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Port Authority sues over Dubai control of NJ port

Posted on: Friday, 24 February 2006, 15:33 CST

By Jon Hurdle

PHILADELPHIA (Reuters) - The Port Authority of New York and New Jersey filed a lawsuit on Friday to stop a United Arab Emirates company from taking over management of its container terminal at Port Newark in New Jersey.

The authority, jointly owned by the states of New York and New Jersey, argued that the deal under which state-owned Dubai Ports World would take over management from the British company P&O violates the terms of P&O's lease.

The transaction is part of a $6.85 billion deal under which DPW would manage terminals at six major U.S. ports. The plan has sparked protests from federal and local lawmakers and officials who fear the ports' security will be hurt if they are managed by a company whose owner has been accused of having links with terrorist groups.

The Port Authority said it has a right to review changes in port management under the existing lease agreement. The lawsuit, filed in the Superior Court in Newark, urged the court to declare that the purchase of P&O requires consent of the Port Authority under the lease, that the container terminal is in breach of its lease, and that the lease is terminated.

The suit names P&O Ports North America, and Port Newark Container Terminal LLC as defendants.

Lawmakers opposed to the takeover noted links between UAE and al Qaeda but President George W. Bush has defended the deal, calling the UAE an ally in the war on terror.

"The Port Authority has been deprived of its right to conduct a thorough review of the purchase ... of the identity, qualifications, experience and reputation of the purchasers ... and of the proposed impact that the change may have on the control and ownership," the lawsuit said.

New Jersey Gov. Jon Corzine urged the other governors of states with ports affected by the DPW deal -- Louisiana, New York, Florida, Connecticut, Maryland and Pennsylvania -- to join the lawsuit.

Democrat Corzine issued the invitation in letters to each governor, saying the lawsuit "will seek to enjoin this sale of vital assets to a foreign nation without our states having had the opportunity to determine the extent of the threat to the safety of our citizens."

In London, a U.S. company at the Port of Miami, Eller & Co. Inc., filed a petition in High Court opposing the takeover.

On Thursday, the State of New Jersey sued the federal government to block the deal.

Officials at P&O Ports North America did not return phone calls seeking comment.

New Jersey Sen. Robert Menendez on Friday dismissed DPW's offer to delay assuming control of the port terminals.

"We can't rely on non-binding promises from foreign governments to secure our ports," he said. "If the Bush administration will not stop this deal from closing, Congress must."

Source: REUTERS

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