Panama Canal goes to international arbitration to settle dispute

The Panama Canal Authority (ACP) will go to an international arbitration panel to review a decision by the Dispute Adjudication Board (DAB) to award $233m to the consortium GUPC over cement quality in the canal’s expansion project.

GUPC, which is building the third set of future locks was awarded $233m of the $463m it claimed in a dispute over the cement quality. The international arbitration would take place in Miami, and could last more than two years.

The consortium has filed a series of claims totalling some $2.3bn over the dispute that halted work early last year.  On 31 December, the DAB, the second level of arbitration established to solve contractual disputes, said the consortium was entitled to $233m of the $463m it was seeking, as well as a six-month contract extension. The DAB decision was approved by two of the three members’ votes.

The entitlement was justified because the consortium was unable to obtain the basalt needed for the cement that the canal authority said would be available at the commencement of work. The board also stated that the canal authority was at fault for unjustified delays as a result of not giving timely approval for the concrete mix proposed by the consortium.

Canal officials have said that the flooding the locks may begin in the last quarter of 2015 with tests lasting six months. The ACP is looking at inaugurating the expanded canal early in the second quarter of 2016.



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