Port de Djibouti S.A. v DP World Djibouti FZCO

A tribunal may determine whether a party retained a contractual status which defines the scope of an arbitration agreement, even where the party argues that it had ceased to possess that status. The question is one of construing the arbitration agreement and determining the matters submitted, rather than a question on which jurisdiction depends upon the court first deciding the substantive issue in the party’s favour.

Where an arbitration agreement remains effective for some purposes, its scope is not extinguished merely because a party may have ceased to satisfy a contractual description. Share-transfer provisions requiring adherence before registration may preserve the transferor’s contractual shareholder status until adherence occurs. A party may also lose a jurisdictional objection under section 73(1) of the Arbitration Act 1996 by failing distinctly to raise it.

Port de Djibouti S.A. challenged under section 67 of the Arbitration Act 1996 jurisdictional determinations made by a sole arbitrator in a London-seated LCIA arbitration concerning a joint venture and its container-terminal company.

The arbitrator held that a Presidential Ordinance had transferred ownership of PDSA’s shares to the Republic under Djibouti law, but that the transfer breached contractual share-transfer restrictions because the Republic had not executed a deed of adherence. She declared that PDSA remained a shareholder for the purposes of the joint-venture agreement and articles, and upheld one related breach claim.

PDSA argued that it ceased to be a shareholder when ownership passed, so that the arbitration agreements no longer covered later matters. The issues were whether the arbitrator had jurisdiction to determine PDSA’s continuing status and related breaches, whether PDSA remained a contractual shareholder, and whether it had lost the right to object.

1. The claim was dismissed. The arbitrator had jurisdiction over all matters determined in the award.
2. The question whether PDSA remained a shareholder was a substantive dispute between persons who were, at the relevant time, shareholders or were alleged to be shareholders. It was also a jurisdictional question in the limited sense that the court had the final say on the arbitrator’s jurisdiction to determine it. The arbitrator’s jurisdiction was not contingent on the court ultimately deciding that PDSA remained a shareholder.
3. The arbitration agreements had undoubtedly come into existence and did not cease to operate for all purposes if PDSA ceased to be a shareholder. Clause 19 of the JVA preserved rights and liabilities connected with earlier breaches. Clauses 19 and 20, read together, covered disputes concerning the parties’ relationship as shareholders, including whether PDSA ceased to have that status.
4. The parties were rational commercial actors. They were likely to intend disputes arising from their shareholder relationship to be resolved by the same tribunal, rather than making arbitrability depend on whether the tribunal or court ultimately answered the status question one way or the other. The one-stop presumption supported that construction.
5. The finding that the failure to procure a deed of adherence constituted a single breach commencing by the date of the Ordinance and continuing thereafter was within jurisdiction. The continuing breach remained connected with a breach occurring while PDSA was a shareholder. In any event, PDSA did not cease to be a shareholder for the contractual purposes of the JVA and Articles.
6. The arbitrator’s finding that PDSA remained a shareholder was a merits finding made within jurisdiction. Following Westland Helicopters Ltd v Al-Hejailan and C v D1, it was binding for the related jurisdictional issue concerning the breach claim.
7. The contractual regime required a deed of adherence before a transfer was recognised for the purposes of the JVA and Articles. The directors could not register a transfer until that condition was fulfilled. Unless and until adherence occurred, PDSA remained the contractual shareholder, notwithstanding the validity of the transfer of ownership under Djibouti law.
8. PDSA had lost the right to challenge jurisdiction over the Share Transfer Claim because it did not distinctly raise an objection to the arbitrator deciding whether it remained a shareholder. Its broader objections to post-Ordinance claims did not sufficiently identify that ground. Its reservations were sufficient, however, to preserve an objection to a continuing breach if that breach were treated as post-dating the Ordinance.

First-instance jurisdictional challenge under section 67 of the Arbitration Act 1996. The judgment records an earlier interim injunction and a judgment of HHJ Pelling KC dated 30 March 2022, but no appeal from the present decision.