Dubai-based ports operator DP World has filed a lawsuit against Hong Kong-based China Merchants Port Holdings for building a free zone at Djibouti’s Doraleh Container Terminal (DCT), which is being disputed with the Djibouti government.

DP World is understood to be seeking damages, interest and declaration that “China Merchants unlawfully procured and/or induced Djibouti's breaches of its agreement with DP World”. The company filed the case with a High Court in Hong Kong.

China Merchants owns a 23.5 per cent share in Port de Djibouti SA (PDSA), which owns a 66.6 per cent stake in DCT. DP World owns the rest.

In September, DP World said it would continue to pursue all legal means to defend its rights as a shareholder and concessionaire in the disputed terminal.

DP World issued the statement in response to reports that the Djibouti president enacted a decree, which aims to transfer the shareholding of PDSA in the disputed container terminal to the government.

DP World said the shareholding transfer “appears to have been made in an attempt to flout an injunction of the English High Court, which restrains PDSA from using its shareholding to take control of DCT”.

DP World signed a concession agreement with Djibouti in 2006 for the operation of the terminal for 30 years. The Djibouti government began making corruption allegations against DP World in 2014.

In February, DP World filed a new arbitration case in London against the government of Djibouti, which it has accused of illegally seizing control of the terminal.

On 31 August, the High Court of England & Wales issued an injunction against PDSA, as shareholder in DCT, ordering that, among others, it be not allowed “to act as if the joint venture agreement with DP World has been terminated, or appoint new directors or remove DP World’s nominated directors without its consent”.

The Djibouti government rejected the court’s ruling.

MEED understands the English law governs the 2006 concession agreement, which provides that disputes relating to the agreement are to be resolved through binding arbitration in the London Court of International Arbitration.