The expansion of the Panama canal and its ruling international contract: A mega-project sailing in troubled waters?

Abstract

The world has recently witnessed the inauguration of the Panama Canal Expansion. This civil engineering mega-project, resulting from a particular historical, political and economic background, is going to globally reconfigure the maritime transport. The Panama Canal Expansion includes the creation of a new lane by the design and construction of the third set of locks, which has undergone to a qualified tender process. The relationships between the parties (the Spanish led consortium Grupo Unidos por el Canal as the contractor and the Panama Canal Authority as the Employer) and the different actors of the project are configured by an extraordinarily complex international contract drawn from a FIDIC form but substantially amended taking into account the particularities of this mega-project. The contractual provision ruling the dispute resolution terms sets forth a multi-tier clause that addresses in first place to the negotiation between the parties, continues with a Dispute Resolution Board (DAB) and finally ends with an arbitration. The referred escalated clause shall be insightfully analyzed in this paper, in light of the status quo of the worth million claims filed by the contractor up to this date.