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Panama Canal contractors awarded $233mn in dispute

Dispute board awards initial claim and six-month extension to European consortium building the project

Panama canal project
Panama canal project

The Panama Canal Authority has been held responsible for the delays incurred in the project's execution following a long-running dispute between the country's government and the consortium building it.

A Dispute Adjudication Board (DAB) found in favour of the GUPC consortium building the canal in a dispute over the delays, recognising that they were entitled to an initial claim of $234mn to compensate for work done. Other claims submitted by the consortium will be subject to upcoming decisions.

The consortium, which is made up of Spanish construction company Sacyr, Italy's Salini Impregilo and Belgium's Jan De Nul, had taken their case to the DAB following a dispute which began early last year after it downed tools when payment stopped on the $5.2bn project, which will see a third set of locks added and the canal widened in order for bigger ships to be able to pass through it.

The Panama Canal Authority, a government-led body responsible for delivering the project, had blamed the consortium for delays and cost overruns of up to $1.6bn.

The consortium had blamed delays on geological difficltues, which had been rejected by the authority leading to an impasse that led to work stopping last year, causing further delays.

The DAB agreed with a claim by contractors that poor quality basalt had been used in the production of concrete used in the project.

As well as awarding the initial $234mn claim, it agreed to a request by the consortium that the contract deadline be increased by six months. It also agreed that the concrete mix initially suggested by GUPC, but rejected by APC, would have been sufficient to last for the anticipated 100-year lifespan of the project.

GUPC CEO Giuseppe Quarta said: "We are pleased with the determination of the DAB because they recognize the merit of our claims that were based on technical realities affecting the cost, logistics and execution of the work.

"All claims were detected in time and presented according to the requirements of the contract, however the systematic and unjustified rejection by ACP has impacted the project and the contractor.

"These decisions raise the question on if the delays suffered by the project and the economic damage suffered by the contractor and its partners, could have been avoided with a more reasonable stance by ACP."

Work on the project is due to complete next year.

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