DP World wins Djibouti port ruling

Doraleh port has three berths and an annual capacity of 1.2 million 20-foot equivalent units of container traffic. (Shutterstock)
Updated 07 August 2018
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DP World wins Djibouti port ruling

  • London court rules illegal Djibouti’s seizure of Doraleh Container Terminal from DP World
  • Ruling will come as a blow to Djibouti and could potentially threaten the country’s ability to attract foreign investment

LONDON: Djibouti’s seizure of the Doraleh Container Terminal from the Dubai-based ports operator DP World was on Thursday ruled illegal by a London court.
The ruling will come as a blow to Djibouti and could potentially threaten the country’s ability to attract foreign investment in the future, analysts told Arab News.
A tribunal at the London Court of International Arbitration said that DP World’s concession agreement “remains valid and binding.” Dubai’s Media Office said DP World “will now reflect on the ruling and review its options.”
On Feb. 22, the Djibouti authorities seized control of the port from DP World, which had been awarded the concession in 2006.
In the run-up to the seizure, the Djibouti government had already attempted to force DP World to renegotiate the terms of the port concession. The London court had previously ruled in DP World’s favor in a 2017 hearing.
DP World started arbitration proceedings the same month to prove again that its original agreement was still legal and binding.
The Doraleh port has three berths and an annual capacity of 1.2 million 20-foot equivalent units of container traffic. Under the concession agreement, the Djibouti government had a 67 percent stake while DP World held 33 percent.
Olivier Milland, senior analyst at risk consultancy Allan & Associates, said that Thursday’s ruling could threaten Djibouti’s ability to attract foreign investment.
“International investors will likely be very concerned, particularly if they’re considering market entry,” said Milland.
“This is because the failure of a host country to honor its contract with foreign entities means that their investments and assets cannot be secured. If foreign investors see that their investments are not legally protected in Djibouti, appetite for the Horn of Africa country is likely to decrease,” he said.

 

While the move is likely to be viewed as a victory for DP World, it is far from the end of a dispute that first broke out in 2012, Milland noted.
“It is less clear to what extent the London Court of International Arbitration ruling will be enforced, as it is up to the national courts to enforce international rulings as per the New York Convention, which Djibouti has signed,” he said.
“Djibouti could appeal the verdict, or attempt to negotiate a settlement with DP World,” Milland said.
Judd Devermont, director of the Africa program at the Center for Strategic and International Studies in Washington DC, also raised questions about how Djibouti will respond to the ruling.
“This is not a pill Djibouti will willingly swallow,” he said.
“Djibouti has indicated that it is open to compensating DP World to a tune of half a billion dollars, but the time for arbitration is over. Moreover, the government is not really in a position to reverse its decision,” he said. “It has already inked a deal with Chinese state-owned enterprises to open a free trade zone at the port, which DP World claims is a violation of its concession to run Doraleh.”
In July, Djibouti is said to have opened the first phase of its Djibouti International Free Trade Zone, which will be managed by both Djibouti authorities and a number of Chinese companies.
DP World issued a statement in July in response to these reports. “This is yet another clear example by the Djiboutian government of violating its contractual obligations and the rights of foreign investors,” it said.
The court’s decision also comes as the UAE looks to strengthen its position in the Horn of Africa, exploring opportunities to develop other ports along the coast.
The Arab state is also positioning itself as a mediator between Ethiopia and Eritrea after the two East African countries signed an agreement in July to restore relations after years of conflict.

FASTFACTS

The Doraleh terminal looks out at the strait of Bab Al-Mandeb at the mouth of the Red Sea. It is one of the biggest employers in Djibouti and a significant source of revenue for the country, and is recognized as one of the most advanced container terminals on the east coast of Africa.


Iran anti-money laundering law faces challenge as deadline looms

Updated 18 August 2018
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Iran anti-money laundering law faces challenge as deadline looms

  • Iran has been trying to implement standards set by the Financial Action Task Force
  • Foreign businesses say legislation that includes FATF guidelines is essential if they are to increase investment

DUBAI: A top Iranian constitutional body has demanded changes to anti-money laundering measures passed by parliament, state-run media said on Saturday, as Tehran nears a deadline to pass legislation to help it attract investment while facing USsanctions.
Iran has been trying to implement standards set by the Financial Action Task Force (FATF), an inter-governmental organization which underpins regimes combatting money laundering and terrorist financing. It hopes it will be removed from a blacklist that makes some foreign investors reluctant to deal with it.
In June, FATF said Iran had until October to complete the reforms or face consequences that could further deter investors from the country, which has already been hit by the return of US sanctions. {nL5N1UY39D]
Hard-liners in parliament have opposed legislation aimed at moving toward compliance with FATF standards, arguing it could hamper Iranian financial support for allies such as Lebanon’s Hezbollah, which the United States has classified as a terrorist organization.
The Guardian Council, which vets legislation passed by parliament for compliance with the constitution, objected to four items in the anti-money laundering amendments and returned the measure to parliament, spokesman Abbas Ali Kadkhodaei was quoted by the judiciary’s news agency Mizan as saying.
Kadkhodaei did not give details of the four items, according to Mizan.
Earlier this month, the Guardian Council approved legal amendments on combating the funding of terrorism.
Supreme Leader Ayatollah Ali Khamenei said in June parliament should pass legislation to combat money laundering according to its own criteria.
Foreign businesses say legislation that includes FATF guidelines is essential if they are to increase investment.