Monica Effio - drbfconferences.org

! ACP’s Legal aspects ! Panama Canal Performance ! Locks Contract § Selec6on process § Contract Relevant Clauses § Claims and Disputes Mechanism

¿Why a Cons6tu6onal Title? ! The Canal must have an exclusive regula6on which is the excep6on to the public administra6on regula6ons. ! These maHers are dealt with in the provisions that estate: § Special Employment Regime § The Canal uninterrupted opera6on § Inalienable patrimony of the Panamanian na6on § Autonomous administra6on § Fiscal Control of the administra6on 3

! Art 315: The Canal is an inalienable patrimony of the na6on, open to the transit of ships of all na6ons ! Art 316: ACP is autonomous, not subject to the payment of taxes. Separates the patrimony of the ACP from that of the Panamanian Government ! Art 316: The Panamanian Cons6tu6on provides that the ACP shall be responsible for the administra6on, opera6on, conserva6on, maintenance and moderniza6on of the Panama Canal, in an efficient and profitable manner ! Art 320: Establishes ACP’s full financial autonomy 4

Ar6cle 319 of the Cons6tu6on The regime contained in the Cons6tu6onal Title shall only be developed by laws that establish general rules which will be further exclusively regulated by the Board of Directors of the Authority. The Cons6tu6on expressly establishes the Contrac6ng System of the Canal 5

National Constitution (Title XIV)ConstitutionACP Organic LawRegulations of the ACPContractingRegulations

According to Ar.cle 53, the principles of the ACP Contrac.ng system are: ! Efficient and expedi.ous acquisi.on of goods and services ! Decentralized delega.on of contrac.ng authority. ! Promo.on of full and open compe..on on purchases and contracts. ! Impar.al decisions. ! Post audi.ng of all expenses. ! Reasonable flexibility within adequate parameters to decide emergency situa.ons.

! Pre-­‐qualifying tendering process ! The ACP uses the non-­‐nego6ated best value process ! The best value was weighted: 55% for the technical proposal and 45% for the price proposal. ! In order to award the Contract ACP confirmed: § Proposal complies with all of the requirements § Proposal obtains the best scores for both the technical and price proposal § Proposer has not experienced a substan6al change in its composi6on and condi6ons as from their pre-­‐qualifica6on

Consortium Members Designers Gate ManufacturersACS Servicios, Comunicaciones y Energía, S.L. – LeaderSener Ingeniería y SistemasC.A.N.A.L.Acciona Infraestructuras, S.A.Fomento de Construcciones y Contratas, S.A.Haskoning Nederland BVMott Macdonald LimitedACS Servicios, Comunicaciones yEnergía, S.L.Hochtief Construction AGHochtief ConsultConstructoras ICA S.A. de C.V.Bouygues Travaux Publics – LeaderBilfinger BergerAtlántico-Pacífico dePanamáVINCI Construction Grands ProjetsConstrucoes e Comercio Camargo Correa S.A.Construtora Andrade Gutierrez S.A.Construtora Queiroz Galvao S.A.AECOM – LeaderALSTOM HydroEnergia BrasilALSTOM Hydro Energia BrasilBARDELLA Ind. MecánicasBechtel,Taisei,MitsubishiCorporationBechtel International, Inc. – LeaderTaisei CorporationMitsubishi CorporationBechtel International, Inc. –LeaderWuchang ShipyardGrupo Unidospor el CanalSacyr Vallehermoso S.A. – LeaderImpregilo S.p.A.Jan de Nul n.v.Montgomery Watson Harza (MWH) –LeaderIV-GroepHeerema Fabrication GroupConstructora Urbana, S.A.Tetra Tech

Consor.a Members Designers Gates manufacturers ACS Servicios, Comunicaciones y Energía, S.L. – Leader Sener Ingeniería y Sistemas C.A.N.A.L. Acciona Infraestructuras, S.A. Fomento de Construcciones y Contratas, S.A. Haskoning Nederland BV MoV Macdonald Limited ACS Servicios, Comunicaciones y Energía, S.L. Hoch.ef Construc.on AG Hoch.ef Consult Constructoras ICA S.A. de C.V. Bechtel Internacional, Inc. – Leader Bechtel, Taisei, Mitsubishi Corpora.on Taisei Corpora.on Bechtel Internacional, Inc. – Leader Wuchang Shipyard Mitsubishi Corpora.on Grupo Unidos por el Canal Sacyr Vallehermoso S.A. – Leader Impregilo S.p.A. Jan de Nul n.v. Constructora Urbana, S.A. Montg. Watson Harza (MWH) – Leader IV-­‐Groep Tetra Tech Heerema Fabrica.on Group 11

! Conceptual pre-­‐design ! ACP contracted physical model ! Design-­‐Build Contract ! FIDIC standard contract (based on Yellow Book – highly amended) ! S.pend of US$15 Million divided equally between the unsuccessful Tenderers who submiVed a fully compliant Tender ! Individual Mee.ngs with the pre-­‐qualified Consor.a before the date for submission of tenders were held

! $400 Million – Performance Bond issued by Zurich American Insurance Company ! $200 Million – Defects No.fica.on Period (DNP) § Contractor will submit a LeVer of Credit for 200 Million for the DNP ! $50 Million – Payment Bond, issued by Zurich American Insurance Company § Standard AIA Payment Bond Form 312

The contractor Security Instrument issuer shall have an acceptable issuer ra.ng according with the Contract. In the event that, at any .me, any Contractor Security Instrument ceases to have and Acceptable Bond Issuer Ra.ng or an Acceptable Financial Ins.tu.on Ra.ng, as the case may be, the Contract establishes several remedies to prevent an increase of the risks or the ACP being in a disadvantaged posi.on.

! All members of the Consor6um are joint and severally liable to the ACP. ! Par6cipa6on of Consor6a created the need to assign the contract to a company incorporated for the specific purpose of execu6ng the works. ! In order to prevent the ACP being in a disadvantage posi6on, the contract establishes the possibility to assign the contract to a specific project company where: § The consor6um members are the only shareholders § The percentage of share capital owned by each member shall be equivalent to the member’s interest in the consor6um § The members a_er de assignment remain joint and severally liable to the ACP

! $300,000 per day up to $54.6 Million (approx. 6 months) ! Paid for every day which shall elapse between the Time for Comple6on for the whole of the Works and the date stated in the Taking-­‐Over Cer6ficate.

! $600 Million and does not include § Loss of profit or revenue § Loss of any contract § Consequen6al or indirect damages § Loss of use of any works ! Intellectual and industrial property rights ! Indemni6es ! Employer equipment and free issue materials ! Will not apply in case of fraud, deliberate or inten6onal default, fault or serious negligence of the contractor

! The contract establishes milestones the Contractor shall comply with regarding certain stages of the Works, which if not complied with the ACP will retain certain amount from payment to the Contractor. ! The Contractor established in his proposal the dates when such milestones shall be accomplished

! Price escala.on § Portland Cement § Diesel fuel § Reinforcing steel § Structural shapes steel ! Indexed to relevant standards § Reinforcing Steel: “PlaHs Steel Markets Daily”, “Reinforcing Bar”, “ExWorks, US SE”, “Close/Midpoint”, in US$ per short ton; § Lock Gate, Valve and Bulkhead Structural Steel Plate and Shapes: “PlaHs La6n American Wire”, “Gulf Diesel (No. 2 Oil)” § Diesel Fuel: “PlaHs La6n American Wire”, “Gulf Diesel (No. 2 Oil)”, Closing Price, in US$ per US gallon

! Varia6ons may be ini6ated by the Contractor under Sub-­‐Clause 13.2 [Value Engineering] if, in the Contractor’s opinion the Varia6on: a. will accelerate comple6on, b. will reduce the cost to the Employer, c. will improve the efficiency or value, or d. will, otherwise, be of benefit to the Employer. ! The Value Engineering proposal shall be prepared at the cost of the Contractor. ! The Employer’s Representa6ve may, in its absolute discre6on, choose to accept or reject the Contractor’s proposal. ! Any reduc6ons to the Contract Price shall be shared 50/50 between the Employer and the Contractor.

! Contractor has 28 days to give no.ce of a claim afer became aware, or should have become aware, of the event or circumstance giving rise to the claim. ! Afer that, the Contractor has 42 days to present a fully detailed claim to the Employer’s Representa.ve (ACP’s Contrac.ng Officer). ! The Employer’s Representa.ve has 42 days to respond with the approval or with disapproval and detailed comments, afer receiving the claim or any further par.cular suppor.ng a previous claim, or within such other period as may be proposed by the Employer’s Representa.ve and approved by the Contractor. a. If the Employer’s Representa.ve approves the claim, a Contract varia.on should be issued. b. If claim is disapproved the Contractor may refer the dispute to the Dispute Adjudica.on Board (DAB) for its decision. There is no .meframe to submit a dispute to the DAB.

The Locks Contract establishes in Sub-­‐Clause 20.2 that disputes between the par6es shall be adjudicated by a Dispute Adjudica6on Board (DAB). The DAB is composed by three (3) members: • Peter Chapman, President • Robert Smith, nominated by ACP • Pierre Genton, nominated by GUPCSA

! If a dispute arises between the Par.es, either Party may refer the dispute in wri.ng to the DAB for its decision, with copies to the other Party. ! Both Par.es shall promptly make available to the DAB all informa.on, access to the Site, and appropriate facili.es, as the DAB may require for the purposes of making a decision on such dispute. ! The DAB shall not act as arbitrators. ! Within 84 days (or the period agreed by the Par.es) afer receiving the informa.on from both par.es, the DAB shall give its reasoned decision which shall be binding on both Par.es unless and un.l it is revised in an amicable seVlement or an arbitral award.

! Impar6ality and independence from the par6es; ! Obliga6on to inform of any fact or circumstance which could appear inconsistent with its impar6ality or independence; ! Conduct hearings as required subject to Contract clauses, rules of procedure and natural jus6ce; ! Decide on their own jurisdic6on and the scope of any dispute submiHed before them.

! It is more beneficial to discuss conflicts at an early stage, close to the situa6on ! It could be highly costly to involve and explain advisors on the disputes way a_er the facts. It could be more complicated to collect informa6on and evidence at a later stage ! An arbitral tribunal knows about the case later on the project without following the works closely ! It is not an arbitra6on process but due process is applied (evidence, witness without being as formal as an arbitra6on) ! Resolu6on of conflicts in real 6me

! Either Party within 28 days afer receiving the DAB's decision may give no.ce of dissa.sfac.on, otherwise the DAB’s decision shall become final and binding upon both Par.es. ! The no.ce of dissa.sfac.on shall set out the maVer in dispute and the reasons for dissa.sfac.on. ! Neither Party shall be en.tled to commence arbitra.on of a dispute unless a no.ce of dissa.sfac.on has been given, except as stated in Sub-­‐Clause 20.7 [Failure to Comply with Dispute Adjudica.on Board's Decision] and Sub-­‐Clause 20.8 [Expiry of Dispute Adjudica.on Board's Appointment].

! Where no.ce of dissa.sfac.on has been given under Sub-­‐Clause 20.4 [Obtaining Dispute Adjudica.on Board's Decision], both Par.es shall aVempt to seVle the dispute amicably before commencing arbitra.on. ! However, unless both Par.es agree otherwise, arbitra.on may be commenced on or afer the 56th day afer the day on which no.ce of dissa.sfac.on was given, even if no aVempt at amicable seVlement has been made.

Dispute No. Subject Dispute referred to DAB DAB Decision Date Date 1 Independent Laboratory Tes6ng 20-­‐April-­‐11 23-­‐Aug-­‐11 2 ACP's Authority to Instruct GUPC to Pay the Mangrove Compensa6on Fee 24-­‐May-­‐11 26-­‐Oct-­‐11 3 Interpreta6on and Applica6on of Sub-­‐Clause 5.2 [Contractor's Documents] 17-­‐Jun-­‐11 23-­‐Oct-­‐11 4 Dewatering of the Pacific 1939 Excava6ons 23-­‐Feb-­‐12 5-­‐Aug-­‐12 5 Mud in 1939 Excava6on 2-­‐Mar-­‐12 10-­‐Aug-­‐12

Dispute No.SubjectDispute referred to DABDAB Decision DateDate 6 Increase in labor wages 14-­‐Aug-­‐12 16-­‐Nov-­‐2012 7Addi6onal Costs related to Range Target (Protec6on Works) 14-­‐Aug-­‐1218-­‐Nov-­‐2012 8 Pacific Entrance Cofferdam and Dredging 14-­‐September-­‐12 Aug 2013 9 Adverse Clima6c Condi6ons 10-­‐Oct-­‐2012 July2013 10 Laboratory Tes6ng Quantum 27-­‐Sep-­‐201229-­‐Abr-­‐2013

! Arbitra.on can not be invoked without previous DAB process. ! The dispute shall be finally seVled under the Rules of Arbitra.on of the Interna.onal Chamber of Commerce (the "Rules“) ! In addi.on to the Rules, the arbitra.on shall be conducted according to the Interna.onal Bar Associa.on Rules on the Taking of Evidence ! The dispute shall be seVled by 3 arbitrators who shall all be licensed lawyers appointed in accordance with the Rules ! The arbitra.on shall be decided in law (within the meaning of Panamanian law) and shall be conducted in English ! The venue of the arbitra.on shall be Miami, Florida -­‐ USA ! The arbitra.on agreement and the arbitra.on shall be governed by the United States Federal Arbitra.on

! The arbitrators shall have full power to open up, review and revise any instruc.on, opinion or determina.on of the Employer's Representa.ve, and any decision of the DAB, relevant to the dispute. ! Nothing shall disqualify the Employer's Representa.ve from being called as a witness and giving evidence before the arbitrators on any maVer whatsoever relevant to the dispute. ! Neither Party shall be limited in the proceedings before the arbitrators to the evidence or arguments previously put before the DAB ! Any decision of the DAB shall be admissible in evidence in the arbitra.on