Procedural Posture

This document is the Third Partial Final Award in LCIA Arbitration No. 183886, rendered by Sole Arbitrator Professor Zachary Douglas QC. The dispute arises from the 2006 Concession Agreement concerning the Doraleh container terminal. Following the Tribunal’s Second Partial Final Award, which ordered the Republic of Djibouti to specifically perform its obligations and restore the Claimants' rights, the Respondent failed to comply. Consequently, the Claimants affirmed the Concession Agreement and pursued damages for accumulated losses resulting from the Respondent's continuing repudiatory breaches. The Respondent did not participate in this quantum phase of the proceedings.

Principal Legal and Procedural Issues

The primary issues before the Tribunal concerned the quantification of damages for the period between 22 February 2018 and 31 March 2021. The Claimants sought compensation for DP World Djibouti FZCO’s (DPWD) lost management fees and dividends, as well as Doraleh Container Terminal SA’s (DCT) losses stemming from the seizure of its onshore bank account. Additionally, the Tribunal addressed DPWD’s reserved claims regarding the Respondent's liability for breaching Articles 3.7 and 12.1.3(vi) of the Concession Agreement by depriving DPWD of its economic interests and management rights.

Tribunal's Analysis and Findings

The Tribunal found that the Respondent’s actions, including the enactment of Decrees 85 and 87 and the transfer of DCT’s assets to the State-owned entity SGTD, constituted a breach of the Concession Agreement. To assess quantum, the Tribunal, assisted by its own appointed experts, rigorously scrutinized the Claimants' valuation models. The Tribunal accepted the calculation of DCT's free cash flows based on actual container traffic statistics published by SGTD, adjusted for inflation and operating costs, rejecting more speculative pricing assumptions.

The Tribunal upheld DPWD’s claims for lost management fees and dividends, confirming that these losses flowed directly from the Respondent's breaches. It also upheld DCT’s claim for the seized onshore bank account balance. However, the Tribunal dismissed DCT’s claim for lost cash flows representing dividends due to the other shareholder, Port de Djibouti S.A. (PDSA). The Tribunal reasoned that PDSA had not advanced a claim in the arbitration, and awarding such sums to DCT to be earmarked for PDSA would be fraught with practical and legal difficulties.

Operative Directions and Relief

The Tribunal ordered the Republic of Djibouti to pay DPWD USD 31,390,693 for lost management fees and USD 116,772,715 for lost dividends. Furthermore, the Respondent was ordered to pay DCT USD 35,123,370 for the loss resulting from the seizure of its onshore bank account. The Tribunal awarded pre-award and post-award compound interest on these sums at the rate of LIBOR plus 4% compounded annually. All other matters, including costs, were reserved for a subsequent award.