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International Container Terminal Services, Inc. has been cleared to operate the Durban Container Terminal 2 after the High Court of South Africa dismissed a case filed by APM Terminals BV, a subsidiary of Danish shipping giant Maersk
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ICTSI said the High Court’s KwaZulu-Natal Local Division in Durban denied the APM application questioning the 25-year port terminal development contract awarded by Transnet SOC Limited
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The court ruled that Transnet acted within its discretion and complied with the principles of fairness and transparency in awarding the contract, the Philippine-based port operator said
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In addition, ICTSI said, the court held the solvency ratio was not the sole measure of financial qualification and that ICTSI’s financial strength was appropriately validated
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State-run Transnet, which owns South Africa’s railway, ports and pipelines infrastructure, awarded the contract to ICTSI in July 2023
International Container Terminal Services, Inc. (ICTSI) has been cleared to operate the Durban Container Terminal 2 (DCT2) after the High Court of South Africa dismissed a case filed by APM Terminals BV, a subsidiary of Danish shipping giant Maersk.
In a disclosure to the Philippine Stock Exchange on October 13, ICTSI said the High Court’s KwaZulu-Natal Local Division in Durban denied the application filed by losing bidder APM Terminals questioning the 25-year port terminal development contract awarded to the Filipino company by Transnet SOC Limited.
“The court ruled that Transnet SOC Limited acted within its discretion and complied with the principles of fairness and transparency in awarding the contract,” ICTSI said. “It further held that the solvency ratio was not the sole measure of financial qualification and that ICTSI’s financial strength was appropriately validated.”
APM Terminals earlier succeeded in blocking Transnet from going ahead with the partial privatization of DCT2 that would see ICTSI acquire 49% of the terminal, with Transnet keeping the majority share.
The latest ruling dealt with the second part of the same case. Maersk asked the court to set aside the tender on grounds it was full of irregularities, including a solvency test that allowed ICTSI to use market capitalization rather than balance sheet equity. With all other bidders required to use balance sheet equity, Maersk argued that ICTSI’s use of market cap unfairly pushed it over the solvency threshold.
Court blocks ICTSI-Transnet Durban port deal
In its ruling, the court noted that the contract “was no ordinary tender by a state-owned entity for the provision of goods and services, as is generally the case where an award is challenged by an aggrieved bidder.”
State-run Transnet, which owns South Africa’s railway, ports and pipelines infrastructure, awarded the contract to ICTSI in July 2023.
“Through this process, Transnet aimed to raise the necessary capital to address the critical infrastructural crisis at the port, to upscale its technical skills and, importantly, generate sufficient capital to reduce its overall debt, and turn its attention to other projects,” the court said.
The court also found that APM’s legal challenge was brought with undue delay, further justifying its dismissal.
ICTSI welcomed the court’s ruling and reaffirmed its commitment to deliver long-term value and operational excellence at the DCT2, South Africa’s biggest and busiest container terminal, in close partnership with Transnet.
“The Company will provide further updates to the Exchange regarding next steps as soon as it receives formal guidance from Transnet on the way forward,” the Razon-led firm said.
