its minority stake, which had been given operational control of the Djibouti Freezone in breach of DP World's exclusivity rights, will also be informed of the ruling.

The court has further prohibited that state-run Port de Djibouti from removing directors of the Doraleh Container Terminal (DCT) joint venture company who were appointed by DP World.

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 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 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 September 9 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 Djibouti's 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 Djibouti's participation, makes clear that it;

"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 and cannot cause the DCT joint venture company to act on the "Reserved Matters" without DP World's consent."

Nor can it "instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti".

The court has ordered PDSA to present its defence at another hearing on September 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 September 9 meeting.
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