The International Chamber of Commerce (ICC) has notified a final award in favour of the Panama Canal Authority (ACP) in one 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 pursued claims for more than US$194m in respect of the Pacific entrance cofferdam. GUPC had also claimed an extension of time of 246 days. All claims were rejected.
In addition to dismissing GUPC’s claims, the Tribunal ordered GUPC to pay more than US$22m to ACP towards its costs of the arbitration process. GUPC was also ordered to reimburse ACP a further US$900,000 in respect of fees and expenses which ACP had already paid to the ICC Court, recognising the result as a victory for the ACP.
The cofferdam was a temporary structure designed and built by GUPC in order to carry out some of its work in dry conditions. The Tribunal found that GUPC had been entirely responsible for the design and construction of the cofferdam at their own risk. The ACP had provided all the information in its possession which it considered relevant. There was extensive information provided on previous dredging which GUPC should have taken into account but did not. Claims by GUPC that ACP had been grossly negligent were considered and rejected.
Manus McMullan QC was lead advocate for the ACP. He was instructed by Nick Henchie of Vinson & Elkins. He was also instructed by Raid Abu-Manneh of Mayer Brown. He was supported by Jim Loftis and Alejandro Lopez and other attorneys from those firms. Agenor Correa Pulice, Carlos Arrue Montenegro and Karla Arias Silva of ACP’s legal department were also a significant and integral part of the legal team.
The cofferdam dispute is the first of a number of claims by GUPC to be decided in arbitration. GUPC has notified 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.
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
Construction Silk of the Year 2016, Chambers UK Bar Awards
Energy and Construction Silk of the Year 2015, Legal 500 Bar Awards
Manus 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 a silk.
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