Republic of Djibouti and Others v Mr Abdourahman Mohamed Mahmoud Boreh and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Flaux,Mr Justice Flaux,MR JUSTICE FLAUX |
| Judgment Date | 02 March 2016 |
| Neutral Citation | [2016] EWHC 405 (Comm) |
| Docket Number | Case No: 2012 FOLIO 000537 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 02 March 2016 |
[2016] EWHC 405 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
The Honourable Mr Justice Flaux
Case No: 2012 FOLIO 000537
Lord Falconer of Thoroton, Mr Philip Brook-SmithQC, Ms Jennifer Haywood, Mr Giles RobertsonandMs Amy Proferes (instructed by Gibson Dunn & Crutcher LLP) for the Claimants
Mr Dominic Kendrick QC, Mr Richard WallerQC, Mr Jocelin GaleandMr Keir Howie (instructed by Byrne & Partners LLP) for First to Third Defendants
Hearing dates: 8 th, 12 th– 14 th, 21 st, 22 nd, 26 th– 30 th October, 2 nd– 6 th, 9 th– 12 th, 17 th– 19 th, 23 rd November, 2 nd, 7 th and 8 th December 2015 with additional written submissions from the First to Third Defendants on 21 st December 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INDEX TO JUDGMENT
| (1) Introduction | [1]–[24] | |
| (2) The claims | [25]–[49] | |
| (3) The evidence | [50]–[96] | |
| (4) Chronological Findings of Fact | (A) The DDP and DP World management of the Port (B) The Horizon Oil Terminal (C) The Doraleh Container Terminal | [97]–[121] [122]–[538] [539]–[833] |
| (5) Political motivation | [834]–[862] | |
| (6) Issues of French and Djiboutian Law | [863]–[921] | |
| (7) Conclusions on individual claims | [922]–[938] | |
| (8) Overall Conclusion | [939] |
(1) Introduction
The first claimant in this action, the Republic of Djibouti (to which I will refer as "the Republic") is a small country in the Horn of Africa with a population of less than one million. It was formerly a French colony, known as the French Territory of the Afars and the Issas, before gaining its independence in 1977. Its strategic importance in the region is that, at least since the hostilities between Ethiopia and Eritrea began in 1998, the Republic and specifically its port facilities have provided the only access to the sea for otherwise land-locked Ethiopia.
In the last fifteen years, a new port and free zone complex has been built at Doraleh, to the south of Djibouti City, on what was previously waste land on which the local population eked out a precarious existence. In that period, the area has been transformed, with about half a billion U.S. dollars of investment in the complex, making it the leading port in the region with a new oil terminal and one of the largest container terminals in the region, capable of receiving the new generation of deeper draught container ships.
Before this transformation, the old port facilities at Djibouti City were out of date and run down. The port was too shallow for modern container ships and there was no room for expansion. The existing oil storage tanks and piping, some of which had been constructed in the 1930s, leaked and posed a threat to the environment. The management of the port authority, the third claimant, to which I will refer as "PAID", was inefficient and corrupt.
The driving force behind the development of the new port facilities at Doraleh was the first defendant, Abdourahman Boreh (to whom I will refer as "Mr Boreh") a prominent local businessman who initially made his money through regional representation of British American Tobacco ("BAT"), but who by the late 1990s had diversified into many other industries, including construction, through his company Soprim Construction S.A.R.L ("Soprim").
The first stage of the development was the creation of Djibouti Dry Port SAZF ("DDP") in two phases, the first a large container yard hub and warehouse facility outside the existing port, for the trade into and out of Ethiopia, and the second the development of office and warehouse space for companies to enjoy free zone status, modelled on the facilities at Jebel Ali in Dubai, owned and operated by Dubai Ports International, part of the DP World group of companies. Save where the context requires otherwise I will refer in this judgment to the Dubai Ports entities which became involved in the running of the facilities in Djibouti as DP World.
DDP was Mr Boreh's idea. It represented a type of venture which was new in Djibouti, a public/private collaboration, a private company in which the government also held a minor shareholding in return for the provision of land. The largest single private investor was Mr Boreh, through his principal company Boreh International, the second defendant. DDP was a considerable success, increasing the throughput of Ethiopian trade in the port and bringing new business and employment to the country. Although the Republic originally made a series of claims against the defendants in relation to DDP, those claims had all been abandoned by the end of the trial.
After he first met Sultan bin Sulayem, the chairman of DP World in 1999, Mr Boreh developed the idea of outsourcing the entire management of the port of Djibouti to DP World, thereby avoiding all the problems of inefficiency and corruption which had beset it in the past. In 2000, a Concession Agreement for the management of the port was entered into between PAID and DP World. With the transfer of management control to DP World, the port became much more efficient and its profits increased and have continued to increase.
Since 1999, the President of the Republic has been Ismail Omar Guelleh (to whom I will refer as "the President"). Until sometime in the second half of 2008, the President and Mr Boreh were good friends and, although Mr Boreh never held a formal position in Government, he was a close and influential adviser of the President. In one email, Mr David Hawker, an employee of DP World who was CEO of PAID from November 2004 described Mr Boreh in these terms: "Mr Boreh is the King Maker in Djibouti and is both a fairly close business associate and friend/acquaintance of Sultan and many other Dubain (sic) businessmen. He was responsible for getting Dubai involved in Djibouti in the first place and continues to actively expand that involvement at any opportunity."
However, although in this litigation, the Republic has sought to paint Mr Boreh as an eminence grise exerting a malign influence over a malleable President, the totality of the evidence in the case has demonstrated that this is far from the true position. The President emerges as a shrewd politician with considerable commercial acumen, who always took a keen interest in the commercial development of the port facilities of the Republic. All important decisions to do with the new port facilities were clearly taken by the President personally. This is only to be expected, since it is he who is the sole effective ruler of the Republic and who dictates Government policy. It was quite clear that all the witnesses called by the Republic at trial, all of whom were present or former Government ministers or high-ranking civil servants, were in fear of the President and were not prepared to say anything in their oral evidence which might contradict the position which the President has adopted towards Mr Boreh in this litigation, of which the President is clearly in ultimate control.
One aspect of the development of new port facilities in which the President took a particular interest was the construction of a new oil terminal at Doraleh. Since the mid-1990s, the Republic had tried, without success, to persuade the three oil majors who had the existing facilities in Djibouti City, Total, Mobil and Shell, to move and build new facilities outside the existing port. From 2000 onwards, when Mr Boreh met Mr Hussain Sultan, the Chairman of the Emirates National Oil Company ("ENOC"), another Dubai entity, and introduced him to the President, negotiations began for the construction of an oil terminal and tank farm at Doraleh. The company which owned the terminal, Horizon Djibouti Terminals Limited was one in which ENOC, the Kuwait oil company Independent Petroleum Group ("IPG") and Mr Boreh through his companies had the principal shareholdings. As with DDP, the Republic provided the land and had a minority shareholding of 10%. DP World paid for the construction of the terminal jetty, for which it has been repaid from the management fees earned by it from management of the port. The Ruler of Dubai, Sheikh Mohammed, as a gift to the Republic, paid for the new roads linking the terminal to both Djibouti City and the highway leading to Ethiopia.
Much of the construction work on the terminal and the infrastructure, including the roads, was undertaken by Mr Boreh's company, Soprim. The Republic advanced claims against the defendants in respect of some of the construction work undertaken, including the road link, but by the end of the trial, all those Soprim claims had been abandoned.
The oil terminal and tank farm ultimately became operational in late 2005. The amount of business through the terminal, which includes a contract for storage of oil on behalf of the United States Navy, far exceeds that which passed through the old facilities and the venture has proved profitable. One of the principal claims which continues to be advanced against the defendants in this litigation concerns the shareholdings held by the Boreh companies in Horizon (25% held by Boreh International and 5% by the...
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