Dubai-based DP World last week accused Djibouti of illegally seizing a port that is the main transit route to landlocked Ethiopia, the second most populous African nation.
More than 90 percent of Ethiopia’s trade passes through Djibouti, located on the Bab al-Mandab strait, the key shipping lane to Europe from the Gulf and Asia beyond.
Under the agreement signed Thursday in Dubai, Ethiopia will own 19 percent of Somaliland Berbera port, according to a statement released by DP World, which will hold a majority 51-percent stake.
Representatives from Somaliland were in Dubai for the signing of the deal, which will leave their self-declared state with a 30 percent stake in Berbera port.
Somaliland is not recognised by the international community despite 25 years of de facto independence from the rest of war-torn Somalia.
Ethiopia will invest in developing infrastructure at the Berbera corridor as a trade gateway for the inland country, the statement said.
DP World has also pledged to invest $442 million (360 million euros) to develop Berbera, strategically located on the Gulf of Aden coast near the entrance to the Red Sea.
The group, one of the world’s largest port operators, won a 30-year concession for the management and development of a multi-purpose port project at Berbera in 2016.
Before Thursday’s agreement, DP World owned 65 percent of the project and Somaliland held the remaining 35 percent.
DP World last week announced it planned to seek international arbitration against Djibouti, after the tiny state terminated its 50-year concession at the Doraleh container terminal.
The Dubai government has also publicly criticised the decision by Djibouti, which is home to military bases of the United States, France, Italy, Spain, Saudi Arabia, Japan and China.
The Chinese base is immediately adjacent to the Doraleh terminal.
Doraleh is the terminus for a Chinese-built railway, which opened in 2016, linking Djibouti with the Ethiopian capital Addis Ababa.
DP World, which operates 78 marine and inland terminals in 40 countries, is also focused heavily on concession deals for ports in war-torn Yemen and across the Horn of Africa.