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Wed 9 Jul 2014 11:51 AM

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DP World in legal action over Africa's largest container terminal

Djibouti gov't launches arbitration in London in a row over how the contract was awarded to Dubai firm

DP World in legal action over Africa's largest container terminal
Image for illustrative purposes only.

Djibouti said it had
started legal action against DP World, seeking to rescind the Dubai-owned port
operator's concession in Africa's largest container terminal in a row over how
the contract was awarded.

"The resulting agreement unfairly favoured DP
World," the government said in a statement, which questioned payments made
in winning the concession in 2000.

DP World said it rejected Djibouti's allegations.

"We categorically reject the accusations and
will vigorously defend our position during arbitration," a company
spokesperson told Reuters by email. "We are disappointed that the
government has chosen to take this action after working so closely with us as partners
over the past 14 years."

DP World, which has a portfolio of about 65
terminals across six continents, owns one-third of Djibouti's Doraleh Container
Terminal, the company's annual report says.

Following the collapse of negotiations with DP
World, Djibouti launched arbitration proceedings in London.

DP World can run Doraleh while the case is pending.
Neither side said when the case was likely to be resolved.

"We have invested significantly in Djibouti
over those years and have been a major contributor to its economy and to its
community," DP World said.

"It is surprising the accusations come from a
government whose parliament ratified our concession."

A former French colony, Djibouti hosts a French
military base and the only US military base in Africa. Its port is used by
foreign navies policing the Gulf of Aden's shipping lanes, some of the busiest
in the world, against pirates from Somalia, which borders the country to the
south.

Doraleh is Africa's largest container terminal, the
government said, while transport accounts for nearly a third of Djibouti's
gross domestic product.

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