UNITED Arab Emirates’ (UAE) DP World Limited and its subsidiaries has taken legal action against China for building an international free zone on a terminal being disputed with Djibouti.
The lawsuit was filed in the High Court of Hong Kong for unlawfully procuring and inducing the Republic of Djibouti to breach various agreements between the African country and DP World.
In the lawsuit, DP World sought damages, interest, and a declaration that China Merchants unlawfully procured and/or induced Djibouti’s breaches of its agreements with DP World.
When the contract between DP World Limited and the Republic of Djibouti was signed, both parties seemed happy and satisfied with the business deal and pledged to respect the terms of the agreement.
Under these agreements, Djibouti granted DP World Limited exclusive rights over port and free zone facilities within Djibouti, including container handling facilities, and DP World constructed, developed, and managed a state-of-the-art container terminal at Doraleh (“Terminal”) that is jointly owned by DP World (33,34 perent) and a Djibouti state-owned entity, PDSA (66,66 percent).
In 2013, China Merchants bought 23,5 percent of PDSA from Djibouti.
China, which has the only foreign military base near the Red Sea terminal, developed and financed the free trade zone as it considers Djibouti an important part of its $1 trillion “Belt and Road” global investment initiative.
DP World said its concession agreement over the terminal “remains in force” and warned that the “illegal seizure of the facility does not give the right to any third party to violate the terms of the concession agreement.” DP World Limited, operates 78 ports in more than 40 nations.
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