The International Chamber of Commerce (ICC) has notified a final award in favour of the Panama Canal Authority (ACP) in another of the disputes arising from the Third Set of Locks project – one of the largest engineering projects in the world.
The contractor for the project, Grupo Unidos por el Canal, SA (GUPC), and its shareholders had prevented the ACP from calling letters of credit for $548 million. They also sought a declaration that GUPC should not repay advances of $847 million until all disputes between the parties were resolved. This, they said, would not occur for a number of years.
The Tribunal rejected those claims and declared that GUPC should repay the Advances of $847 million which were already due for repayment. The Tribunal also awarded the ACP:
- $13,186,719 in respect of interest (for the late repayment of the Initial Advances) because the ACP had been prevented from calling the letters of credit
- $5,444,478 in respect of costs of the arbitration
- $395,000 in respect of fees and expenses of the Tribunal and the ICC.
The Tribunal also found that amounts due to GUPC in respect of maintenance services should be paid.
Manus McMullan QC was lead advocate for the ACP and Peter Land was his junior. They were instructed by Nick Henchie and Louise Woods of Vinson & Elkins along with Raid Abu-Manneh and Barry Machlin of Mayer Brown. Civil law aspects were argued by Andres Jana of BMAJ Abogados.
Karla G. Arias S. and Carlos Arrue Montenegro of the ACP’s legal department were a significant and integral part of the legal team, dealing with all parts of the case.
The advances dispute is the second of the disputes between GUPC and the ACP to go a final award in international arbitration. In the first dispute GUPC’s claims for $194 million and an extension of time of 246 days were rejected. The ACP was awarded more than $22 million in costs. https://www.atkinchambers.com/manus-mcmullan-qc-lead-advocate-win-panama-canal-authority/
GUPC has notified further multi-billion dollar claims and there will be a series of arbitrations to determine them. Manus McMullan QC is instructed as lead advocate on all the claims. Peter Land is also instructed on all the claims.
About the Panama Canal
The Panama Canal is of vital importance to shipping and world trade. Inaugurated in 1914, it connects the Atlantic Ocean with the Pacific Ocean. The Panama Canal is approximately 80 kilometres long and uses a system of locks (compartments with entrance and exit gates). The locks function as water lifts: they raise ships from sea level (the Pacific or the Atlantic) to the level of Gatun Lake (26 meters above sea level); ships then sail the channel through the Continental Divide. Each of the original set of locks bears the name of the place where it was built: Gatun (on the Atlantic side) and Miraflores and Pedro Miguel (on the Pacific side). Ships from all parts of the world transit daily through the Panama Canal. Some 13 to 14 thousand vessels use the Canal every year. The Panama Canal serves more than 144 maritime routes connecting 160 countries and reaching some 1,700 ports in the world. Throughout the twentieth century many ships were constructed so that they were as large as possible but could still pass through the Canal. They were known as Panamax vessels, and later Panamax Max vessels. The original sets of locks allow the passage of vessels that have a capacity of up to 5,000 TEUs. As world trade increased and even larger vessels were constructed (Post Panamax) there was increasing demand for an expanded route through the Canal.
About the Panama Canal Expansion Programme
Described as the biggest engineering project in the world in terms of technical and technological complexity, the new locks sit alongside the existing canal and were inaugurated on 26 June 2016. The new sets of locks: Agua Clara (on the Atlantic side) and Cocoli (on the Pacific side), created a third lane of traffic doubling the cargo capacity of the waterway, allowing the passage of ships with a length of 366m, a width of 57m, a draught of 18m and a capacity of 13,000/14,000 TEUs. The new sets of locks also use less water due to water-savings basins that recycle 60 percent of the water used per transit. The Design and Build of the Third Set of Locks Contract was part of a larger Expansion Programme, which included the widening and deepening of the Pacific and Atlantic Entrances, the creation of the Pacific Access Channel, improvement to the navigational channels, and improvements of the water supply. The Third Set of Locks Contract was awarded to an international consortium called Grupo Unidos por el Canal (GUPC) made up of infrastructure and engineering companies: Italy’s Salini Impregilo, Spain’s Sacyr, Belgium’s Jan de Nul and Constructora Urbana from Panama.
About Manus McMullan QC
International Arbitration Silk of the Year 2018, Legal 500 Bar Awards
International Arbitration Silk of the Year 2017, Chambers UK Bar Awards
Construction Silk of the Year 2016, Chambers UK Bar Awards
Energy and Construction Silk of the Year 2015, Legal 500 Bar Awards
Manus McMullan QC specialises in commercial disputes with an emphasis on energy, natural resources, infrastructure, professional indemnity and insurance matters both domestically and internationally. He is often the lead advocate on the largest and most high-profile disputes in these fields. He has represented a wide range of clients including multi-national corporations, government entities, professional advisers, contractors and individuals all over the world.
Manus is recommended by both the Legal 500 and Chambers and Partners legal directories in the fields of international arbitration, construction, energy and natural resources and professional negligence. He has won many awards and accolades as both a junior and senior counsel.
About Peter Land
Peter Land is instructed in relation to disputes across all areas of construction, engineering and information technology. Originally qualifying as an engineer, prior to coming to the bar he gained 15 years’ experience across a broad range of industry sectors including power generation, construction, defence, oil and gas, financial and professional services, and FMCG., initially as an engineering consultant and latterly as an IT consultant, manager and project manager.
Peter has acted for corporations, partnerships, local government authorities and private individuals and is experienced conducting litigation in the English Courts and in arbitration, both domestically and internationally including in the Middle East. In addition to his advocacy work he takes adjudication and arbitration tribunal appointments. He is co-author of the Construction Adjudication and Payments Handbook (OUP, 2013).
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About Atkin Chambers
Atkin Chambers is a leading set of commercial barristers, described by the Legal 500 as “the place to go for substantial international disputes” and “the premier construction set”.
Our barristers specialise in construction and engineering, infrastructure and utilities, energy and natural resources, procurement, shipbuilding and offshore construction, transport, IT and telecommunications, professional negligence, and international arbitration.
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