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Lawsuit against State Enterprise in China’s “Belt and Road Initiative” Project

China’s “Belt and Road” port project is involved in a legal dispute in Djibouti in the Gulf of Aden in Africa. China’s listed state-owned company China Merchants Port (SEHK: 144) was charged with ignoring the port operator’s franchise agreement and investing in the construction of a new terminal in Djibouti. This is the first time that a multinational company has filed a lawsuit against a Chinese state-owned enterprise in Hong Kong for its “Belt and Road” project.

In August last year, Dubai-based global port operator DP World filed a lawsuit in the Hong Kong High Court against China Merchants Port, that China Merchants Port, knowing that the Djibouti government and DP World had already signed a 30-year port franchise, still unlawfully procured and/or induced Djibouti’s breach of its agreement with DP World.

According to the indictment, the Djibouti government signed an agreement with DP World in 2004 that DP World would enjoy a 30-year franchise for the Doraleh Container Terminal (DTC), which was put into operation in 2009. However, three years later, China Merchants Port proposed cooperation with the Djibouti government and finally built a new “Doraleh Multi-purpose Terminal” next to the local Chinese People’s Liberation Army base. In 2017, the Djibouti government and China Merchants Port signed another agreement to build the “Doraleh International Container Terminal.”

This is the first time that a multinational company has sued a Chinese state-owned enterprise in relation to the “Belt and Road” project in Hong Kong. The case is viewed as a test of Hong Kong’s judicial independence.

Source: Radio Free Asia, February 11, 2019