Djibouti ends Dubai's DP World contract to run container terminal

DJIBOUTI/LONDON (Reuters) - Djibouti has ended a contract with Dubai’s DP World, one of the world’s biggest port operators, to run its Doraleh Container Terminal, the president’s office said on Thursday.

“The Republic of Djibouti has decided to proceed with the unilateral termination with immediate effect of the concession contract awarded to DP World,” the office of President Ismail Omar Guelleh said in a statement.

DP World called the move an illegal seizure of the terminal and said it had begun new arbitration proceedings before the London Court of International Arbitration, which has reviewed previous claims related to the dispute.

“We demand that the Government [of Djibouti] will cease its unlawful conduct and continue to work as partners with us,” DP World said in its statement.

The termination of the contract would have no material financial impact on the company, it said.

Last February, the London Court of International Arbitration cleared DP World of all charges of misconduct over a concession to operate the terminal, Dubai’s government said at the time.

In 2014, the government of Djibouti lodged claims accusing DP World, majority-owned by the Dubai government, of illegal payments to secure a 50-year concession for the Doraleh Container Terminal, the Dubai government said.

The president’s office said the contract was ended after the failure to resolve a long-running dispute between the two parties that started in 2012.

It gave no other details on the nature of the dispute, but said it took the decision to protect its “national sovereignty and economic independence.”

“It should be noted that the Doraleh Container Terminal (DCT) will now be under the authority of the Doraleh Container Terminal Management Company which is fully owned by the government,” the statement said.

Reporting by Abdourahim Arteh and Alexander Cornwell; Writing by George Obulutsa and Katie Paul; Editing by Mark Potter and David Evans