A tribunal appointed under the rules of the International Chamber of Commerce has rejected more than US$600 million in claims brought against the Panama Canal Authority by the contractor of the Design and Construction of the Third Set of Locks project. As a result of these claims being dismissed the contractor has been ordered to pay the Panama Canal over US$20m in costs.
In this latest arbitration the contractor brought eight separate claims in three categories. First, claims relating to the design of the bespoke lock gates. The contractor claimed that the Panama Canal Authority had hidden information in relation to a seismic reduction factor which the contractor had incorrectly used in its calculations. The contractor had also alleged that the Canal Authority had varied the partial safety factor for fatigue and increased the number of load cycles the gates must perform. By a majority decision the contractor was not successful in any of these three claims.
The contractor’s shareholders also brought claims for alleged lost return on investment. These claims were also rejected by a majority decision.
In relation to increases of labour rates the contractor made four claims. Two were rejected outright. In relation to the other two the Tribunal made a declaration that further payment up to a limit of $34.8m may be due, but whether the contractor was in fact entitled to these monies or had to repay the canal was to be determined in another arbitration.
The trio from Atkin Chambers advised in the case from the start and other than in relation to Panamanian law issues (covered by Andrés Jana) did all the advocacy for the Panama Canal Authority including the three-week evidential hearing in Paris and two days of closing submissions in Panama.
Manus McMullan KC is lead advocate for the Panama Canal in all matters pertaining to the Design and Construction of the Third Set of Locks project. He has successfully represented the canal in a number of proceedings, including at the Dispute Adjudication Board, in arbitrations and in the UK Commercial Court. This is the fourth time Manus has represented the canal at an international arbitration, the third for Peter Land and the second for Christopher Lewis KC. The Panama Canal Authority has been successful on each occasion. Details on the other cases can be found here:
- Manus McMullan QC, Christopher Lewis QC and Peter Land help to secure US$272m for the Panama Canal Authority (11 May 2021)
- Manus McMullan QC and Peter Land in win for the Panama Canal Authority (17 Dec 2018)
- Manus McMullan QC lead advocate in win for Panama Canal Authority (3 August 2017)
Manus, Chris and Peter are also instructed in the final arbitration between the Panama Canal and the contractor which includes the canal’s claims for delay and the contractor’s and shareholders’ remaining claims for over $3.5 billion.
