The Red Sea city state of Djibouti faces in excess of $1bn in potential future claims in a bitter fight with Dubai's DP World over port concession rights — with a claim of $210m actual losses to date.
The claim sheds light on a lucrative terminal business, and implies that annual net profits for shuffling boxes at the gateway to the Red Sea average $218m per year.
The disputed Doraleh Container Terminal opened in December 2008 as a joint venture between a DP World entity that held 33% of the operation and state agency Djibouti Ports and Free Zone Authority (DPFZA) with 67%.
In February 2018, Djibouti threw out DP World and handed the operation to a new state-owned entity.
But DP World maintains that the joint venture contract continues in effect.
Ongoing dispute
The dispute is ongoing before the London Court of International Arbitration, from which Djibouti has withdrawn. In the absence of Djibouti's representatives, the London panel has issued a series of awards, including one that found Djibouti's legislature had no right to interfere in the contract.
TradeWinds has separately reported that Aboubaker Omar Hadi-led DPFZA has accused DP World of infringing on its national sovereignty and seeking to control its entire coastline, as well as refusing reasonable settlement offers.
DP World is demanding to be restored and claims lost dividends that come to $174.8m for the three years to 31 March this year, plus management fees of $35.4m.
In a document seen by TradeWinds, DP World said it used Djibouti's own volume reports and "conservative" assumptions to calculate revenue.
The $174.8m dividend claim is what DP World said it should have received, based on a policy of paying out 80% of net profits and its one-third shareholding. The joint venture's total net profits are thus implied to be some $655m for three years.
In addition to the annual dividend comes the management fee, averaging some $12m per year.
Complex claims
The large sums at stake before the arbitration panel and in other proceedings are difficult to harmonise, in part because they involve claims by DP World and by the joint venture itself. Although Djibouti is majority shareholder, DP World appoints a majority of board members and can bring suit on its behalf.
Doraleh is understood to be claiming $529.6m in lost revenue, a figure that is hard to square with the claim by joint venture partner DP World. A representative of DP World told TradeWinds the claims are overlapping and "not cumulative" but declined to explain in any detail.
