English High Court continues restraint against Djibouti Port Company over shares in Joint Venture

The High Court of England and Wales in London has continued the injunction first made on 31 August 2018, prohibiting the Government of Djibouti’s port company, Port de Djibouti S.A. (“PDSA”) from interfering with the management of the joint venture company, Doraleh Container Terminal S.A. (“DCT”). 

On 31 August, the Court issued a without notice injunction against PDSA, as shareholder in DCT, prohibiting the following actions:

- It shall not act as if the joint venture agreement with DP World has been terminated.

 
- It shall not appoint new directors or remove DP World’s nominated directors without its consent.

 
- It shall not cause the DCT joint venture company to act on “Reserved Matters” (being matters contractually reserved to DP World) without DP World’s consent.

 
- It shall not instruct or cause DCT to give instructions to Standard Chartered Bank in London to transfer funds to Djibouti.

Following a hearing on 14 September 2018, at which PDSA failed to appear despite being notified, the Court ordered that the injunction will continue until it makes a further order or an award of the arbitration tribunal at the London Court of International Arbitration (“LCIA”) that will be formed imminently to consider the shareholding dispute with DP World.

 On DP World’s application, the Court also extended the injunction to include any ‘affiliate’ of PDSA.  Under the JV Agreement, PDSA’s affiliates include the Government.  The decision follows the enactment of an “emergency” ordinance by the President of Djibouti on 9 September.  This ordinance purported to transfer PDSA’s shares in DCT to the Government of Djibouti.  

 PDSA is 23.5% owned by China Merchants Port Holdings Company Ltd of Hong Kong (“China Merchants”).

 The Court further ordered that PDSA must ensure that any transferee of DCT shares is legally bound by the Joint Venture Agreement and Articles of Association in the same way as PDSA.  The ruling means neither the Government nor PDSA can control DCT or give valid instructions to third parties on behalf of DCT without DP World’s consent.

 DP World confirmed last week it will continue to pursue all legal means to defend its rights as shareholder and concessionaire in the Doraleh Container Terminal in the face of the Government’s blatant disregard for the rule of law and respect for binding commercial contracts.

 A DP World spokesperson, said: “This is yet another in a series of rulings – all in favour of DP World – that demonstrate Djibouti’s continuing disregard for the rule of law. We underline our belief that companies intending to operate in such a country or already operating there need to seriously consider their dealings with this Government in the face of such behaviour.”

 The 2006 Concession Agreement that the Government awarded to DP World is governed by English law.  It provides that all disputes relating to the Agreement are to be resolved through binding arbitration at the LCIA with two such LCIA proceedings already completed.

 In the first proceeding, the Government filed an arbitration against DP World seeking to rescind the Concession Agreement, claiming its terms were unfair to the Government and were procured through bribery.  The LCIA tribunal (comprising Sir Richard Aikens, Lord Hoffmann, Peter Leaver QC) ruled against the Government, finding the terms were fair and there was no bribery.  Certain counterclaims raised by DCT and DP World in relation to DP World’s exclusive right to container handling facilities in Djibouti remain to be decided by the Tribunal. 

 In a separate proceeding, another LCIA Tribunal (comprising Professor Zachary Douglas QC) held that the 2006 Concession Agreement was valid notwithstanding the Government’s attempts to terminate it through special legislation and decrees.  DP World’s claims for damages against the Government will now be determined in these proceedings.

 To date, the Government has not made any offer to compensate DP World.

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Claim No. CL-2018-000566

 

 IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT (QBD)


21 Sep 2018

CL-2018-000566

 

Before The Honourable Mr Justice Teare IN AN ARBITRATION CLAIM

B E T W E E N :

DP WORLD DJIBOUTI FZCO                                Claimant

-and-

PORT DE DJIBOUTI SA                                   Defendant

 

ORDER

 

PENAL NOTICE

 

IF YOU, PORT DE DJIBOUTI S.A, DISOBEY THIS ORDER, YOU MAY BE HELD TO BE IN CONTEMPT OF COURT AND YOU OR YOUR DIRECTORS MAY BE IMPRISONED OR FINED, OR YOUR ASSETS MAY BE SEIZED.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS THE DEFENDANT, PORT DE DJIBOUTI S.A., TO BREACH THE TERMS OF THIS ORDER, MAY ALSO BE HELD TO BE IN CONTEMPT OF COURT AND MAY BE IMPRISONED OR FINED, OR YOUR ASSETS MAY BE SEIZED.

UPON the Claimant’s Application made by Notice dated 28 August 2018.

AND UPON READING the first, second and third witness statements of Dr Anthony Charles Sinclair dated 28, 29 August and 13 September 2018 respectively and the documents exhibited thereto.

AND UPON HEARING Counsel for the Claimant at a hearing on notice to the Defendant on the Return Date referred in paragraph 1 of the Order made by the Honourable Mr Justice Bryan on 31 August 2018 (“the Original Order”).

 

IT IS ORDERED THAT

The Injunction

 

  1. 1.    The injunction contained in paragraph 2 of the Original Order shall continue in force until further order of this court or further order or award of the arbitration tribunal to whom the disputes between the parties have been referred pursuant to paragraph 5 of the Original Order (“the Tribunal”).

 

  1. 2.    With effect from the date of this Order, the Injunction contained in the Original Order will be varied so that it contains an additional sub-paragraph (5), as follows (“the Injunction”):

 

“2. Until further order of the court, or further order or award by the Tribunal, the Defendant must not

 

(1)  treat the Joint Venture Agreement between the Claimant and the Defendant dated 22 May 2007 (the “JVA”) as terminated on any of the grounds stated in the Defendant’s letter to the Claimant of 28 July 2018;

 

(2)  vote in favour of any resolution proposed at a Shareholders’ Meeting of Doraleh Container Terminal S.A (“DCT”) to remove either Mr Suhail Al Banna or Mr Raj Jit Singh Wallia or both of them from his office as director of DCT unless the Claimant votes affirmatively in favour of such a resolution;

 

(3)  cause DCT to act on any of the matters referred to in the JVA as “Reserved Matters” otherwise than after a resolution authorising such action has been passed either


(a)   at a board meeting at which a director appointed by the Claimant has voted in favour of that resolution; or

 

(b)   at a shareholders’ meeting at which the Claimant has voted in favour of that resolution.

 

(4)  give instructions or cause DCT to give instructions in relation to any bank account(s) held by DCT with Standard Chartered Bank otherwise than through the instructions of the presently authorised signatories.

 

(5)  take any steps to effect a transfer of its shares in DCT to any transferee who is not already a party to the agreement contained in the Articles of Association of DCT (the “Articles”) unless the transferee has entered into an undertaking to observe and perform the provisions of that agreement by way of Deed of Adherence as required by Article 11.7 of the Articles.”

 

  1. 3.    The Defendant, not being an individual, and having been ordered not to do something, must not do it itself or by its directors, officers, partners, employees or agents or in any other way including by its Affiliates as that term is defined in the JVA and the Articles.

 

  1. 4.    So far as persons outside the jurisdiction are concerned:

 

(1)  Except as provided in paragraph (2) below, the terms of this order do not affect or concern anyone outside the jurisdiction of this Court.

 

(2)  The terms of this order will affect the following persons in a country or state outside the jurisdiction of this Court—

 

(a)   the Defendant or its officer or its, her or his agent appointed by power of attorney;

 

(b)   any person who–

(i)          is subject to the jurisdiction of this Court;


(ii)         has been given written notice of this order at its, her or his residence or place of business within the jurisdiction of this Court; and

 

(iii)        is able to prevent acts or omissions outside the jurisdiction of this Court which constitute or assist in a breach of the terms of this order; and

 

(c)             any other person, only to the extent that this order is declared enforceable by or is enforced by a Court in that country or state.

 

  1. 5.    The Defendant may apply at any time to vary or discharge the Injunction, but must do so on at least 72 hours’ written notice to the Claimant’s solicitors.

 

Directions

  1. 6.    Steps already taken by the Claimant pursuant to paragraphs 7 and 8 of the Original Order to bring the documents referred to in paragraph 8 to the attention of the Defendant by email shall constitute good service of the same by the alternative means identified in paragraph 7(a) of the Original Order pursuant to CPR 6.15 and the date on which the Claim Form is deemed served shall be 14 September 2018.

 

  1. 7.    No further directions are given in relation to the trial of the Arbitration Claim and the proceedings shall be stayed with. Permission to apply.

 

Costs

  1. 8.    Costs reserved.

Dated: 14 September 2018

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