As of March 31st, 2019
From January through March 2019, the Panama Canal Authority (ACP) continued monitoring and verifying progress on the items included in the Schedule of Outstanding Minor Works and Defects (SOMWD). Meanwhile, while the Contractor for the Design and Construction of the Third Set of Locks, Grupo Unidos por el Canal, S.A. (GUPCSA) presented the “as-built” drawings that were pending submittal.
Training for ACP personnel involved in the operation and maintenance of the Post-Panamax Locks continued as part of the transition period that began on 24 December 2018 to facilitate the transfer of responsibilities of GUPCSA maintenance and repair functions to the ACP, as stated by contract.
GUPCSA claims are currently being treated by the International Chamber of Commerce (ICC) for arbitration, with five arbitration requests filed by the Contractor to the ICC to date.
The first arbitration, related to the Pacific Entrance Cofferdam, was settled by the Arbitral Tribunal in favor of the ACP, as reported for the previous quarter.
Regarding the second arbitration, related to Concrete and Aggregates, On-Site Laboratories and Pacific Foundation, the hearing of the case was held on 21 January 2019 and concluded on 15 February 2019. A final hearing, of two days’ duration, is scheduled for October 2019, and the announcement of the arbitral award is expected during the first semester of 2020.
For the third arbitration, on Lock Gates and Labor, the parties are following the agreed procedure for the appointment of the President of the Arbitral Tribunal, and for the fourth arbitration, involving Disruption, Unforeseeable Physical Conditions and other Claims, a case management conference has been scheduled for May 2019.
In the matter of the fifth arbitration, related to Advance Payments, and the arbitration to enforce the bond that guarantees the repayment of the advanced funds for Lock Gates, in which the Arbitral Tribunals rendered Arbitral Awards in favor of the ACP during the last quarter of 2018, the ACP successfully executed all letters of credit and corporate guarantees supporting the payment of those Advances. The process ended in the effective recovery of all advance payments due in the amount of USD$848 million, plus interest, costs of the proceedings and legal expenses granted by the Arbitral Tribunals and the English Courts in favor of the ACP.
CH2MHill continued to address several matters related to the claims filed by GUPCSA. During the last quarter, CH2MHill helped draft and review technical reports for the defense in arbitrations related to the Concrete and Aggregates, On-site Laboratories and Pacific Foundation, Disruption, Unforeseeable Physical Conditions and other Claims.
In addition, the consultant provided follow-up and monitored the activities executed by GUPCSA for the completion of the SOMWD. During this period, CH2MHill supported the identification of defects and the collection of evidence to support the Notifications of Defects that must be sent to the locks Contractor, as stated in the Terms of Agreement.
During this quarter, Vinson & Elkins RLLP and Mayer Brown LLP, both legal advisory services consultants for international contracts, provided advice on various issues related to the locks contract.
Vinson & Elkins RLLP provided legal opinions, and reviewed and prepared documents related to the various claims filed by GUPCSA.
Concurrently, the legal advisors took over the representation and defense of the ACP and worked alongside in-house lawyers before the Arbitration Tribunal constituted for the Arbitration on Concrete and Aggregates, On-Site Laboratories and Pacific Foundation, filed by GUPCSA against the Authority, at the hearing in Miami from 21 January to 15 February 2019.
Mayer Brown LLP lawyers provided advice and legal opinions, reviewed and drafted documents related to the arbitration requested by GUPCSA and the process to execute the corporate guarantees carried out in English Courts.
Concerning the locks project Construction All-Risk and Liability Insurance coverage, based on the contract insurable amount, Willis Limited Insurance made the premium final calculations, which are being reviewed by the ACP to proceed with the corresponding final payment.