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Panama Canal new lock construction consortium ordered to repay $848m

The Panama Canal Authority (ACP) said on Wednesday that an arbitration tribunal has ordered Grupo Unidos Por el Canal (GUPC), the construction consortium that built the Panama Canal new locks to pay back nearly $848m to the Canal Authority.

The contractor for the design and construction contract for the third set of locks of the Panama Canal expansion programme GUPC and its shareholders filed an arbitration against the ACP, which was carried out in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC), based in Miami, US.

Through this arbitration, GUPC requested the Tribunal to declare that the advances granted by the ACP for the execution of the Contract had not expired and were not liquid or enforceable until all of its claims were resolved in arbitration.

Read more: Repairs to Panama Canal cracks to be completed in January 2016

On 12 December 2018, the Panama Canal Authority has been notified of the Arbitral Award issued within said Arbitration, in which the Arbitral Tribunal determined that:

  • GUPC will have to pay the ACP the initial Advances which amount to $547,958,819.42; and, the additional Advances which amount to $ 299,671,507.68, which total $ 847,630,327.10.
  • The ACP is authorised to immediately collect the Guarantee issued by UniCredit AG, London branch, in the amount of $13,186,719 to guarantee the payment of interest generated from the due date of the initial advances until 16 December 2018
  • The Panama Canal Authority was not authorised to withhold amounts payable to GUPC related to maintenance services, with which it must return such amounts to GUPCSA.
  • Grupo Unidos por el Canal S.A. Sacyr S.A., Salini-Impregilo S.p.A., Jan De Nul N.V., Constructora Urbana S.A., and Sofidra S.A. they must reimburse the Panama Canal Authority the amount of $395,000 as costs and expenses of the Members of the Tribunal and administrative expenses of the International Court of Arbitration of the ICC.
  • Grupo Unidos por el Canal S.A. Sacyr S.A., Salini-Impregilo S.p.A., Jan De Nul N.V., Constructora Urbana S.A. and Sofidra S.A. they must pay the Panama Canal Authority the amount of $5,444,478.50 as a contribution to the legal costs and other expenses incurred by the ACP in relation to the arbitration.
  • All other requests for compensation required by GUPC were denied.

As a result, the ACP will continue to exercise all the legal actions that assist it in the immediate collection of those advances that are pending payment and that are duly guaranteed by Letters of Credits and Corporate Guarantees.

Last year, the tribunal had rejected a demand by GUPC for $192.8m to cover cost overruns.

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