Caribbean & Central America - February 2016 (ISSN 1741-4458)

Varela sets Canal expansion completion date: In his state-of-the-nation address last month, President Juan Carlos Varela put the expected completion date for the US$5.3bn Panama Canal expansion project (which is 96% finished) at “around May 2016”. This has been pushed back from October 2014 amid a dispute over cost overruns with the multinational consortium Grupo Unidos por el Canal [GUPC]). The latest date has still been subject to doubt amid continued legal wrangling between Panama Canal Authority (ACP) and GUPC which, comprising Spain’s Sacyr Vallehermoso, Italy’s Impreglio, Belgium’s Jan de Nul and Panama’s Constructora Urbana S.A [Cusa], is in charge of constructing the third set of locks – the expansion plan’s biggest project. While a deal was reached in 2014 over the cost dispute (which briefly led GUPC to suspend work on the expansion plan early that year [RC-14-01]), the timeframe again was cast in doubt last year after localised seepage was found in the concrete sill between the lower and middle chamber of the Canal’s expanded Pacific Locks. After issuing a statement on 1 December 2015 that “work to reinforce the sills in the new locks will be completed in January 2016”, on 18 December the ACP said the inauguration is expected to take place in the second quarter of 2016, with the commercial opening soon thereafter. However, the following day GUPC issued a statement warning that “the time to reach that date depends on the willingness and availability of the ACP”, which it accused of continuing to “delay any payment awarded under the contract, limiting the progress of the Project”.

The legal battle between the two sides is ongoing. On 31 December 2015, an independent arbitration panel, the Dispute Adjudication Board (DAB) (which a year earlier had awarded the GUPC US$233m of the US$463m it was seeking from the ACP in relation to the dispute), again found in favour of the consortium in relation to two further complaints relating to extra labour costs and a workers’ strike, for which it awarded the GUPC US$17m (out of US$45m initially demanded). The ACP, however, maintains that while this is the fifth such case in which the DAB has found in favour of GUPC (which received a total of US$283m – albeit less than the US$803m it was demanding for the five cases), the discrepancy between the GUPC’s demands and the amount awarded raise question marks over the methods used by the consortium for calculating costs – a point which has led one lawyer to file a criminal case.

• More DAB decisions

On 31 January, the Dispute Adjudication Board (DAB) issued two further decisions in relation to claims put forward by the multinational consortium Grupo Unidos por el Canal (GUPC) against the Panama Canal Authority (ACP). In one ruling, related to costs incurred by a labour dispute, the DAB rejected outright GUPC’s demand for US$7.5m. In another, related to an increase in labour costs associated with the delay caused by a construction workers’ strike and previous legal complaints, the DAB awarded US$24.6m of the US$42.2m which GUPC was demanding.