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Expansion of Panama Canal hangs on arbitration at US court

Outstanding issues in the client-contractor dispute on the Panama Canal expansion project will be settled through international arbitration at the Court of Miami, US. 

The Panama Canal Authority (ACP) and its contractor, the Grupo Unidos por el Canal consortium (GUPC), fell out towards the end of last year.

GUPC warned that it would stop work on the Third Set of Locks project if the ACP refused to pay for growing cost overruns it claimed were caused by faulty technical data provided by the client.

GUPC alleged cost overruns had reached £976M. ACP insisted the contractor continue work, with any claims being settled by arbitration.

This arbitration will take place in Miami, with discussions over an initial £120M of claims already underway. In March, a deal was agreed to provide extra funding for the project, with ACP and GUPC each putting up a further £60M. This contract has since been signed.

The agreement provides for the completion of the project by 31 December 2015, with a number of intermediate steps, such as the delivery of the lock gates – eight out of 16 have already arrived in Panama – by February 2015. GUPC has also appointed a new chief executive.

Giuseppe Quarta is a manager with Italian firm Salini Impreglio, one of the consortium’s four companies; the others are Spanish firm Sacyr, Belgian outfit Jan De Nul, and local Panama company Cusa.

The Third Set of Locks project, which currently employs around 7,500 people, involves the construction of a new canal that will add to the two existing canals.

Works on the project are currently 77% complete. The Panama Canal will celebrate its 100th anniversary on 15 August this year.

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