Port de Djibouti S.A. v DP World Djibouti FZCO [2023] EWHC 1189 (Comm)

“(a) The subscribers to these Articles of Association holding Shares in the Capital of the Company, and (b) Any Persons to whom Shares are issued or Transferred in accordance with these Articles and who have executed a Deed of Adherence; while any Shares are held by such Persons; and Shareholder means any of them (as the context requires).”

“11.2 Any Transfer of Shares is subject to Clause 14 of the [JVA]. Any Transfer of the Shares of the Company in contravention of this Article 11 or the provisions of the [JVA], shall be void and unenforceable and the Board of Directors shall not register such Transfer under Article 11.1”. “11.3 Consequently … (ii) The conditions provided by the present Article 11 are applicable to any legal or conventional Transfer; … (iv) The provisions of this Article 11 are serious and are for the protection of the legitimate interests of the Company.” “11.7 Deed of Adherence It shall be a condition of any Transfer of Shares (whether permitted or required) that: (i) The Transferee, if not already a Party to this Agreement, enters into an undertaking to observe and perform the provisions and obligations of these Articles under a Deed of Adherence; and (ii) The relevant transferor of Shares assigns its obligations under any guarantee or encumbrance to which it is a party, to the transferee.” “11.8 Registration of Transfers (i) The Directors shall only register any Transfer made in accordance with the provisions of these Articles and the [JVA]. … (iii) A person executing an instrument of Transfer of a Share is deemed to remain the holder of the Share until the name of the transferee is entered in the register of members of the Company in respect of it. (iv) Upon registration of a Transfer of Shares, and provided that the requirements of [the JVA] have been complied with, a Shareholder’s benefit of the continuing rights under this Agreement shall attach to the transferee who may enforce them as if it had been a party to this Agreement and named in it as a Shareholder.” … (ii) The conditions provided by the present Article 11 are applicable to any legal or conventional Transfer; … (iv) The provisions of this Article 11 are serious and are for the protection of the legitimate interests of the Company.”

“Article 1: The ownership of the shares held by the company [PDSA] in the capital of the company [DCT] is transferred to the State to ensure protection of the nation’s fundamental interests. Article 2: The State will compensate the company [PDSA] within a maximum period of two months in exchange for the shares transferred to the State. The compensation terms will be determined by decree. Article 3: The State representatives in the corporate bodies of the company [DCT], in respect of its stake in the share capital, will be appointed by decree. Article 4: This order shall take effect upon signature and shall be published under the emergency procedure.”

“231. Without prejudice to its right to amend, supplement or restate the relief to be requested in the arbitration, DPWD respectfully requests that the Tribunal, by way of a partial award, to: (a) DISMISS PDSA challenge to the admissibility of DPWD’s claims; (b) UPHOLD its jurisdiction to determine DPWD’s claims under DCT’s Articles; (c) [JVA Termination Claim]DECLARE that, notwithstanding PDSA’s purported termination of the JVA on 28 July 2018, the termination of the JVA is unlawful and consequently, the JVA remains valid and binding; (d) [Share Transfer Claim] DECLARE that notwithstanding the Presidential Ordinance, the purported transfer of shares from PDSA to the Republic is in breach of the JVA and Articles and, consequently, invalid and unenforceable and that PDSA remains a shareholder of DCT; (e) [Breaches Claims]DECLARE that PDSA has also breached Clauses 4.3(c), 5.2(a), 7, 8.5, 9.3, 11.1, 13.1, 14.1(a), 14.3(b),14.5, 15.1(a), 15.1(i), 15.1(j), 16.1, 17.1, 17.2(d) of the JVA and Articles 11.1, 11.2, 11.7, 17, 21.5, 23, 42A, 47.1 of the Articles; 232. In addition, DPWD respectfully requests that the Tribunal: (a) DECLARE that PDSA is liable to indemnify DPWD for any damages resulting out of the wrongful termination; (b) ORDER PDSA to pay to DPWD compensation for damages DPWD has incurred as a result of PDSA’s wrongful actions in an amount to be quantified at a later date; (c) DECLARE that PDSA remains party to the JVA and the Articles.” (a) DISMISS PDSA challenge to the admissibility of DPWD’s claims; (b) UPHOLD its jurisdiction to determine DPWD’s claims under DCT’s Articles; (c) [JVA Termination Claim]DECLARE that, notwithstanding PDSA’s purported termination of the JVA on 28 July 2018, the termination of the JVA is unlawful and consequently, the JVA remains valid and binding; (d) [Share Transfer Claim] DECLARE that notwithstanding the Presidential Ordinance, the purported transfer of shares from PDSA to the Republic is in breach of the JVA and Articles and, consequently, invalid and unenforceable and that PDSA remains a shareholder of DCT; (e) [Breaches Claims]DECLARE that PDSA has also breached Clauses 4.3(c), 5.2(a), 7, 8.5, 9.3, 11.1, 13.1, 14.1(a), 14.3(b),14.5, 15.1(a), 15.1(i), 15.1(j), 16.1, 17.1, 17.2(d) of the JVA and Articles 11.1, 11.2, 11.7, 17, 21.5, 23, 42A, 47.1 of the Articles; (a) DECLARE that PDSA is liable to indemnify DPWD for any damages resulting out of the wrongful termination; (b) ORDER PDSA to pay to DPWD compensation for damages DPWD has incurred as a result of PDSA’s wrongful actions in an amount to be quantified at a later date; (c) DECLARE that PDSA remains party to the JVA and the Articles.”

“THE ARBITRATOR: … If I look now at the claimant’s request for relief in the statement of reply, the first declaration other than not challenging admissibility and upholding jurisdiction is regarding the termination of the joint venture agreement. My understanding here is that there is no challenge regarding the jurisdiction of this Tribunal regarding that particular claim and I would like to confirm that with the respondent. DR PETROCHILOS: Madam President, let me perhaps take that starting with your latter point. Your understanding is correct. The termination pre-dates the dispossession arguments and therefore temporally it is within your jurisdiction.”

“THE ARBITRATOR: … Let me now go to the next claim by the claimant, which is the one that, notwithstanding the presidential ordinance, the purported transfer - - and I’m here quoting from the claimant’s request for relief - - the purported transfer of the shares from the respondent to the Republic is in breach of the JVA and the articles and, as a consequence, is invalid and unenforceable. My understanding is that you have of course a number of objections to, you know, making that particular claim, but am I right that you are not objecting to the jurisdiction on the basis that that is not postdating 9 September? DR PETROCHILOS: That is correct, Madam President.”

“THE ARBITRATOR: So what we have left with is the list of various other breaches, and I would like here to take your list that you have put, for instance, on slide 46 of the presentation that we just went through. It very helpfully lists the various actions on the left-hand side and you’ve identified those that are in your submission post 9 September, post ordinance, presidential ordinance, and so these concern - - and I believe here the numbers are referenced in the claimant’s skeleton. These are 64(d), 64(e), 64(f) and 64(g). So in your submission it is these four claims that there is a jurisdictional challenge, not for the others? DR PETROCHILOS: Madam, the issue of the temporal limitation, post termination of the JVA, applies to a number of claims. Forgive me, the issue of the post dispossession ordinance applies to a number of claims and these are the four claims that you have identified. I am confirming it in long form so you have it on the record. So they are 64(d), (e), (f) and (g), that is correct.”

“VI. AWARD NOW THEREFORE THE ARBITRAL TRIBUNAL DECIDES, HOLDS, AND ORDERS AS FOLLOWS: a. Decides that it has jurisdiction to hear the Claimant’s claims under the JVA and the Articles; b. [JVA Termination Claim] Declares that notwithstanding the Respondent’s purported termination of the JVA on 28 July 2018, the termination of the JVA is unlawful and consequently, the JVA remains valid and binding; c. [Share Transfer Claim] Declares that notwithstanding the Presidential Ordinance, the purported transfer of shares from the Respondent to the Republic is in breach of the JVA and Articles and, consequently, unenforceable and that the Respondent remains a shareholder of DCT; d. [Breaches Claims] Declares that the Respondent breached Clause 14.5 of the JVA and Article 11.7 of the Articles; e. Declares that the Respondent is liable to indemnify the Claimant for any damages resulting out of the wrongful termination; f. Declares that the Respondent remains a party to the JVA and the Articles; g. Order the Respondent to pay to the Claimant GBP 1,644,165.78 as Legal Costs and GBP 91,743.75 as Arbitration Costs; and h. Reserves its decision on other matters. ”

“457. … it is important to keep in mind the scope of the Tribunal’s decision regarding the Claimant’s Share Transfer Claim. As set out above, the Tribunal’s decision is limited to determining the contractual rights of the Parties to this arbitration under the JVA and the Articles, as governed by Djiboutian law. As noted, it is not for this Tribunal to make any determination as to whether the Presidential Ordinance is valid and lawful as a matter of Djiboutian law, but instead takes its validity and lawfulness as a given. 458. In light of the above, the Tribunal accepts as valid the order contained in the Presidential Ordinance, which as matter of Djiboutian law is deemed valid. Article 1 of the Presidential Ordinance states that “[t]he ownership of the shares held by [the Respondent] in the capital of [DCT] is transferred to the State […].”

“… the modern ‘one-stop’ dispute resolution presumption in contractual interpretation” … is concerned with the interpretation of dispute resolution clauses, as made clear in Fiona Trust. ... The presumption has nothing to do with the question whether the parties have concluded a contract (including a contract to arbitrate) in the first place. On the contrary, to hold that the question whether a binding arbitration agreement has been concluded is subject to ordinary principles of contract formation is a principled approach. It recognises that an arbitration agreement is a contract like any other, so that there is no justification for treating the question whether such an agreement has been concluded as subject to special presumptions uniquely applicable in arbitration cases. One-stop shopping is all very well, but if the parties have not entered into an arbitration agreement, the shop is not open for business in the first place.” (§ 75) “[The separability principle] applies where the parties have reached an agreement to refer a dispute between them to arbitration, which they intend (applying an objective test of intention) to be legally binding. It means that a dispute as to the validity of the main contract in which the arbitration agreement is contained does not affect the arbitration agreement unless the ground of invalidity relied on is one which “impeaches” the arbitration agreement itself as well as the main agreement. But it has no application when, as in the present case, the issue is whether agreement to a legally binding arbitration agreement has been reached in the first place.” (§ 80(5)) The same analysis applies, PDSA submits, in the present case where a Shareholder loses the status of Shareholder. In this situation too, the ‘arbitration shop’ is closed for business, and any subsequent question about the scope of the arbitration agreement does not arise. v) Thus the question of whether PDSA remained a Shareholder was a jurisdictional issue, which concerned whether party consent remained or had been withdrawn. That was an issue on which the arbitrator could not make any final determination: only the court can do so. vi) This is a ‘gateway’ question: the parties agreed that only Shareholders can cross the gateway and invoke arbitration. The definition of Shareholder by its nature involved a question as to whether the party said to be a Shareholder had certain required attributes (of holding shares). Investment treaty cases are a useful analogy: jurisdictional clauses under such treaties require one of the parties to have the attribute of being an “investor” in order to invoke the arbitration agreement against the respondent State (cf GPF GP Sarl v Poland [2018] EWHC 409 (Comm) § 70 and Republic of Korea v Dayyani [2019] EWHC 3580 (Comm) § 88). Determinations by arbitrators of these necessary jurisdictional qualities, which all go to the question of party consent to arbitration, are subject to the court’s control under section 67. vii) For the question of jurisdiction to decide whether PDSA remained a Shareholder to be an issue of the scope of the arbitration clause, the arbitration agreement would have needed to be drafted in unusual terms so as to confer on the arbitrator jurisdiction to determine questions of party consent as a matter of the scope of the arbitration agreement. It would have had to be drafted along the lines of: “Any dispute between the parties as to whether they have the contractual status of Shareholders shall be determined by arbitration”: see, e.g., the decisions of the Supreme Court in Dallah Real Estate v Ministry of Religious Affairs [2011] 1 AC 763 (§§ 24 and 84), and AES Ust-Kamenogorsk Hydropower Plant [2013] 1 WLR 1889 (§ 35) where Lord Mance said: “In short, any tribunal convoked to determine a dispute may, as a preliminary, consider and rule on the question whether the dispute is within its substantive jurisdiction, without such ruling being binding on any subsequent review of its determination by the court under sections 32, 67 or 72 of the 1996 Act. However, a tribunal cannot by its preliminary ruling that it has substantive jurisdiction to determine a dispute confer on itself a substantive jurisdiction which it does not have. Absent a submission specifically tailored to embrace them (as to which there is no suggestion here), jurisdictional issues stand necessarily on a different footing to the substantive issues on which an award made within the tribunal’s jurisdiction will be binding.”

“(a) whether there is a valid arbitration agreement, (b) whether the tribunal is properly constituted, and (c) what matters have been submitted to arbitration in accordance with the arbitration agreement.” ii) As the arbitrator noted, “[PDSA] does not challenge as such the validity of the arbitration agreements … nor does it contest that this Tribunal is validly constituted under these arbitration agreements” (Award § 193). iii) The definition of “matters”, for the purposes of s. 30(1)(c) and section 67, was considered by Flaux J in Gulf Import & Export Co v Bunge SA [2008] 2 All ER (Comm) 161 at [20]: “Mr Stephen Males QC for Gulf submits that “matters” in section 30(1)(c) is referring to the claims that can be submitted to arbitration, not the way in which discretion is exercised in relation to a claim which has been validly submitted to arbitration. It seems to me that this must be right.” iv) The question of whether PDSA remained a Shareholder post the Presidential Ordinance goes only to the relief the arbitrator granted to DP World in respect of the claims on which it succeeded. It does not concern one of the “matters” submitted to arbitration, but only the arbitrator’s exercise of one of the “powers exercisable by the arbitral tribunal as regards remedies” referred to in section 48 of the Act, viz the section 48(3) power to “make a declaration as to any matter to be determined in the proceedings”

“It clearly could have done so, even in the light of the Presidential Ordinance ”

“500. As set out above, the Tribunal finds that the Respondent’s failure to seek or procure a signed deed of adherence from the Republic is in breach of Clause 14.5 of the JVA and Article 11.7 of the Articles.514 It is this contractual breach that would have to be excused by the Presidential Ordinance as a force majeure event. However, the Presidential Ordinance (which ordered that the ownership of the DCT shares be transferred from the Republic to the Respondent) does not provide any excuse for the Respondent to have not sought the signature of a deed of adherence from the Republic. Indeed, nothing in the Presidential Ordinance prevents the Republic from signing a deed of adherence, or the Respondent from taking any steps towards procuring such a signature. As already noted above, there is no evidence on record that the Respondent has taken any step to procure the signature of such a deed of adherence from the Republic.515 It clearly could have done so, even in light of the Presidential Ordinance.” “514 See above at paras. 442-444.” “515 See above at para. 451. “501. In these circumstances, the Tribunal finds that the Presidential Ordinance cannot excuse the Respondent’s contractual breach of the JVA/Articles, and this is irrespective of the question whether it could, in principle, rely on it as a force majeure event. “502. In sum, for the reasons detailed above, the Tribunal finds that the Respondent breached Clause 14.5 of the JVA and Article 11.7 of the Articles.”

“241(1) By majority decision, the Tribunal declares that Clause 26 the SPA does confer jurisdiction on the Tribunal to determine claims arising from alleged breaches by the Claimant of the terms of the PSC, as asserted by [D1]; … (2) By majority decision, the Tribunal declares that Clause 11.1 of the SPA requires the Claimant to indemnify [D1] in respect of Pre-Economic Date Liabilities (including claims with respect to the PSC covered thereby) suffered by [D1] and its Affiliates subject to the limitations and other provisions of the SPA.”

“Parties means PAID, DPW Djibouti, the Company and any other Persons who may become parties to this Agreement by the execution of a Deed of Adherence; and Party means any of them.”

“A person executing an instrument of transfer of a Share is deemed to remain the holder of the Share until the name of the transferee is entered in the register of members of the Company in respect of it.”

“The Government Shareholders agree that, at any time during the Operations Period the DPW Shareholder(s) shall have the right to propose the sell-down of the Government Shares by the Government Shareholders on a pro rata basis in favour of any Shipping .Companies. The Transfer of Government Shares in favour of such Shipping Companies shall be decided as a Reserved Matter. For the avoidance of doubt, it is clarified that the provisions of Clause 14.2(g) shall not apply to such a Transfer of Shares by the Government Shareholders to the Shipping Companies, provided always that the Shareholding Proportion of the Shipping Companies does not exceed the Shipping Companies Equity Cap. Upon such Transfer, the Parties hereto shall procure a Deed of Adherence from such transferee Shipping Companies. …”

“If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection – (a) that the tribunal lacks substantive jurisdiction … he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection.”

“Recalcitrant parties or those who have had an award made against them often seek to delay proceedings or to avoid honouring the award by raising points on jurisdiction etc. which they have been saving up for this purpose or which they could and should have discovered and raised at an earlier stage. Article 4 of the Model Law contains some provisions designed to combat this sort of behaviour (which does the efficiency of arbitration as a form of dispute resolution no good) and we have attempted to address the same point in this Clause. In particular, unlike the Model Law, we have required a party to arbitration proceedings who has taken part or continued to take part without raising the objection in due time, to show that at that stage he neither knew nor could with reasonable diligence have discovered the grounds for his objection (the latter being an important modification to the Model Law, without which one would have to demonstrate actual knowledge, which may be virtually impossible to do). It seems to us that this is preferable to requiring the innocent party to prove the opposite, which for obvious reasons it might be difficult or impossible to do …”

“declares that the Respondent breached Clause 14.5 of the JVA and Article 11.7 of the Articles”

“purporting to transfer its shares …, having failed to secure a Deed of Adherence”