Somaliland Parliament Slaps DP World Berbera on the Wrist for Unlawful Tariffs

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In what appears to be the first sign of estrangement between the UAE ports  manager, DP World, and the Republic of Somaliland, the House of Representatives (HoR) of the latter annuls tariffs levied on bulk cargo importers, NFMC, for undelivered services.

At its 18th session of the 7th sitting  of the House, the lower house of the country’s bicameral parliament on Sunday scrapped a porterage charge of US$ 3.5/ton on the National Flour Mills Company (NFMC) for uploading bulk imports of wheat despite the company using its own grabbers and hoppers to load up trucks onward to the company’s silos and warehouses.

Drawing on a detailed report read out to the House panel by Honorable Ahmed Abdi Ibrahim (Timojili’), chairperson of an ad hoc committee previously appointed to report back on the lingering dispute between NFMC and DP World, voted 40 in favor of the annulment of the unearned charges, where 8 abstained and 14 voted against the decision.

“The House Corroborates the surmise that the Geelle (quay) porters can only be paid for services rendered on behalf of DP World which is in line with Article 20(3) of the Constitution of the Republic of Somaliland stating ‘All employees have a right to payment appropriate to the work they undertake and are free to enter into agreements with their employers on an individual or collective basis. Forced labor is prohibited’ which eliminates compensation for services not rendered and on pressuring an employer to pay more than that is due to an employee/worker/service provider,” the House Resolution of Sunday stated.

The HoR stated that it found no fault in the conclusions several government line  institutions and committees appointed by the President to look into the dispute made with the Berbera port manager reached and which, it was reported, the latter largely ignored or declined without plausible justification.

“The House concurs the conclusions and decisions of the various committees the president nominated to look into the dispute between NFMC and DP World Berbera,” the House Resolution stated.

Among the officials, ministries, and agencies that corresponded their findings and conclusions included Somaliland Chamber of Commerce, Industry, and Agriculture. Minister for finance Development, Minister of Employment, Social Affairs, and Family Welfare (who was the General-Manager of Berbera Port at the incident of the dispute), the Solicitor-General, Port and Free Economic Zone BoD, and the incumbent General-Manager of the Port of Berbera.

The Resolution reaffirmed, in line with the conclusions of the House ad hoc committee and the government line institutions, that NFMC was ‘not bound to pay porterage charges since no porterage services have been rendered’.

“The House Corroborates the surmise that the Geelle (quay) porters can only be paid for services rendered on behalf of DP World which is in line with Article 20(3) of the Constitution of the Republic of Somaliland stating ‘All employees have a right to payment appropriate to the work they undertake and are free to enter into agreements with their employers on an individual or collective basis. Forced labor is prohibited’ which eliminates compensation for services not rendered and on pressuring an employer to pay more than that is due to an employee/worker/service provider.” the HoR resolution said, adding, “Geelle (quay) porters be awarded a compensation commensurate with workload clocked in collecting, packing and loading quayside spillages in accordance with the (DP World) set tariff charges of US$3.5 per ton”.

The House went on to state that on the occurrence of disputes that DP World Berbera was ‘legally obligated to respond to arbitration when a dispute arises in accordance with article 15.2 of the Concession Agreement it entered with the government of Somaliland, and that it cannot unilaterally decline complaints raised against it; and that the concession agreement with Somaliland does not offer an immunity against disputes or calls of attendance in front of the Parliament since DP World possesses a legal personality which endows it the right to file suit against parties or be sued for transgression in accordance with Article 28 of the Constitution of the Republic of Somaliland’.

The HoR in at least one instance quite clearly showed its displeasure in what seemed to be a flagrant disregard of the country’s laws and the letter and spirit of the content of the Articles of Association it signed with the government of Somaliland.

“House emphasizes that DP World comply with the conclusions and decisions of the different government institutions and committees relating to this dispute and that, if it is not satisfied with them, appear before the London Court of International Arbitration where NFMC has filed its complaint as set forth by Article 28(1 and 2)  of the Constitution of the Republic of Somaliland which is concurred by Article 15.2 of the (Shareholders’) Agreement which obliges DP World to acknowledge and sign the formal notice submitted it by the attorneys of the  NFMC which the Solicitor General formally forwarded to DP World within 30 days from delivery at which failure on the part of DP World NFMC will have the right to initiate/file suit a case against DP World in the appropriate/competent national court,” the Resolution stressed.

Finally, the House concluded that DP World must refund levies it unjustifiably charged the flour mill company.

“House resolves that DP World refund/recompensate NFMC the porterage charges it previously levied it and funds that the government compensated NFMC from its own coffer in full,” the Resolution emphatically banged down.

The House ad hoc on whose report the Resolution largely drew on came into force on 30 July 2023. Since then and until it tabled its findings to the panel hall, the committee left no stone upturned to hammer out facts and figures relating or contributing to the dispute reaching as untenable a stage as it has.

The Dubai-based ports manager, DP World signed a 30-year concession agreement with the government of Somaliland in 2018 to manege and develop the strategically located Red Sea port of Berbera.. Whilst the agreement grants much leeway in management and levying issues, it does emphasize that it operate within the law and as is set forth by the concession agreement and the articles of association.

Arbitration in disputes is an accepted form of settlement in differences that arise between partners or associates in business deals.

The dispute between NFMC and DP World, which will also soon affect another flour mill company soon to be inaugurated, Oomaar, may either prove to be a tip of the iceberg, flourishing into a more serious stand off with government, or the beginning of a stronger, mutually respected business partnership depending on how the current situation is handled.

What many see as a more serious consequence of a continued intransigence on the part of DP Word is the resurfacing of a strong opposition to the long-term concession given to DP World at a mere cost of $442 million. Another consequence could be the discouragement of local industries and the revival of the country’s economic growth which can be crippled by heavy or undue tariffs and taxes.

https://www.somtribune.com/wp-content/uploads/2024/03/Annulment-of-disputed-DP-WORLD.pdf

https://www.somtribune.com/wp-content/uploads/2024/03/NFMC-House_Committee_Report.pdf