Seven years after Djibouti forced DP World staff out of the country and seized control of the Doraleh Container Terminal (DCT), an international arbitration tribunal has confirmed what the company has argued all along: the takeover was illegal.
The London Court of International Arbitration (LCIA) issued its final ruling on October 1 in the case between DP World and Djibouti’s government-owned Port de Djibouti SA (PDSA). The Tribunal confirmed that Djibouti’s 2018 seizure of the terminal violated international law, though it declined to award damages against PDSA specifically, determining the harm was caused by the Government of Djibouti rather than the port company itself.
That distinction matters legally but does little to resolve DP World’s fundamental problem: it built and operated a major container facility under a 50-year concession agreement, then lost access when the government unilaterally terminated the arrangement. The LCIA confirmed that concession agreement remains legally valid and binding, and the termination attempt was unlawful. Yet Djibouti continues blocking DP World from exercising its contractual rights at the terminal.
DP World holds existing arbitration awards worth approximately $685 million against the Government of Djibouti. The government has refused to pay. The company also maintains active claims worth around $1 billion against both the government and China Merchants Port Holding, which partnered with Djibouti after DP World’s removal.
The case illustrates the tension between contract law and sovereign power when governments decide existing arrangements no longer serve their interests. Djibouti sold 23.5% of its DCT shares to China Merchants Port Holding in 2013 and opened a new Doraleh Multipurpose Port with Chinese partnership in 2017. By 2018, it had terminated DP World’s involvement entirely.
A DP World spokesperson framed the dispute as extending beyond one company’s commercial interests. “This case is bigger than DP World. It is about whether governments can tear up binding contracts and ignore international law without consequence,” the spokesperson said. “Djibouti’s behaviour is a clear warning to serious investors.”
That warning resonates particularly in Africa, where infrastructure development often requires massive upfront investment under concession agreements spanning decades. If governments can unilaterally exit those arrangements once facilities are built and operational, the risk calculus for future investment changes significantly.
Djibouti has contested DP World’s characterization of events. The government issued a statement on September 30 claiming DP World’s $1 billion claim was “dismissed in full” and the ruling “ends the dispute.” President Ismail Omar Guelleh released a video statement that DP World says misrepresents the facts and ignores binding tribunal decisions.
DP World disputes those claims systematically. The Tribunal dismissed only the claim against PDSA, the company notes, because liability rests with the government itself. Claims against the Government of Djibouti and China Merchants remain active. The $685 million in existing awards remains unpaid. Multiple rulings by independent tribunals have confirmed the seizure was illegal.
The factual dispute reflects fundamentally different narratives about what happened and why. From Djibouti’s perspective, reclaiming control of critical port infrastructure represents sovereign decision making about national assets. From DP World’s perspective, it represents contract violation and asset appropriation after the company invested heavily in building modern facilities.
DCT’s significance to Djibouti’s economy is substantial. The terminal has capacity for 1.2 million twenty-foot equivalent units (TEU) annually, making it the largest and most modern container facility in East Africa. Under DP World management, it contributed roughly 12% to Djibouti’s gross domestic product (GDP) and functioned as one of the country’s single biggest employers through direct and indirect job creation.
The terminal’s strategic location matters globally. Djibouti sits at the junction of the Red Sea and Gulf of Aden, making it a crucial logistics hub for trade between Africa, the Middle East, and Asia. Multiple foreign powers maintain military bases there. Control of port infrastructure carries both commercial and geopolitical significance.
China Merchants Port Holding’s involvement adds another dimension. The company acquired its stake in DCT in 2013, three years before becoming Djibouti’s partner after DP World’s removal. Whether that sequence represents opportunistic business development or coordinated planning depends largely on which party you ask.
For DP World, the LCIA ruling closes one arbitration proceeding but resolves nothing practically. The company states it will pursue all available legal avenues to secure compensation and enforce its rights against the Government of Djibouti and China Merchants.
The challenge with enforcing arbitration awards against sovereign governments is that collection requires cooperation or asset seizure in jurisdictions where enforcement is possible. Governments can resist payment indefinitely if they’re willing to accept the reputational and practical consequences in international commerce.
DP World argues Djibouti’s actions undermine investor confidence and damage the country’s reputation, ultimately hurting its own people. The company points to its track record of successful investments across Africa and globally, creating jobs, infrastructure and growth through legitimate partnerships.
Whether other investors view Djibouti’s handling of the DP World relationship as cautionary tale or isolated incident will influence the country’s ability to attract future foreign investment under similar concession structures. International arbitration rulings matter, but so do governments’ willingness to honor them.
Source: newsghana.com.gh
