Panama Canal Authority rejects EU mediation offer in contract row

Mon Jan 20, 2014 12:45pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Danilo Masoni and Foo Yun Chee

MILAN/BRUSSELS (Reuters) - The Panama Canal Authority (PCA) has turned down an offer by the European Commission to mediate in a multi-billion dollar dispute with a Spanish-led construction consortium which threatens to halt work on widening the century-old waterway.

The consortium, known as Grupo Unidos por el Canal (GUPC), had threatened to suspend work by Monday unless the Panama Canal Authority (PCA) paid $1.6 billion in cost overruns on one of the world's largest construction projects. But on Sunday the group backed down from the threat.

The European Commission said on Monday GPUC, led by Spanish builder Sacyr (SCYR.MC: Quote), had requested mediation by the European commissioner for industry Antonio Tajani, who accepted.

But the PCA immediately rejected it.

"The contract over a third set of locks has already mechanisms to resolve disputes and none of them includes the intervention of a third party," PCA said in a statement.

"This will only be dealt with in accordance with what the contract says," it also said.

Earlier on Monday Tajani had told Reuters by telephone he believed a compromise could be found allowing Panama to have the work done and the European companies not to lose the contract.

"In the meantime it is important that the deadline date (to stop work) be put back. This is the first step and it looks to me as if we are heading in this direction," he had said.   Continued...

A cargo ship is seen at the Panama Canal in Panama City January 8, 2014. REUTERS/Carlos Jasso