The International Chamber of Commerce in Miami (ICC) has ordered the Grupo Unidos por el Canal (GUPC) consortium to repay the Panama Canal Authority (ACP) a total of USD 848 million in contract advance payments.
The decision is part of the ongoing arbitration process between GUPC, the contractor responsible for the design and construction of the third set of locks as part of the canal expansion project, and ACP.
Namely, the GUPC and its shareholders launched an arbitration case against the canal authority claiming the advances granted by the ACP had not expired and were not enforceable until its claims were resolved. However, on December 12, the court ruled in favor of ACP.
The Panama Canal Authority said on Monday, December 17, that it had executed all three letters of credit that guaranteed for the repayment of USD 547.9 million worth of initial advances. The canal authority is entitled to a recovery of additional advances worth USD 299.6 million.
The authority added that it had initiated the execution of the letter of credit issued by UniCredit AG, the London branch, to guarantee the payment of USD 13.1 million owed by GUPC, as interest on the initial advances, and that it expects to receive the payment during the next few days.
“The authority will continue to exercise all the legal actions and remedies within its reach for the full and prompt collection of these sums of money owed by the contractor and its shareholders under the contract and the arbitration award,” the canal authority said.
Commenting on the case, Salini Impregilo, GUPC partner said its pro quota contract advanced payments, equal to a principal amount of USD 217 million, will be paid immediately from its available cash resources.
The advances related to variation orders, also covered by corporate guarantees, for a pro quota principal amount of USD 117 million, will be subject to a decision by a London court, whose hearing is set for March 2019.
“The arbitration award will not affect the outcome of the outstanding arbitration cases involving GUPC and its partner Salini Impregilo for a total request of USD 5.2 billion,” the company said.
Grupo Unidos por el Canal (GUPC), comprised of Spain’s Sacyr, Italy’s Salini – Impregilo, Belgium’s Jan De Nul and Panama’s Constructora Urban, SA (CUSA), was awarded the USD 3.2 billion project to expand the canal in 2009.
However, the amount that GUPC presented upon the completion of the works was higher than initially projected.
On December 19, 2016, GUPC filed two arbitration requests before the International Court of Arbitration of the International Chamber of Commerce (ICC), claiming up to USD 5.67 billion.
The expanded canal was inaugurated in June 2017. The project included the construction of a new set of locks on the Atlantic and Pacific sides of the waterway and the excavation of more than 150 million cubic meters of material, creating a second lane of traffic and doubling the cargo capacity of the waterway.
World Maritime News Staff