U.A.E. Jumps to DP World's Defense in Djibouti Port Dispute

(Bloomberg) -- The United Arab Emirates denounced Djibouti’s cancellation of DP World Ltd.’s contract to run the Doraleh Container Terminal, calling it an “arbitrary” flouting of a signed agreement.

“Djibouti government’s seizure of the Doraleh port is regrettable,’’ Minister of State for Foreign Affairs Anwar Gargash wrote on Twitter, in the U.A.E’s first official response to the cancellation of the Dubai port operator’s concession. “Agreements, commitments and reassurances didn’t hold up to arbitrary measures against DP World.’’

Dubai’s government said Djiboutian authorities “illegally seized control” of Doraleh on Thursday and that DP World has begun arbitration proceedings before the London Court of International Arbitration to protect its rights.

The government of Djibouti took action in light of “the recent poor performance’’ of the port and “to rectify irregularities in the agreement covering its operation,’’ Djibouti Ports & Free Zones Authority said a statement Sunday.

Djibouti’s government said a contract signed more than a decade ago granting DP World the concession violated the Horn of Africa nation’s sovereignty. It previously claimed DP World paid bribes when the concession was awarded in 2006, allegations denied by the company and rejected by the U.K. High Court in 2016.

The six-year dispute threatens to sour relations between the governments of the two countries and could damp investor appetite for Djibouti.

DP World helped Djibouti develop its trade for the past two decades and “recent arbitrary measures’ harmful impact will be far worse for Djibouti’’ than DP World, Gargash wrote in another tweet. “Success is based on respecting laws and agreements and Djibouti has failed that test.’’

To contact the reporter on this story: Zainab Fattah in Dubai at zfattah@bloomberg.net.

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Amy Teibel, Neil Chatterjee

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