Caribbean & Central America - January 2015 (ISSN 1741-4458)

Panama Canal Authority accused of “negligence”: A ruling by an independent arbitration panel, Dispute Adjudication Board (DAB), has found that the Panama Canal Authority (ACP) was “negligent” and ought to pay part of the overrun costs to Grupo Unidos por el Canal (GUPC), the consortium in charge of construction work on the Canal’s third set of locks – the biggest project under the US$5.2bn Canal expansion plan.

The DAB ruling, which was issued on 31 December found the ACP acted in an “unfair” way to circumvent the terms of its contract with the GUPC. In response the ACP has issued a “note of dissatisfaction”, which means the case will now go to the third and final arbiter, the International Chamber of Commerce in Miami.

According to the 167-page judgement by the DAB, GUPC was correct in filing for damages based on the fact that at the start of the canal widening project, the ACP had failed to detect the presence of fault lines in the terrain on which the canal rests. This resulted in the GUPC consortium being unable to find basalt, a key ingredient in cement, in the quantity and quality needed. The ACP was also at fault for “unjustified” delays caused by its failure to give timely approvals for the concrete mix proposed by the GUPC.

The DAB said GUPC was entitled to US$233m of the US$463m the consortium is seeking from ACP in connection with two specific issues. GUPC has total standing claims before the DAB for US$2.3bn in what the consortium describes as cost-overruns for which it is not responsible.

GUPC halted work on the locks on 5 February 2014, alleging a cash-flow crisis stemming from US$1.6bn in cost overruns that it insisted the ACP should cover. On 27 February the ACP announced that it had reached a conceptual agreement with GUPC to inject fresh funds into the project and ensure completion. The parties then signed a Memorandum of Understanding embodying the terms of the conceptual agreement, which stated that GUPC would pay US$100m and ACP would advance US$100m to enable the work to continue.

• Panama’s first cardinal

José Luis Lacunza, the bishop of the western city of David, will travel to Rome in early February to take part in the ceremony that will see him appointed as Panama’s first Cardinal.