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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