Economy
Djibouti, DP World Bicker over London Court Ruling
By Modupe Gbadeyanka
The government of Djibouti and a company known as DP World are arguing over a ruling by the London Court of International Arbitration on the cancellation of the Doraleh Container Terminal contract between both parties.
The court had ruled in favour of the firm, but the government of Djibouti released a statement on Friday that it “does not recognise the international rule of law.”
According to the statement issued by the government, the deal was terminated in the interest of the country.
Business Post reports that on February 22, 2018, Djibouti terminated the concession for the Doraleh container terminal, awarded in 2006 to Doraleh Container Terminal (DCT), a company controlled de facto by the minority shareholder DP World.
It was claimed by Djibouti that implementation of the concession contract had proved to be contrary to the fundamental interests of the country, noting that the continuation of the concession contract was seriously prejudicial to the its development imperatives and to the control of its most strategic infrastructure.
According to the government, several attempts to renegotiate the concession with DP World were unsuccessful because of the firm’s repeated refusal to hear the legitimate objections and requests of the Djiboutian State.
“This termination, which was therefore necessary and unavoidable, is made in accordance with international public law which recognizes the ability of a sovereign state to unilaterally terminate a contract on public interest grounds, subject to payment of fair compensation to the other party. The termination was decided in the context of a transparent procedure. It finds its legal basis in a law enacted by the Djiboutian Parliament on November 8, 2017, aimed at protecting the fundamental interests of the Nation, completed by a decree dated February 22, 2018,” the statement said.
“DCT, at DP World’s request, nevertheless decided to oppose it and initiated arbitration proceedings before the LCIA (London Court of International Arbitration) with the aim, publicly announced by DP World, of resuming as soon as possible its rights on the concession and thus the operation of the Doraleh container terminal.
“Logically, the Republic of Djibouti did not participate in this procedure, considering that LCIA would only judge this dispute on the basis of the terms of a contract contrary to Djibouti’s fundamental interests.
“On 31 July 2018, the sole arbitrator appointed under the aegis of LCIA rendered a partial arbitral award, which the Government of the Republic of Djibouti has become aware of.
“The sole arbitrator has concluded that the concession contract could not be terminated by the Government of the Republic of Djibouti under the law passed by the Djiboutian Parliament on November 8, 2017 and considered that the contract was still in force.
“The Republic of Djibouti does not recognize this arbitral award which consists in qualifying the law of a sovereign State as illegal.
“Indeed, the arbitral award seems to consider that the terms of the concession contract entered into between the Port of Djibouti and DCT, are above Djiboutian law. It disregards the sovereignty of the Republic of Djibouti and takes no account of public international law rules.
“Following the arbitral award’s reasoning, it is also understood that a sovereign State would not have the right to terminate a contract the implementation and performance of which is considered contrary to its fundamental interests, but would however authorize the other party to it (DP World) to terminate the said contract to protect its commercial interests…
“In other words, a contract would have a higher value than a law adopted in the name of a sovereign nation.
“Moreover and in any case, DP World’s approach which consists in trying to oppose the will of a sovereign State is unrealistic and doomed to failure. The concession contract has been terminated, the staff and assets of the concession were transferred to a public company specifically created for this purpose and which now manages this infrastructure.
“That is why, in this case, only an outcome consisting in the payment of a fair compensation in accordance with the principles of international law can be envisaged, the statement by Djibouti said.
But reacting on Saturday, DP World said the court’s decision upholding the continuing validity of the concession was based on recognised principles of international law and is internationally binding both on the Djibouti government and so far as third parties are concerned.
“As the Court has held, Djibouti does not have sovereignty over a contract governed by English law. It is well established that, in the absence of an express term to that effect, an English law contract cannot be unilaterally terminated at will. The contract therefore remains in full force and effect,” a statement issued by DP World stated.
The company noted that, “The Djibouti government’s repeated statements that the port concession has proved contrary to the fundamental interests of the Republic of Djibouti do not bear scrutiny.
“As the court’s decision records, the government’s own representatives have given evidence that the port has been ‘a great success for Djibouti’. The terms of the concession have also been held in two previous cases brought by the government itself to have been ‘even handed and fair’.
“In light of that indisputable success, and the fair and reasonable terms of the concession, the government’s attempts to terminate it cannot have anything to do with the fundamental interests of the people of Djibouti.”
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, August 5, as the market witnessed weaker trading activity with only two deals executed.
In the midweek session, the volume of securities exchanged by investors dropped 99.9 per cent to 802 units from the 1.6 million units recorded on Tuesday. The value of securities further decreased by 99.6 per cent to N208,240 from the preceding session’s N47.6 million, and the number of deals significantly went down by 93.9 per cent to two deals from the 33 deals recorded a day earlier.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.9 million units transacted for N5.5 billion.
GNI Plc was also the most active stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
There were no price gainers or losers yesterday.
As a result, the market capitalisation stood unmoving at N2.739 trillion, while the NASD Security Index (NSI) remained unchanged at 4,563.96 points.
By Adedapo Adesanya
The Naira slid against the US Dollar by N2.28 or 0.17 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, August 5, to N1,363.85/$1 from N1,362.55/$1.
The local currency also declined against the Pound Sterling in the official market during the session by N5.97 to close at N1,837.38/£1 compared with Tuesday’s closing rate of N1,831.41/£1, and against the Euro, it crashed by N6.54 to quote at N1,575.25/€1 versus the preceding session’s N1,568.71/€1.
But at the black market, the Nigerian Naira traded flat against the greenback yesterday at N1,400/$1, and also remained unchanged at the GTBank FX desk at N1,373/$1.
The Central Bank of Nigeria (CBN) says rates have narrowed to below two per cent, while the country’s external reserves have risen above $52.5 billion, reflecting the impact of its ongoing monetary and foreign exchange reforms.
CBN Governor Yemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Mrs Hakama Sidi-Ali, disclosed this on Tuesday during the CBN Fair in Gombe. He noted that reforms introduced since 2023 had significantly reduced the disparity between the official FX market and the parallel market.
“The Naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” he said, adding that reserves at $52.5 billion were supported by sustained inflows and renewed investor confidence in the economy.
Interbank FX transactions slid as weaker market activities dropped total Dollar volume exchanged to $75.35 million, a 51.8 per cent decline from $156.23 million in turnover quoted at the previous close.
The deals at the NFEM window also fell as data from the central bank put Wednesday’s quote at 82 from 139.
In the cryptocurrency market, major were down as global risk sentiment softened as a key world equity index slipped and chipmakers fell.
The MSCI All Country World Index snapped a five-day run to fall 0.2 per cent as chipmakers retreated on both sides of the Pacific. South Korea’s Kospi, a bellwether for the AI trade, dropped 4.4 per cent.
Ripple (XRP) depleted by 1.7 per cent to $1.05, Binance Coin (BNB) decreased by 1.0 per cent to $594.87, Cardano (ADA) depreciated by 0.9 per cent to $0.1884, TRON (TRX) shrank by 0.2 per cent to $0.3261, Solana (SOL) crumbled by 0.1 per cent to $74.00, and Dogecoin (DOGE) went down by 0.1 per cent to $0.0697.
On the flip side, Ethereum (ETH) gained 2.3 per cent to trade at $1,911.41, and Bitcoin (BTC) rose by 0.8 per cent to $64,759.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The domestic stock exchange rebounded by 0.05 per cent on Wednesday on the back of renewed bargain-hunting by investors, though the level of activity waned.
After bleeding for a few days, the Nigerian Exchange (NGX) Limited heaved a sigh of relief yesterday, as the All-Share Index (ASI) gained 109.41 points to close at 244,912.24 points compared with the previous day’s 244,802.83 points, and the market capitalisation garnered N71 billion to settle at N158.087 trillion versus Tuesday’s N158.016 trillion.
Business Post reports that despite the rebound recorded by Customs Street at midweek, the market breadth index remained negative, as there were 20 price advancers and 29 price decliners, implying bearish investor sentiment.
Linkage Assurance appreciated by 9.94 per cent to N1.77, AVA Capital rose by 9.55 per cent to N10.90, Fortis Global Insurance advanced by 7.69 per cent to N2.80, McNichols gained 7.34 per cent to finish at N5.85, and Coronation Insurance surged by 5.51 per cent to N2.49.
Conversely, Honeywell Flour depreciated by 9.94 per cent to N16.30, PZ Cussons gave up 9.94 per cent to trade at N74.75, Zichis crashed by 9.74 per cent to N20.76, Learn Africa slipped by 9.62 per cent to N9.40, and Neimeth tumbled by 8.33 per cent to N8.25.
The busiest equity was FCMB, with a turnover of 369.2 million units valued at N4.1 billion. Chams transacted 46.7 million units worth N201.8 million, First Holdco transacted 43.5 million units for N5.7 billion, Access Holdings sold 29.8 million units worth N778.0 million, and Linkage Assurance exchanged 19.6 million units valued at N33.5 million.
At the close of transactions, market participants bought and sold 824.1 million units worth N25.5 billion in 48,114 deals, in contrast to the 1.6 billion units sold for N28.7 billion in 54,160 deals a day earlier, showing a shortfall in the trading volume, value, and number of deals by 48.49 per cent, 11.15 per cent, and 11.16 per cent, respectively.
