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Panama Canal Authority faces first cost overrun claim arbitration

Panama Canal Authority faces first cost overrun claim arbitration
The Panama Canal Authority (ACP) is facing a $180m arbitration claim, the first, over cost overruns on the expansion project.

The Panama Canal Authority Administrator Jorge Quijano told Seatrade Global that: “It was not true that there was a $1.6bn claim in arbitration as reported by international media. The only claim that has reached arbitration is a $180m claim for the Pacific cofferdam that had been filed originally by the Consortium Grupo Unidos por el Canal (GUPC) for $120m and later raised to $180m when submitted at this final claims resolution stage.”

GUPC filed its claim in March 2010, which was rejected in February 2012 by the Employer’s representative determination (ACP) and also rejected by the Dispute Arbitration Board in August 2013.  “The arbitration process will begin on July 21st with a teleconference between the lawyers of the two parties and the arbitrators to establish the procedure they will follow,” said Quijano.

So far, GUPC has filed 16 claims, ten of then them (the others being rejected) have been referred to the Dispute Arbitration Board where the consortium won eight receiving $14m from the ACP.

Meanwhile, the Dispute Arbitration Board will examine next September a $497m claim presented by GUPC concerning the required concrete design and the difficulties met by GUPC leading the consortium to a six-month delay.

The consortium announced last December it would present a disruption claim for $898m but it has not yet completed the submission of all information to the employer’s representative in order to be fully analysed at this first step of claims resolution and that a determination on the merits and amount  can be issued.

However, the expansion programme has reached at June-end 76.6% of its completion, while the construction of the future locks is 72% complete.

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