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Dispute Board says Panama Canal has to pay $234m to GUPC consortium

Dispute Board says Panama Canal has to pay $234m to GUPC consortium
Nearly a year on from a work stoppage by Panama Canal expansion contractor consortium Grupo Unidos por el Canal (GUPC) in relation to cost overruns a dispute board has ruled they are owed $234m.

The Dispute Adjudication Board (DAB) independent technical organisation established within the framework of the contract between the Panama Canal Authority (ACP) and the consortium GUPC building the third set of locks, has ruled in favour of GUPC in the two major claims filed by GUPC related to the basalt poor quality and the delay attributed to ACP in approving the concrete mixture used in the work.

The DAB resolution established that ACP will pay additional $234m to GUPC and extend the contract period for six months.  GUPC comprises Sacyr of Spain, Salini - Impregilo of Italy, Jan De Nul of Belgium and Constructora Urban, SA (CUSA) of Panama.

“We are pleased with the DAB decision because they have recognised the merit of our claims that were based on technical realities affecting the cost, logistics and execution of the work. All claims were detected in time and presented according to the requirements of the contract, however the systematic and unjustified rejection by ACP has impacted the project and the contractor", said GUPC ceo Giuseppe Quarta. "We will analyse the DAB report to understand their economic determination, which is between 50% and 58% of what was submitted by GUPC and the time extension of six months," said Quarta.

GUPC had claimed some $463m of which, the board recognised $234Mm and an extension of 176 days lead time, of the 265 claimed by the contractor.The DAB is the second instance of claims after being submitted to the ACP. A party dissatisfied with the decision has the option of bringing the case before a court of arbitration under the rules of the International Chamber of Commerce.

In that sense, the administrator of the ACP Jorge Luis Quijano, said that is not necessarily the end of the process. "Although there is a partial recognition in both directions in this instance, it is up to us to do a thorough technical and legal analysis of this decision and take the step that suits the interests of the Canal,” he said. 

In February 2011, GUPC alerted the ACP that the properties of the basalt - as the main source for the mixture stipulated in the contract- were not of the same quality indicated in the bidding documents submitted by ACP to all companies that tendered in the Panama Canal expansion project. This claim was based on the additional costs that the consortium had to assume to adjust the processing plant of this material and seek new sources for obtain basalt and in changes that impacted the logistics, time and investment in this phase of the project.