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Lawyers, other representatives, expert(s), tribunal’s secretary

Final Award

The references to the "Tribunal" or the "Arbitral Tribunal" in Chapters VIII to XI of the Award must be read as references to the majority of the Arbitral Tribunal, since this is a majority award.

Chapter I. The Parties

Section I: The First to Fourth Claimants

1.
GRUPO Unidos POR el Canal, S.A., an incorporated Panamanian sociedad anónima existing under the laws of Panama and having its registered offices at 22B Brujas Road, Cocoli, Republic of Panama. hereinafter referred to as "First Claimant", or "GUPC", or the "Contractor";
2.
SACYR VALLEHERMOSO, S.A., a sociedad anónima, existing under the laws of Spain and having its registered offices at Paseo de la Castellana 83-85-28046, Madrid, Spain. hereinafter referred to as "Second Claimant" or "Sacyr, S.A.";
3.
SALINI-lMPREGILO S.P.A., a società per azioni, existing under the laws of Italy and having its registered offices at 97, Via dei Missaglia, 20142, Milan, Italy. hereinafter referred to as "Third Claimant";
4.
Jan DE Nul N.V., a naamloze vennootschap, existing under the laws of Belgium and having its registered offices at Tragel 60, 9308 Hofstade-Aalst, Belgium. hereinafter referred to as "Fourth Claimant" or "Jan de Nul";
5.
Claimants 1- 4 are hereinafter collectively referred to as "Claimants";
6.
Claimants are represented in this arbitration by their duly authorized attorneys mentioned at pages 1 -2 above.

Section II: The Respondent

7.
Autoridad DEL Canal DE Panama, an autonomous legal entity of the Republic of Panama, created by the Panamanian Constitutional Title XIV and by Law 19 of 1997, having its registered offices at Building 739, Corozal Panama, Republic of Panama.

hereinafter referred to as "Respondent" or "ACP" or the "Employer";

8.
Respondent is represented in this arbitration by its duly authorized attorneys mentioned at page 1 above.
9.
Claimants and Respondent are hereinafter individually referred to as "a Party" and collectively as "the Parties," except as otherwise specifically stated.

Chapter II. The Arbitral Tribunal, the Arbitration Clause, the Choice of Law Clause and the Language of the Proceedings

Section I. The Arbitral Tribunal

10.
The Arbitral Tribunal has been constituted as follows:

- Claimants have nominated as arbitrator:

Dr. Bernardo M. Cremades
Goya 18, 2nd Floor
28001 Madrid
Spain
Tel: +34 91 423 72 00
Fax: +34 91 576 97 94
Email: bcremades@bcremades.com

whose nomination as co-arbitrator has been confirmed by the Secretary General of the ICC International Court of Arbitration ("ICC Secretary General"), in accordance with Article 13(2) of the ICC Arbitration Rules in force as from 1st January 2012 ("ICC Rules"), on 19 March 2014.

- Respondent has nominated as arbitrator:

Dr. Robert Gaitskell QC
Keating Chambers
15 Essex Street
London WC2R 3AA
United Kingdom
Tel: +44 20 7544 2600
Fax: +44 20 7544 2700
Email: rgaitskell@keatingchambers.com

whose nomination as co-arbitrator has been confirmed by the ICC Secretary General, in accordance with Article 13(2) of the ICC Rules, on 19 March 2014.

- The two arbitrators have jointly nominated (in consultation with the Parties) as President of the Arbitral Tribunal:

Prof. Bernard Hanotiau
Hanotiau & van den Berg
IT Tower
Avenue Louise 480, Box 9
1050 Brussels
Belgium
Tel: +32 2 290 39 00
Fax: +32 2 290 39 39
Email: bernard.hanotiau@hvdb.com

whose nomination as President of the Arbitral Tribunal (the "President") has been confirmed by the ICC Secretary General on 4 June 2014, in accordance with Article 13(2) of the ICC Rules.

11.
In accordance with the ICC Note on the Appointment, Duties and Remuneration of Administrative Secretaries dated 1 August 2012, the Arbitral Tribunal appointed Ms. Aimee Sweeney as Administrative Secretary to assist the Arbitral Tribunal with the administrative tasks of this arbitration on 24 July 2014.
12.
On 14 June 2016, the President informed the Parties that Ms. Sweeney was no longer connected with his law firm, and suggested the appointment of Ms. Gladys Sarah R. Bagasin as Administrative Secretary. Ms. Bagasin submitted her curriculum vitae and Statement of Independence and Impartiality.
13.
On 16 June 2016, the Claimants confirmed that they have no objection to Ms. Bagasin’s appointment.
14.
On 17 June 2016, the Respondent made the same confirmation.
15.
Ms. Bagasin’s address is:

Gladys Sarah R. Bagasin
Hanotiau & van den Berg
IT Tower
Avenue Louise 480, Box 9
1050 Brussels
Belgium
Tel: +32 2 290 39 00
Fax: +32 2 290 39 39
Email: gladys.bagasin@hvdb.com

Section II. The Arbitration Clause

16.
The Claimants have initiated this proceeding on the basis of Sub-Clause 20.6 of the Conditions of Contract ("Conditions of Contract"), incorporated into the Contract of 11 August 2009 (the "Contract")1 by means of Clause 2. Sub-Clause 20.6 reads as follows:

20.6 Arbitration

Unless settled amicably, any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration in iaw (within the meaning of Panamanian law). Unless otherwise agreed by both Parties:

(a) the dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce ("the Rules");

(b) in addition to the Rules, the arbitration shall be conducted according to the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration[2];

(c) the dispute shall be settled by three arbitrators who shall be licensed lawyers appointed in accordance with the Rules;

(d) the arbitration shall be decided in law (within the meaning of Panamanian law) and shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language]

(e) the venue of the arbitration shall be Miami, Florida-United States of America; and

(f) the arbitration agreement and the arbitration shall be governed by the United States Federal Arbitration Act, 9 U.S.C §§ 1 et seq.

The arbitrators shall have full power to open up, review and revise any certificate, determination, instruction or opinion or valuation of the Employer’s Representative, and any decision of the DAB, relevant to the dispute. Nothing shall disqualify the Employer’s Representative from being called as a witness and giving evidence before the arbitrators on any matter 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 to obtain its decision, or to the reasons for dissatisfaction given in its notice of dissatisfaction. Any decision of the DAB shall be admissible in evidence in the arbitration.

Arbitration may be commenced prior to or after completion of the Works. The obligations of the Parties, the Employer’s Representative and the DAB shall not be altered by reason of any arbitration being conducted during the progress of the Works.

17.
Claimants have also initiated this proceeding on the basis of Sub-Clause 9.2 of the Joint and Several Guarantee, dated 31 May 2010 (the "JSG")3, which reads as follows:

9. DISPUTE RESOLUTION

[...]

9.2 Any dispute arising out of, under or in connection with this Guarantee or out of the subject matter of this Guarantee shall be finally settled by international arbitration in law (within the meaning of Panamanian law). Unless otherwise agreed by the Parties:

(a) the dispute shall be finally settled trader the Rules of Arbitration of the International Chamber of Commerce (the "Rules");

(b) in addition to the Rules, the arbitration shall be conducted according to the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration;

(c) the dispute shall be settled by three arbitrators who shall all be licensed lawyers appointed in accordance with these Rules;

(d) the arbitration shall be decided in law (within the meaning of Panamanian law) and conducted in the English language;

(e) the venue of the arbitration shall be Miami, Florida - United States of America; and

(f) the arbitration agreement and the arbitration shall be governed by the United States Federal Arbitration Act, 9 U.S.C. I et seq.

Arbitration may be commenced prior to or after completion of the Works.

Section III. The Choice of Law Clause

18.
Sub-Clause 20.6(d) of the Conditions of Contract states:

[T]he arbitration shall be settled in law (within the meaning of Panamanian law) and shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language].

19.
Sub-Clause 9.2(d) of the JSG in respect to the Third Set of Locks Project between the Second to Fourth Claimants and Constructora Urbana S.A. ("CUSA") and the Respondent similarly states:

[T]he arbitration shall be decided in law (within the meaning of Panamanian law) and conducted in the English language[...]

20.
Sub-Clause 1.4 [Law and Language] of the Conditions of Contract states, in relevant part:

[T]he Contract shall be governed by the laws of the Republic of Panama.

21.
Similarly, Sub-Clause 9.1 of the JSG states that:

This Guarantee shall be governed by and construed in accordance with the laws of the Republic of Panama.

22.
Pursuant to Sub-Clause 20.6(f) of the Conditions of Contract, the arbitration agreement and the arbitration shall be governed by the United States Federal Arbitration Act, 9 U.S.C §§ et seq. ("FAA"). Sub-Clause 9.2(f) of the JSG contains a similar provision.

Section IV. The Language of the Proceedings

23.
In accordance with Sub-Clause 20.6(d) of the Conditions of Contract, "the arbitration shall be decided in law (within the meaning of Panamanian law) and shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language]."
24.
Sub-Clause 1.4 of the Conditions of Contract states:

[T]he ruling language stated in the Appendix to Tender shall be the language of the Contract.

The language for communications under the Contract shall be that stated in the Appendix to Tender.

25.
The Appendix to Tender states that the Ruling Language is English. Similarly, SubClause 9.2(d) of the JSG similarly states that "the arbitration shall be [...] conducted in the English language."

Chapter III. The Procedural History

26.
On 19 December 2014, the Arbitral Tribunal issued its Interim Award on Jurisdiction ("Interim Award"), which was notified to the Parties on 19 December 2014. In the Interim Award, the Tribunal decided:

(i) That the Claimants claims arising from both the Contract and the JSG may be brought and determined together in this arbitration;

(ii) That the Second to Fourth Claimants do not have standing to assert claims under the Contract; and consequently that it has no jurisdiction to hear the claims brought by the Second to Fourth Claimants under the Contract;

(iii) That it has jurisdiction to hear the claims brought by the Second to Fourth Claimants under the JSG; that whether those claims fall within the scope rationae materiae of the arbitration clause of the JSG is an issue that is intertwined with the merits of the case and is therefore reserved for determination at a later stage of the proceedings;

(iv) That it reserves its decision on the costs;

(v) That it reserves all other decisions to a subsequent award or awards.

27.
The Arbitral Tribunal set out the procedural history regarding the jurisdiction phase of this arbitration in paragraphs 22-81 of its Interim Award. The procedural history chapter of the Interim Award is incorporated herein by reference.
28.
On 10 February 2015, the Arbitral Tribunal issued an Addendum to the Interim Award (the "Addendum"), wherein it decided:

22. The Arbitral Tribunal agrees with all of the corrections suggested in the Claimant’s Application dated 9 January 2014, and hereby amends the Interim Award as follows:

(i) Paragraph 99, lines 4-5: the spelling of Mr. Antonio Zaffaroni's name is corrected, replacing "Antonia" with "Antonio";

(ii) Footnote 66, page 40: The following citation is inserted into the footnote which was previously blank: "Exhibit RLA-4, Bernard Hanotiau, Complex Arbitrations 17-18 (2006)."

(iii) Paragraph 217, lines 1-2: the word "First" is replaced with the word "Second" so to correctly read the Second to Fourth Claimants and CUSA operated as a consortium called "Grupo Unidos por el Canal" [...]";

(iv) Paragraph 224, line 2: the word "following" is deleted.

(v) Paragraph 256, line 1: the word "JSG" is replaced with the word "Contract" so to correctly read "In circumstances where the Second to Fourth Claimants - while not formally parties to the Contract - are closely implicated [...]";

(vi) Paragraph 283, lines 1-2: the word "First" is replaced with the word "Second" so to correctly read "Equitable estoppel cannot be used as a Justification to give standing to the Second to Fourth Claimants [...]";

(vii) Paragraph 305, line 3: the word "Claimants" is added so to read "[...] Second to Fourth Claimants under the JSG".

23. The Arbitral Tribunal also accepts all of the corrections suggested in the Respondent’s Application dated 17 January 2014, and hereby further amends the Interim Award as follows:

(viii) Paragraph 221, lines 1-2: the word "First" is replaced with the word "Second" to read as follows: "Article 5 of the AAA makes it clear that after the assignment, GUPC would take over all of the Second to Fourth Claimants’ obligations under the Contract.";

(ix) Paragraph 243, lines 2-3: the term "substantially compatible" is replaced with the term "substantively compatible."

29.
The Arbitral Tribunal set out the procedural history leading up to the Addendum in paragraphs 11-21 of the same. The procedural history chapter of the Addendum is incorporated herein by reference.
30.
On 2 February 2015, Claimants filed their Statement of Claim dated 2 February 2015 ("SoC"), together with witness statements, expert reports, and lists of exhibits and legal authorities.
31.
On 30 April 2015, Claimants submitted the updated expert report of Mr. Martin Hunter of Yendall Hunter of even date, which replaced and superseded the report of Mr. Hunter dated 2 February 2015.
32.
On 18 May 2015, Respondent submitted its Statement of Defence dated 18 May 2015 ("SoD"), together with witness statements, expert reports, and lists of factual and legal authorities.
33.
On 11 June 2015, the President wrote to the Parties that the Tribunal wished to hold a site visit, which both Parties agreed with.
34.
On 26 June 2015, both Parties submitted their document production requests in the form of a Redfern Schedule.
35.
On 30 June 2015, Respondent submitted a revised version of its Redfern Schedule.
36.
On 3 July 2015, Respondent submitted its Statement of Defence in Respect of the First Claimant’s Quantum Claim dated 3 July 2015 ("Supplemental SoD") together with an expert report and an updated list of factual exhibits.
37.
On 7 July 2015, the Respondent submitted the Expert Report of Mr. Daniel P. Stare of Gannett Flemming, Inc. dated 7 July 2015 and supporting documents.
38.
On 13 July 2015, the President conducted a site visit. On 23 July 2015, the members of the Tribunal likewise conducted a site visit.
39.
On 19 July 2015, the Tribunal issued Procedural Order ("PO") No. 2, which resolved the Parties’ document production requests.
40.
On 22 July 2015, the Claimants submitted their responses to the Tribunal’s questions in PO No. 2.
41.
On 29 July 2015, the Respondent submitted its comments to the Claimants’ letter dated 22 July 2015.
42.
On 5 August 2015, the Tribunal issued PO No. 3, resolving the Respondent’s outstanding document production requests.
43.
On 7 August 2015, the Respondent filed an application to modify PO No. 1 with respect to expert meetings and joint statements. Claimants filed their comments on 18 August 2015. Respondent submitted additional comments also on 18 August 2015.
44.
On 19 August 2015, the Tribunal issued PO No. 4, amending PO No. 1.
45.
On 21 August 2015, the Tribunal issued PO No. 5, containing its instructions as to the Parties’ draft confidentiality agreements.
46.
On 27 August 2015, the Respondent in its letter dated 27 August 2015, wrote to the Tribunal setting forth the Claimants’ alleged breaches of PO No. 2. The Claimants filed its comments on 2 September 2015. The Respondent filed further comments on 3 September 2015.
47.
On 4 September 2015, the Tribunal issued PO No. 6, resolving the Respondent’s and Claimants’ applications with regard to the other party’s disclosure of documents.
48.
On 10 September 2015, the Respondent requested the Arbitral Tribunal to make specific orders in relation to the confidentiality agreement referred to in PO Nos. 3 and 5 and provided their proposed confidentiality agreement. Respondent’s expert, Mr. Jeffrey Fuchs, also submitted his comments on the Claimants’ proposed confidentiality agreement. The Claimants submitted their response on 11 September 2015. On even date, the Respondent submitted further comments and an updated draft.
49.
On 11 September 2015, Respondent submitted further comments in response to Claimants’ letter of 2 September 2015, with regard to document production.
50.
On 13 September 2015, Claimants requested for instructions from the Tribunal as to the experts’ discussions.
51.
On 14 September 2015, Respondent filed its comments on Claimants’ letter dated 13 September 2015.
52.
On even date, the Tribunal issued PO No. 7, which contained directions as to the confidentiality agreement between Claimants, Respondent, Respondent’s expert, and Respondent’s counsel.
53.
On 15 September 2015, both Claimants and Respondent wrote to the Tribunal as to their observations on the ongoing expert discussions.
54.
Also on the same day, Claimants wrote to the Tribunal explaining that the Parties’ experts will not be able to agree on interim joint expert statements. On the other hand, Respondent replied that in its opinion, it was still possible to produce interim joint expert statements.
55.
On even date, the Tribunal issued instructions as to the expert discussions and the production of the joint expert statements.
56.
On 16 September 2015, Respondent wrote to the Tribunal discussing the status of the experts’ efforts, to which Claimants responded on the same day.
57.
On 30 September 2015, Claimants submitted their Statement of Reply dated 30 September 2015 ("SoR"), together with witness statements, expert reports, and legal opinions.

[REDACTED]

64.
On 29 October 2015, Claimants sent a corrected version of the second legal opinion of Dr. Hoyos ("Hoyos II").
65.
On 18 November 2015, Respondent requested the Tribunal to order that all of its experts be allowed to be added to the Confidentiality Undertaking. Claimants objected to this, and the Parties exchanged comments. On 20 November 2015, the Tribunal denied the request.
66.
On 24 November 2015, the Respondent filed its Statement of Rejoinder ("SoRej") accompanied by witness statements, expert reports, and legal opinions.
67.
On 1 December 2015, the Respondent submitted the Supplemental Expert Report of Mr. MacGregor and Supplemental Rebuttal Report of Mr. Fuchs.
68.
On 2 December 2015, the Claimants wrote a letter requesting the postponement of the hearing. After a series of exchanges between the Parties, on 3 December 2015, the Tribunal decided to postpone the hearing to the weeks of 18 and 25 July 2016. The Tribunal also scheduled a procedural meeting on 15 December 2015.
69.
On 15 December 2015, the Parties and party representatives, and the Tribunal, held a procedural conference in Brussels, Belgium. The following persons attended4:

For Claimants
Jose Luis Torres
Paolo Moder
Ciaran Chesser
Carlos Rubio
Carlos Iso
Antonio Crivellaro
Phillip Capper
Nicolas Bouchardie
Hansel Pham
Matthew Drossos

For Respondent
Agenor Correa
Ilya Marotta
Carlos Arrue
Manus McMullan QC
Nick Henchie
Raid Abu-Manneh
Alejandro Lopez-Ortiz
Amber Chew
Patricia Ugalde Revilla
Justine Moxham
George Fisher
Ben Grunberger-Kirsch

70.
[REDACTED]
71.
On 15 January 2016, the Respondent requested that its expert, Mr. Bates, be allowed to submit a supplementary geotechnical report. The Tribunal replied on even date encouraging the Parties to discuss among themselves and to try to agree on the matter.
72.
On 18 January 2016, Claimants filed the Requests to Submit Rebuttal Evidence.
73.
On 26 January 2016, the Claimants filed their Redfern Schedule containing Claimants’ rebuttal document requests.
74.
On 3 February 2016, the Tribunal issued PO No. 10, wherein it resolved Claimants’ rebuttal document requests.
75.
On 4 February 2016, Claimants submitted a letter with their proposals with regard to rebuttal submissions. Respondent submitted its comment on 8 February 2016, to which Claimants responded on 11 February 2016.
76.
On 18 February 2016, the Tribunal issued PO No. 11, which resolved Claimants’ requests to submit rebuttal evidence.
77.
On 4 March 2016, Respondent submitted the Supplemental Expert Report of Anthony Bates with appendices and exhibits.
78.
On 4 March 2016, Claimants submitted their rebuttal evidence. In addition, they alleged that Respondent has not complied with the Tribunal’s decision on document production. Respondent submitted its comments on 7 and 15 March 2016.
79.
On 9 March 2016, Claimants wrote to the Tribunal on the issue of Mr. Fuch’s alleged failure to provide them with original spreadsheets containing the formulae to substantiate his conclusions. The Parties exchanged their views on 9 and 12 March 2016. The Tribunal issued its decision on the matter on 16 March 2016.
80.
On 18 March 2016, Claimants submitted the Joint Statement of Quantum Experts (Second to Fourth Claimants’ claims).
81.
On 21 March 2016, Claimants requested the Tribunal for leave to file additional evidence. On 24 March 2016, Respondent filed its comment. Claimants submitted further comments on 26 and 31 March 2016.
82.
On 29 March 2016, Claimants informed the Tribunal that the delay experts, Ms. Ramey and Mr. Harvey, have not been able to agree on a joint expert statement, and provided the Tribunal with the list of issues Ms. Ramey wished to include in the joint expert statement, and a summary of her views thereon.
83.
On even date, Respondent submitted the issues Mr. Harvey wished to include in the joint expert statement, and a summary of his views thereon.
84.
On 31 March 2016, the Secretariat informed the Tribunal that on 17 March 2016, the International Court of Arbitration for the ICC ("ICC Court") extended the time limit for rendering the final award until 30 November 2016.
85.
On 31 March 2016, Claimants submitted further responses to Respondent’s 24 March 2016 letter.
86.
On 1 April 2016, the Parties submitted the joint statement of the geotechnical experts.
87.
On even date, the Claimants submitted the second witness statement of Mr. Jan Neckebroeck with additional exhibits.
88.
On 5 April 2016, the Tribunal responded to the Claimants’ letter dated 4 March, and the Respondent’s letters dated 7 and 15 March 2016.
89.
On 6 April 2016, the Claimants requested the tribunal to strike off parts of the Respondent’s Rejoinder that refer to the Dispute Adjudication Board ("DAB") transcripts. The Respondent submitted its comment on 13 April 2016. The Claimants submitted further comments on 20 April 2016.
90.
On 6 April 2016, the Tribunal ruled on the Claimants’ request of 21 March 2016.
91.
On 19 April 2016, the Joint Statement regarding the Contractor’s Quantum Claim was submitted.
92.
On 22 April 2016, the Tribunal issued its decision denying the Claimants’ request of 6 April 2016.
93.
On 29 April 2016, Claimants informed the Tribunal that the Parties have been unable to agree on a combined list of issues. Thus, it furnished the Tribunal the two separate lists of issues.
94.
On 3 May 2016, Respondent filed Mr. Bates’ Second Supplementary Dredging Report and accompanying exhibits.
95.
On 4 May 2016, by agreement with the Claimants, Respondent submitted additional documents into the evidentiary record.
96.
On 27 May 2016, by agreement with the Claimants, Respondent again submitted additional documents into the evidentiary record.
97.
On 10 June 2016, the Claimants submitted GUPC’s Summary of the Case dated 10 June 2016 ("Claimants’ Summary of the Case") and Respondent submitted Respondent’s Case Summary dated 10 June 2016 ("Respondent’s Summary of the Case").
98.
On 16 June 2016, the Tribunal sent to the parties a revised provisional list of issues.
99.
On 14 July 2016, the parties sent their respective lists of questions for the Panamanian law experts and comparative law experts.
100.
On 15 July 2016, the Claimants requested the Tribunal to admit certain documents that were inadvertently omitted from the record. The Respondent commented on the request on the same day. The Tribunal issued its ruling on the request on even date.
101.
On 17 July 2016, the Respondent objected to new arguments allegedly put forward by the Claimants. The Claimants responded on even date.
102.
On 18-23 and 25- 30 July 2016, the hearing on the merits was held, which the following persons5 attended:

For Claimants
Advocates:
Nicolas Bouchardie (W&C)
Phillip Capper (W&C)
Antonio Crivellaro (Bonelli Erede)
Alejandro Ferrer (Alcogal)
Carolyn Lamm (W&C)
Hansel Pham (W&C)

Legal Team:
Ana Biasiolo (Bonelli Erede)
Diana Bowman (W&C)
Pauline Depinay (W&C)
Matt Drossos (W&C)
Anibal Galindo (Alcogal)
Shelley Gaylor (W&C)
Alexandra Guilbault (W&C)
Drew Kulow (W&C)
Jorge Lee (Alcogal)
Ana Maria Legendre (Alcogal)
Giovanni Minuto (Bonelli Erede)
Kirsten Odynski (W&C)
Kim Preston (Seyfarth Shaw)
Erin Vaccaro (W&C)
Kat Walton (W&C)
Paul Brumpton (via VC) (W&C)
Barbara Halla (via VC) (W&C)
Robert Hanratty (via VC) (W&C)
Pauline Ho (via VC) (W&C)
Maria Irene Perruccio (via VC) (W&C)

Witnesses & Experts:
Stephane Braconnier
Bart Callens
John Coates
Tim Hart
Arturo Hoyos
Martin Hunter
Mario Lampiano
Paul Lievens
Jose Manuel Loureda
Paolo Moder
Jan Neckebroeck
Rafa Perez
Rex Pingle
Marianne Ramey
Piero Sembenelli
Nicola Valiante
William Van Impe
Antonio Zaffaroni
James Apted (via VC)
Yves Gaudemet (via VC)

Client and Representatives:
Ciaran Chesser
Carlos Iso Floren
Terry Hawkins
Ken Kratovil
David Lanceley
Ana Sala
Jose Luis Torres Munoz

Support:
Guillermo Cuevas (W&C)
Jeff Stellhorn (W&C)

For Respondent
Legal Team:
Manus McMulIan QC (Atkin Chambers)
Nick Henchie (V&E)
Jim Loftis (V&E)
Scott Stiegler (V&E)
Peter Danysh (V&E)
Ben Grunberger Kirsh (V&E)
Michala Kucharikova (V&E)
Heather Tyson (V&E)
Barry Machlin (MB)
Raid Abu-Manneh (MB)
Alejandro Lopez Ortiz (MB)
George Fisher (MB)
Mark McMahon (MB)
Patricia Uvalde Revilla (MB)
Charles Pacey (MB)
Kwadwo Sarkodie (MB)
Diego Herrera (Galindo, Arias & Lopez)

Witnesses & Experts:
Jeff Fuchs
Bob Cavoto
Prof. Octavio del Moral Prado
Trent Dreese
Larry Belken
Zeljko Cabarkapa
Prof. Tomas Ramon Fernandez
Dan Stare
Anthony Bates
Donald Harvey
John Gunn
Gervase MacGregor
Caryn Deeley
Donald Bruce (via VC)
Francisco Miguez

Client and Representatives:
Ilya R.E. de Marotta (ACP) Jorge de la Guardia (ACP)
Agenor Correa (ACP)
Karla Arias (ACP
Carlos Arrue (ACP)
Itzel Ulloa (ACP)
Luis Moral (ACP)
Raul Garcia (ACP)
Derek Irving (ACP)
Yesenia Ardila (ACP)
Maximilliano de Puy (ACP)
Rick Robertson (CH2M Hill / ACP)

Support:
Carlos Olvera (V&E)

103.
On 19 July 2016, the Respondent requested to add a one page extract of the Phase 2 Dredging Contract to the record. The Claimants expressed their agreement on the same day.
104.
On 3 October 2016, the Respondent requested the Tribunal to direct the parties to correct the interpretation and amend the transcript of the hearing to take into account some alleged inaccuracies in interpretation of Spanish to English. On 12 October 2016, the Claimants responded to the request. The Tribunal ruled on the matter on 13 October 2016
105.
On 4 November 2016, the Respondent filed the ACP’s Closing Arguments dated 4 November 2016 ("Respondent’s PHB I"). The Claimants filed their First Post Hearing Brief dated 4 November 2016 ("Claimants’ PHB I") on the same day.
106.
On 18 November 2016, the Respondent requested the Tribunal to disregard Exhibits C259 and 246 and Dr. Hoyos’ legal opinion appended to the Claimants’ PHB I. In the alternative, it requested that it be allowed to submit a response to them.
107.
On 29 November 2016, the Secretariat informed the Tribunal that on 17 November 2016, the ICC Court had extended the time limit for rendering the final award until 30 May 2017
108.
On 29 November 2016, Claimants submitted their response to the Respondent’s request of 18 November 2016. Respondent submitted further comments on 5 December 2016.
109.
On 10 December 2016, Claimants informed the Tribunal of the developments which were relevant to the Parties’ relationship, although not directly relevant to the present arbitration proceedings.
110.
On 10 December 2016, Claimants submitted their final comments on Respondent’s request of 18 November 2016.
111.
On 12 December 2016, the Tribunal resolved the Respondent’s request of 18 November 2016 and granted it the opportunity to respond to exhibits and Dr. Hoyos’ legal opinion appended to Claimants’ PHB I.
112.
On 22 December 2016, Claimants submitted their Second Post-Hearing Brief ("Claimants’ PHB II").
113.
On even date, Respondent submitted its Response to the Claimants’ Post-Hearing Brief ("Respondent’s PHB II"). With its submission, Respondent requested for leave to introduce a witness statement responsive to certain arguments in Claimants’ PHB I. On 31 December 2016, Claimants submitted their comments. On 3 January 2017, the Tribunal denied Respondent’s request.
114.
On 10-11 January 2017, a hearing was held for the Parties’ closing arguments, attended by6:

For Claimants
Advocates:
Nicolas Bouchardie (W&C)
Phillip Capper (W&C)
Antonio Crivellaro (Bonelli Erede)
Alejandro Ferrer (Alcogal)
Carolyn Lamm (W&C)
Hansel Pham (W&C)

Legal Team:
Kirsten Odynski (W&C)
Matt Drossos (W&C)
Diana Bowman (W&C)
Alexandra Guilbault (W&C)
Pauline Depinay (W&C)
Maria Irene Perruccio (W&C)
Drew Kulow (W&C)
Katharine Walton (W&C)
Stefan Bisson (W&C)
Ana Maria Legendre (Alcogal)
Kim Preston (Seyfarth Shaw)

Client and Representatives:
Paolo Moder
Ana Sala
Jose Luis Torres Muñoz
Ciarán Chesser
Carlos Iso Floren
Rafael Pérez

For Respondent
Legal Team:
Manus McMullan QC (Counsel)
Jim Loftis (V&E)
Nick Henchie (V&E)
Scott Stiegler (V&E)
Peter Danysh (V&E)
Ben Grunberger-Kirsh (V&E)
Michala Kucharikova (V&E)
Raid Abu-Manneh (Mayer Brown)
Alejandro Lopez Ortiz (Mayer Brown)
George Fisher (Mayer Brown)
Patricia Ugalde Revilla (Mayer Brown)

Client Representatives (ACP):
Ilya Marotta
Karla Arias
Carlos Arrue

115.
On 28 April 2017, the Parties submitted their respective Submissions on Costs. On 12 May 2017, the Parties submitted their respective Reply Submissions on Costs.
116.
On 26 May 2017, the Tribunal declared the proceedings closed.
117.
On 30 May 2017, the Secretariat informed the Tribunal that on 18 May 2017, the ICC Court extended the time limit for rendering the final award until 30 June 2017.
118.
On 23 June 2017, the Secretariat informed the Parties that on 15 June 2017, it received a draft award submitted by the arbitral tribunal.
119.
On 29 June 2017, the Secretariat informed the Tribunal that on 22 June 2017, the ICC Court extended the time limit for rendering the final award until 31 July 2017. Also on 29 June 2017, the Secretariat informed the Parties that on even date, the ICC Court approved the draft award submitted by the arbitral tribunal.
120.
On 20 July 2017, the Secretariat informed the Tribunal that on even date, the ICC Court extended the time limit for rendering the final award until 31 August 2017.

Chapter IV. The Factual Background of the Dispute

121.
The project for the construction of a canal across the Isthmus of Panama, uniting the Atlantic and Pacific Oceans, started in the early 16th century. It can be traced back to 1513, when Vasco Nunez traversed the Isthmian crossing, discovering that only a narrow strip of land separated the oceans. The movement to build a passage started with Charles I of Spain in 1534.7
122.
The French undertook the plans and construction of the Canal in 1876 but it was not completed. The French company working on the project subsequently sold the project to the United States.8
123.
In 1903, Panama granted to the United States the right to build and administer the Panama Canal. The latter started construction in 19049 and the Canal was opened in 1914.10 The Canal links the Atlantic and Pacific Oceans, and has been hailed as "one of the supreme human achievements of all time, the culmination of a heroic dream of over four hundred years and of more than twenty years of phenomenal effort and sacrifice."11 At that time, more than 250 million cubic yards were excavated, and the construction of the Canal cost over USD 375 million12
124.
In 1939, the United States began works relating to the construction of a new set of locks in order to accommodate larger ships in the Canal. However, the works were suspended in the 1940s during World War II.13
125.
On 7 September 1977, the United States of America and Panama executed the Panama Canal Treaty.14 In addition, the two countries also signed the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal.15 Pursuant to these two treaties, Panama gained sovereign rights over the Canal in 1979, and full control was transferred to it on 31 December 1999.16
126.
On 24 April 2006, Respondent issued its Proposal for the Expansion of the Panama Canal ("Proposal for Expansion").17 At that time, the Canal had been serving more than 144 maritime routes, connecting 160 countries and 1,700 ports. Thirteen to fourteen thousand vessels pass through the canal annually. To be able to pass through the Canal, these vessels need to be Panamax-sized (at most 294.1 meter keel, 12 meter draft, and 32.3 meter beam).18 The Proposal for Expansion expected to double the Canal’s capacity by increasing the size of the vessels that could pass through - the Post-Panamax sized ships (365 meter keel and 50 meter beam).19
127.
The Proposal for Expansion described the three major components of the project:

The third set of locks project is a plan to expand the Canal’s capacity composed of three integrated components: (1) the construction of two lock facilities - one on the Atlantic and another on the Pacific side - each with three chambers, which include three water reutilization basins; (2) the excavation of new access channels to the new locks and the widening of existing navigation channels; and, (3) the deepening of the navigation channels and the elevation of the Gatun Lake’s maximum operating level.20

128.
The Proposal for the Expansion was approved in a national referendum on 22 October 2006.
129.
The ACP commenced the procurement process on 27 August 2007. The process comprised of the prequalification phase and the tendering phase. During the prequalification phase, the Respondent established the minimum criteria for tenderers, and determined which tenderers would be pre-qualified to submit bids. During the tendering phase, the tenderers’ technical and price proposals would be evaluated in accordance with the Request for Proposal ("RFP").21
130.
Between August and December 2007, Respondent conducted a Request for Qualifications ("RFQ") process. The Respondent pre-qualified four consortia: Consorcio C.A.N.A.L. ("CANAL"), Consorcio Atlántico-Pacifico de Panamá ("CAPP"), Bechtel, Taisei, Mitsubishi Corporation ("BTM"), and the First Claimant (collectively, the "Tenderers").22
131.
On 21 December 2007, the Respondent sent to the Tenderers the first version of the RFP, which included the following documents:

i. Instructions to Tenderers ("ITT") (Volume I, Part 1);23

ii. Employer’s Requirements ("ER") (Volume II);24

iii. Conditions of Contract (Volume III);25

iv. Employer’s Evaluation Criteria (Volume IV);26

v. Contractor’s Proposal (Volume V);27

vi. Reference Documents, including a Geotechnical Report (Volume VI).28

132.
From 21 December 2007 until 13 February 2009, the RFP underwent a number of amendments and extensions to the deadline for tenders.
133.
On 3 March 2009, three of the four Tenderers submitted their respective Tenders:

GUPC: USD 3.1 Billion

BTM: USD 4.2 Billion

CANAL: USD 5.98 Billion

134.
The Third Set of Locks Project (the "Project" or "TSLP") was awarded to the First Claimant on 15 July 2009.29
135.
The Contract for the TSLP dated 11 August 200930 was concluded between the Second to Fourth Claimants, and CUSA, on the one hand, and the Respondent, on the other.
136.
Pursuant to the Contract, the works commenced on 14 August 2009.31
137.
By way of an Assignment and Acceptance Agreement dated 31 May 201032 ("AAA"), the rights, obligations, warranties, liabilities, and undertakings under and pursuant to the Contract were assigned by the Second to Fourth Claimants and CUSA to the First Claimant.
138.
The Second to Fourth Claimants and CUSA and Respondent also executed the JSG by which they guaranteed the performance of the First Claimant under the Contract.
139.
The dispute arose when GUPC referred a dispute relating to the Cofferdam claim to the Dispute Adjudication Board ("DAB"), which was designated as Referral No. 8. The dispute stemmed from the Claimants’ alleged added costs due to unanticipated and unforeseeable conditions in the area of the Cofferdam.
140.
The DAB denied the claims in a decision dated 19 August 201333, to which GUPC filed a Notice of Dissatisfaction on 6 September 2013.34 Claimants and CUSA initiated the instant proceedings and filed the Request for Arbitration on 28 December 2013.

Chapter V. The Contract’s Main Provisions

141.
As mentioned, the Contract under which the dispute has arisen was entered into on 11 August 2009.35
142.
Under the terms of the Contract, GUPC, comprised of the Second to Fourth Claimants and CUSA, and ACP agreed that the Contractor would design, execute and complete the works (the design and construction of a third set of locks, hereinafter the "Works"). Pursuant to the Contract, the Works commenced in 2009.
143.
The Second to Fourth Claimants and CUSA, the members of the consortium, experienced practical difficulties relating to Panamanian regulations. Thus, in November 2009, they decided to incorporate Grupo Unidos por El Canal under Panamanian law as a means to avoid these problems. As a result, Grupo Unidos por El Canal became GUPC S.A., the First Claimant in this arbitration.
144.
The incorporation of the consortium into GUPC S.A. required an assignment of their rights and obligations by the Second to Fourth Claimants and CUSA to the newly created entity, giving rise to the AAA. The AAA was stated to be effective from the original date of the Contract.
145.
On the same date as the AAA, the Second to Fourth Claimants and CUSA executed the JSG by which they guaranteed the performance of GUPC under the Contract.
146.
The Contract provides in its Article 2:

2. The following documents shall be deemed to form and be read and construed as part of this Agreement:

(a) The Letter of Acceptance

(b) The Letter of Tender, which includes the Appendix to Tender

(c) The Conditions of Contract

(d) The Price Adjustment Timetable

(e) The Appendices to the Conditions of Contract

(f) The Employer’s Requirements

(g) The Contractor’s Technical Proposal which includes the Compilation of Correspondence exchanged between the Employer and the Contractor during the Technical Proposal Evaluation Process, a compendium of which is appended to this Agreement.

(h) The Contractor’s Price Proposal and

(i) Volume VI - Reference Documents comprising:

Part 1 - Reference Drawings

Part 2- Geotechnical Reports

[...]

Part 4- Environmental Impact Study of the Third Set of Locks

[...]

Part 11- Widening and Deepening of the Pacific Entrance and South Approach Channel to the Third Set of Locks of the Panama Canal

[...]

(j) Volume VII - Employer’s Data comprising

Part 1- Geotechnical Interpretative Report

Part 2- Topographical Data

Part 3- Seismic Design Criteria Data

147.
The main contractual provisions are included in the Conditions of Contract.
148.
Article 1 sets forth the definition of terms, including definitions relating to the lock structures:

1.1.5.12 "Footprint of the Lock Structures" means...with respect to the Pacific locks to be constructed as part of the Works the area shown on Drawings 5803-58 and 5803-59 (see Part 2 of the Volume VII documents).

1.1.5.13. "Foundation Level" means in respect of each Lock Structure, the top level of the foundation of each such Lock Structure.

[...]

1.1.5.15. "Lock Structure" means a lock chamber, lock head, gate enclosure, water saving basin, lock approach structure, culvert and water conduit, valve enclosure or any other structure in each new lock.

149.
Article 1.16, entitled "Entire Agreement" provides:

The Contract and the documents incorporated herein by reference constitute the entire agreement between the Employer and the Contractor and supersede all prior negotiations, commitments, representations, communications and agreements relating to the Contract either oral or in writing except to the extent they have been expressly incorporated herein. The Employer and the Contractor confirm that they have not relied upon any representation inducing them to enter into the Contract and agree to waive any right which they might otherwise have to bring any action in respect of such representation.

The Parties agree and acknowledge that the Contract shall be interpreted and construed without reference to any prior negotiations or communications and without reference to any changes or amendments to the RFP during the course of the tender process which changes or amendments were not expressly incorporated into the Contract.

In furtherance of the foregoing and for the avoidance of doubt, the Parties agree and acknowledge that the Contract shall be interpreted, construed and enforced without reference to any document or other material submitted to the Employer by or on behalf of the Contractor, any Member and/or any parent company of either thereof in response to or in connection with the RFQ and/or the RFP, and in no event shall the fact that the Employer shall have received any such document or other material be construed as an approval or consent of any matter, or a waiver or modification of any term or provision of the Contract, which shall take precedence thereover.

No change in, or addition to, or waiver, relaxation, forbearance, delay or indulgence in enforcing the terms and provisions hereof shall be binding upon the Contractor or the Employer unless approved and dated in writing by their respective authorized representatives in express terms that identify this Sub-Clause 1.16.

150.
Under the title Contractor’s General Obligations, Article 4.1, in relevant part, provides:

4.1.1 The Contractor warrants and undertakes that when completed, the Works shall be fit for the purposes for which the Works are intended as defined or as reasonably to be inferred from the Contract and they will fully comply with all performance specifications and requirements included in the Employer’s Requirements and will comply fully with the Contract.

4.1.2 Entirely without prejudice to Sub-Clause 4.1.1 and without any way limiting the Contractor’s obligations as set out therein, or elsewhere in the Contract, the Contractor warrants and undertakes that it shall design, execute and complete the Works (including any rectification of defects therein) and carry out its obligations under the Contract:

(a) in accordance with the Contract as altered or modified in accordance with these Conditions of Contract.

(b) ensuring that the Contractor complies with all applicable Laws, including the labor Laws and regulations of the Republic of Panama, and specifically with respect to the composition of the labor force permitted to work in the Republic of Panama;

(c) in relation to the design of the Works, using all the reasonable skill, care and diligence to be expected of professionally qualified and competent designers of the relevant disciplines;

(d) ensuring that it does not use and will not specify for use in relation to the Works any Prohibited Materials. The Contractor agrees that it will immediately give notice to the Employer’s Representative if it becomes aware at any time prior to issue of the Performance Certificate that any Prohibited Materials have been or may be so used;

(e) using Materials and Plant which are new and of sound and satisfactory quality and all workmanship, manufacture and/or fabrication will be to the standard consistent with the Intended use of the Works or as expressly stated in the Contract;

(f) in such a way as to ensure that the Works enable the full, efficient, economic and safe commercial operation of the Works in accordance with the applicable Laws and the requirements of the Contract after the Taking-Over Certificate has been issued with the minimum interruption for maintenance or repair; and

(g) with sound equipment, safely and in accordance with Prudent Industry Practices, and in accordance with the Contract’s requirements and specifications.

4.1.3 The Contractor warrants and undertakes to the Employer that it has the requisite degree of skill, experience, capability and resources (including financial resources) available to it to perform its obligations under the Contract and execute the Works.

151.
Article 4.10, "Site Data", provides as follows:

4.10.1 Prior to the Base Date, the Employer shall have made available to the Contractor the Geotechnical Interpretive Report and certain other data (including geotechnical boring cores) in the Employer’s possession on physical conditions including sub-surface, hydro-geologic and topographic conditions at the Site, including environmental aspects.

4.10.2 The Contractor shall be deemed to have obtained all necessary information as to risks, contingencies and other circumstances which may influence or affect the Tender or the Works. To the same extent, the Contractor shall be deemed to have inspected and examined the Site, its surroundings, the data referred to in SubClause 4.10.1 and other available information, and to have been satisfied before submitting the Tender as to all relevant matters, including:

(a) the form and nature of the Site, which shall include physical conditions, subsurface, hydro-geologic and topographical conditions all the Site and environmental aspects;

(b) the hydrological and climatic conditions;

(c) the extent and nature of the work and Goods necessary for the execution and completion of the Works and the remedying of any defects;

(d) the applicable Laws, procedures and labor practices of the Country;

(e) the Contractor’s requirements for access, accommodation, facilities, personnel, power, transport, water and other services; and

(f) availability of labor.

4.10.3 The Employer gives no warranty as to and shall have no responsibility for the sufficiency, suitability or completeness of any date or information (including geotechnical boring cores) it has provided or does provide regarding physical conditions including sub-surface, hydro-geologic and topographic conditions at the Site and environmental aspects, except for:

(a) the Employer’s geotechnical characterization and interpretation, to the extent set out (but not further or otherwise) in the Geotechnical Interpretive Report, of the physical conditions (as defined in sub-paragraph (a) of Sub-Clause 4.12.1.1) to be encountered at and below the Foundation Level of each Lock Structure but only to the extent it relates to the area inside the footprint of each Lock Structure;

(b) the Employer’s geotechnical characterization and interpretation, to the extent set out (but not further or otherwise) in the Geotechnical Interpretive Report, of the physical conditions (as defined in sub-paragraph (a) of Sub-Clause 4.12.1.1) to be encountered, in respect of each Lock Structure for the purposes only of designing and building the slopes of the excavations for each Lock Structure; and

(c) information concerning topographic conditions (as defined in Sub-Clause 4.12.1.2) contained in the Topographical Data in so far as it relates to the area defined by the Footprint of the Lock Structures".

152.
Under the title "Unforeseeable Physical Conditions", Article 4.12 provides:

4.12.1.1 In this Sub-Clause 4.12, "physical conditions" means:

(a) natural physical conditions, including sub-surface and hydro-geologic conditions but excluding climatic conditions; and

(b) man-made and other physical obstructions and pollutants.

4.12.1.2 In this Sub-Clause 4.12, "topographic conditions" means the geometric conditions of the ground at the surface.

4.12.2 If the Contractor encounters:

(a) in respect of Lock Structure, physical conditions (as defined in sub-paragraph (a) of Sub-Clause 4.12.1.1) at and/or below the Foundation Level of the Lock Structure within the area inside the footprint of such Lock Structure, which are more adverse to the Contractor than the Employer’s geotechnical characterization and interpretation of such conditions to the extent set out (but not further or otherwise) as included in the Geotechnical Interpretive Report as it relates to such Lock Structure;

(b) in respect of a Lock Structure, adverse, physical conditions (as defined in subparagraph (b) of Sub-Clause 4.12.1.1), at, or above, or below the Foundation Level of the Lock Structure within the area inside the footprint of such Lock Structure ;

(c) in respect of a Lock Structure, physical conditions (as defined in sub-paragraph (a) of Sub-Clause 4.12.1.1), which are more adverse to the Contractor than the Employer’s geotechnical characterization and interpretation of such conditions to the extent set out (but not further or otherwise) in the Geotechnical Interpretive Report, as it relates to such Lock Structure and which as a consequence prevent it from designing and building the slopes of the excavations for the Lock Structure as contemplated by sub-paragraph (b) of Sub-Clause 4.10.3;

(d) in respect of a Lock Structure, adverse, physical conditions (as defined in subparagraph (b) of Sub-Clause 4.12.1.1), above or below the slopes of the excavations for the Lock Structure; and/or

(e) adverse, topographic conditions (as defined in Sub-Clause 4.12.1.2) within the area defined by the Footprint of the Lock Structures, materially different from those reflected in the Topographical Data and/or falling outside the tolerance stated in the Topographical Data;

which the Contractor considers to be Unforeseeable, the Contractor shall give notice to the Employer’s Representative as soon as practicable.

4.12.3 Any notice given by the Contractor as required by Sub-Clause 4.12.2 shall describe the physical or topographical conditions encountered (as the case may be) which the Contractor considers to have been Unforeseeable, so that they can be inspected by the Employer's Representative, and shall set out the reasons why the Contractor considers such conditions to be Unforeseeable.

The Contractor shall continue executing the Worksusing such proper and reasonable measures as are appropriate for the physical conditions or topographic conditions, and shall comply with any instructions which the Employer's Representative may give. If an instruction constitutes a Variation.Clause 13 [Variations and Adjustments] shall apply.

4.12.4 If and to the extent that the Contractor encounters the physical or topographical conditions referred to in Sub-Clause 4.12.2 which are Unforeseeable, gives the required notice(s), and suffers delay and/or incurs Cost due to these conditions, the Contractor shall be entitled subject to Sub-Clause 20.1 [Contractor’s Claims] to:

(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-Clause 8.4 [Extension of Time for Completion] and/or if completion of a Milestone is or will be delayed, under Sub-Clause 8.4A [Extension of Milestone Dates]; and

(b) payment of any such Cost, which shall be included in the Contract Price.

4.12.5 After receiving such notice and Inspecting and/or Investigating the subject matter of the notice, the Employer’s Representative shall proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine (1) whether and (if so) to what extent these conditions were Unforeseeable, and (ii) the matters described in sub-paragraphs (a) and (b) of Sub-Clause 4.12.4 related to this extent.

4.12.6 Save as expressly provided in this Sub-Clause 4.12, the Contractor shall not be entitled to and shall not make any claims, or requests for Variations or for adjustment(s) to the Contract Price or for any Cost or for extension(s) to the Time for Completion or to any Milestone Date(s). arising from, out of or in connection with topographic conditions (as defined in Sub-Clause 4.12.1.2) or physical conditions (as defined in Sub-Clause 4.12.1.1) expected to be encountered or actually encountered during the course of the Works.

(Underlining added)

153.
Article 5 "Design" provides, in relevant part:

5.1....Notwithstanding any other provisions of the Contract, the Parties agree that the Employer shall not be responsible in any way whatsoever for the Volume VI Documents, including but not limited to the drawings, designs, geotechnical data, reports, documents, design data and other information included therein and shall not be deemed to have given any warranty, representation of accuracy or completeness in relation to the same. Nothing contained therein shall relieve the Contractor from his responsibility for the design and execution of the Works in accordance with the Employer's Requirements. The parties agree that the Volume VI Documents are included in the Contract for information purposes only, may not be relied upon by the Contractor in any way or for any reason, and shall not give rise to, form the basis of, or be the subject matter of, any claims of any nature against the Employer.36

154.
In its relevant part, Article 5.2 "Contractor’s Documents" provides:

Any approval of consent, or any review or comment or failure to do the same (under this Sub-Clause 5.2 or otherwise), by the Employer’s Representative (or any of the Employer’s Personnel), shall not relieve the Contractor from any of its obligations or responsibilities under the Contract.

Further, the Contractor shall not be entitled to argue or contend that any approval, consent or review or comment or failure to do the same on a Contractor's Document (under this Sub-Clause 5.2 or otherwise) by the Employer’s Representative (or any of the Employer’s Personnel), shall of itself give rise to any extension or time to the Time for Completion, and/or to a Milestone Date and/or an entitlement to additional Cost or constitute a Variation. To the extent that a Contractor's Document shows a deviation from or a change to the Employer’s Requirements which is approved consented to or not objected to by the Employer's Representative (or any or the Employer's Personnel) that approval consent or non objection (including any comment) shall not of itself constitute an instruction by the Employer's Representative or a Variation of any nature to the Contract or the Employer's Requirements. Clause 13 [Variations and Adjustments] shall be construed accordingly.

155.
Article 8.4 "Extension of Time for Completion" is formulated as follows:

The Contractor shall be entitled subject to Sub-Clause 20.1 [Contractor's Claims] to an extension of the Time for Completion if and to the extent that completion for the purposes of Sub-Clause 10.1 [Taking Over of the Works] is or will be delayed by any of the following causes:

(a) a Variation (unless an adjustment to the Time for Completion and/or to a Milestone Date has been agreed under Sub-Clause 13.3 [Variation Procedure]);

(b) a cause of delay giving an entitlement to extension of time under a Sub-Clause of these Conditions of Contract;

(c) exceptionally adverse climatic conditions;

(d) Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions; and/or

(e) any delay, impediment or prevention caused by or attributable to the Employer, the Employer's Personnel, or the Employer's other contractors on the Site.

If the Contractor considers himself to be entitled to an extension of the Time for Completion, the Contractor shall give notice to the Employer's Representative in accordance with Sub-Clause 20.1 [Contractor's Claims]. When determining each extension of time under Sub-Clause 20.1 [Contractor's Claims], the Employer's Representative shall review previous determinations and may increase, but shall not decrease, the total extension of time.

156.
Article 14.1, entitled "The Contract Price" provides in its first paragraph, "The Contract Price shall be the lump sum Accepted Contract Amount and be subject to adjustments in accordance with the Contract."
157.
Under the title "Limitation of Liability", Article 17.6 provides as follows:

17.6.1 Neither Party shall be liable to the other Party for loss of use of any Works, loss of profit, loss of any contract or for any indirect or consequential loss or damage which may be suffered by the other Party in connection with the Contract, other than under Sub-Clause 16.4 [Payment on Termination] and Sub-Clause 17.1 [Indemnities] or save where expressly stated otherwise in the Contract.

17.6.2 The total liability of the Contractor to the Employer, under or in connection with the Contract other than

(a) under Sub-Clause 4.20 [Employer's Equipment and Free-Issue Material];

(b) under Sub-Clause 17.1 [Indemnities]; and

(c) under Sub-Clause 17.5 [Intellectual and Industrial Property Rights];

shall not exceed the sum stated in the Appendix to Tender.

17.6.3 Sub-Clauses 17.6.1 and 17.6.2 shall not apply in any case of fraud, deliberate default, reckless misconduct or gross negligence by the defaulting Party.

158.
Finally, Article 20 concerns "Claims, Disputes and Arbitration". Article 20.2 discusses the appointment of the DAB. Article 20.6 contains the arbitration clause already referred to above.

Chapter VI. The Parties’ Respective Cases

Section I. Claimants’ Case

I. ACP’s Duties

159.
Claimants base their case upon the following duties which they allege ACP should have but failed to observe, during the tender period, and during the performance of the contract.

A CP’s Duties During the Tender Period

i. Duty to act in good faith in releasing relevant information

160.
GUPC contends that ACP has a duty to act in good faith, which required them to provide tenderers with information that ACP knows to be relevant. GUPC contends that the duty of good faith "pervades the entire Panamanian legal system", and specifically, is found in Law 19, Law 22, and Article 1109 of the Civil Code of Panama ("Civil Code").37 Good faith is a general principle of Panamanian law and public policy.38

ii. Duty to diligently prepare the studies and the tender documents

161.
The principles of transparency, economy, and responsibility are provided for in Article 130 of ACP’s Regulation. Pursuant to this principle, Claimants and their legal expert contend that ACP was duty-bound to "prepare the studies, designs, and projects required, as well as the terms of reference and specifications, assuring that its preparation is not done in an incomplete, ambiguous or confusing manner."39

iii. Duty to treat contractors (and tenderers) as collaborators and conduct the contracting process in a manner that strives to guarantee contractor’s rights and interests

162.
Article 130 of ACP’s Regulation states:

Contracts are entered into and formalized primarily because this allows for a closer concerted effort between the parties and permits greater administrative efficiency. Notwithstanding the preceding purpose, the contract shall also strive to guarantee the rights and interests of the parties. All actions taken by those persons who participate in the procurement shall be based upon principles of transparency, economy and responsibility, in accordance with the rules that govern administrative functions, as well as the rules of ethics and conduct that apply to the Authority, the rules of contract interpretation, and those general principles of law and specific provisions contained in administrative regulations.40

163.
Claimants assert that this duty to collaborate and guarantee the rights and interests of the contractors requires that ACP, at a minimum, must provide all the information it knows to be relevant to the tenderers, and inform the tenderers to correct incomplete or misleading information.41

iv. Duty to treat contractors with equity and to act with transparency

164.
The Claimants invoke Article 2(6), 90, and 130 (as quoted above) of ACP’s Regulation:

Article 2(6)

The system shall be based on the following:...Equity in the relations with contractors.42

Article 90

Contracts entered into by the Authority shall be subject to the provisions in this regulation, as well as to the terms and conditions established for each contract in particular.

The interpretation of the provisions of this regulation and of the contract shall always be directed towards satisfying the fundamental purpose of the legal responsibilities recognized to the Authority and the principle of equity in its dealings with the contractors.43

165.
According to Claimants, these principles reinforce ACP’s obligation to provide to tenderers all information that ACP knows (or should know) to be relevant, and to correct incomplete or misleading information.

ACP’s Duties During the Performance of the Contract

i. Duty to provide all relevant information and cooperate with GUPC, based on the duty of good faith

166.
According to Claimants, the duty of good faith continues to apply during the performance of the Contract. The first impact of this duty is to provide relevant information and cooperate with GUPC after the Contract was awarded. This applies to ACP’s duty to make available the Geotechnical Interpretative Report and certain other data, under SubClause 4.10.1 [Site Data] of the Conditions of Contract.44
167.
Good faith also imposes on ACP a duty to cooperate and assist GUPC in the performance of the latter’s obligations towards the timely and successful completion of the project.
168.
Moreover, Article 133(6) of ACP’s Regulation states that ACP should "proceed in a timely manner, so that actions attributable to the Authority do not create more onerousity in the compliance of the obligations of the contractor..."45
169.
In compliance with this, ACP should inform GUPC of any concerns that it may have with GUPC’s design solutions or proposals, as part of its duty to cooperate and not render the contractor’s work more onerous.

ii. Duty to maintain and restore the economic conditions prevailing when the Contract was entered into

170.
Article 133(5) of ACP’s Regulation provides that ACP is obligated to "[a]dopt measures to maintain, during the execution and performance of the contract, the original technical, economic and financial conditions, prevailing at the moment of contracting..." This is echoed by Article 13(5) of Law 22.
171.
ACP thus had a "duty to maintain and restore the contractual balance that was in force at the time the Contract was entered into."46

iii. Duty to compensate GUPC in case of unforeseeable physical conditions

172.
The duty arises from Contract, specifically Sub-Clause 4.12, which will be discussed more below, as well as Article 133(5) and 133(6) of ACP’s Regulation, which, GUPC asserts, sets out ACP’s obligation to maintain the technical, financial, and economic conditions existing at the time of execution.47

iv. Duty to determine GUPC’s entitlements promptly and fairly

173.
Applying the duty of good faith, ACP had a duty to promptly and fairly determine GUPC’s entitlements, based on Sub-Clause 3.5 of the Contract.48

II. Primary Case

ACP’s Breach of its Duties

174.
As their primary case, the Claimants contend that Respondent failed to "provide accurate and reliable geotechnical data, as well as [withheld] crucial geotechnical information, in connection with (i) the design and construction of the main cofferdam ("Cofferdam") located in the Project’s Pacific Entrance Access Channel ("PEAC"), and (ii) the feasibility of a diversion of the nearby Cocoli River."49 According to Claimants, these amount to breaches of ACP’s duties as mentioned above. It led to GUPC entering into the Contract under financial terms that were more advantageous to ACP than GUPC would have agreed to had ACP provided them with all information and performed its duties at tender stage.50

With regard to the Cofferdam

175.
GUPC and its subcontractor Sembenelli prepared a conceptual design for the Cofferdam providing for a foundation level at -6m PLD, because of the information ACP provided that there were suitable foundation materials at this depth. Because of this, the price proposal for the Cofferdam-related works was lower than what GUPC would have proposed if it knew that the Cofferdam had to be founded at almost rock level (around -14m PLD).51
176.
GUPC contends that ACP knew, during the RFP period and afterwards, that extensive dredging had taken place in the PEAC, but did not provide the tenderers with information about it. Instead, "ACP knowingly provided tenderers with inaccurate, incomplete, and misleading information about the geological and geotechnical conditions in the PEAC."52
177.
The information provided by ACP misled GUPC and the other tenderers because the information provided that "relatively competent, in situ naturally occurring material would be found above the top of sound rock."53 However, what GUPC found "was not the naturally occurring material described in the RFP, but recently deposited, very soft sediments (effectively mud) which had infilled a channel that had been previously dredged almost down to rock level."54
178.
This was contrary to what had been provided in the Geotechnical Interpretative Report ("GIR"), the GIR Plates, the boreholes and the body of the Geotechnical Data Report ("GDR"). In short, the information from ACP were incomplete, inaccurate and misleading.
179.
Worse, despite claiming that dredging was reflected in Chapter 6 of the Isthmian Report, ACP failed to provide this to the tenderers?55 Chapter 6 of the Isthmian Report specifically discusses the 1940s dredging works, which would have been far more useful to the tenderers as compared to other parts of the Isthmian report which were provided.
180.
In addition, ACP was also in possession of the Governor’s Annual Reports, which included information on the as-built quantities of the 1940s dredging works. Despite being aware of these reports, they were never provided to GUPC.56
181.
Despite admitting that it knew about the prior dredging, ACP never warned GUPC that its cofferdam design was unsuitable. Moreover, despite receiving GUPC’s proposals, and numerous discussions, nobody at ACP expressed any concern as to GUPC’s design.
182.
The breaches continued even after the Tender period and after the Contract award. Despite numerous meetings between ACP and GUPC between August 2009 and January 2010, discussing the Cofferdam, ACP never expressed any concern with regard to the design.57

With regard to the Cocoli River Diversion

183.
Claimant alleges that at tender stage, ACP provided inaccurate, incomplete, and misleading information in relation to the Cocoli River diversion. It claims that RFP Amendment 23 allowed tenderers to plan for the diversion of the Cocoli River on a temporary basis and had the option to adopt or not to adopt the diversion alignment suggested by ACP in the said amendment.58
184.
However, ACP, in breach of its duty to provide accurate information, did not provide the tenderers with important information about the instability of the Velasquez dyke, notwithstanding the studies that ACP had already carried out on this area. ACP’s failure to do so thus prevented GUPC and the rest of the tenderers from assessing the extent of the work involved in diverting the Cocoli River. This constituted "negligence, indeed gross negligence under Panamanian law; and...constituted dolo incidental, as it induced GUPC to reduce its tender costs by a greater measure than it would have had it been able to plan for the required preventive or remedial measures."59
185.
Based on the incomplete and inaccurate information, GUPC was induced into reducing its tender direct costs by [REDACTED] and passed on those savings to ACP.
186.
After signing the Contract, ACP again failed to provide GUPC with the information in its possession regarding actual conditions in the area of GUPC’s proposed diversion.
187.
GUPC and ACP had various meetings and discussions on the plan to divert the Cocoli River around the north-east corner of the Velasquez disposal site. Despite having various opportunities to do so, ACP allegedly never informed GUPC that the area for the planned diversion was prone to instability and that the Velasquez dyke had failed in the past.60
188.
In September 2009, for the first time since the beginning of the works, ACP instructed GUPC that the diversion would instead be carried out on a permanent basis, and thus would require a 100-year design life. This change increased the design requirements for the diversion. According to Claimants, this amounts to a Variation that would entitle GUPC to additional payment and time pursuant to Clause 13 of the Conditions of Contract.61
189.
Moreover, ACP again breached its duty to provide GUPC with all the information in its possession in order to enable the latter to prepare for the permanent diversion design.62 It remained silent about the unstable conditions below and around the Velasquez dyke. Thus, GUPC worked on the design for the diversion based on inaccurate and incomplete assumptions.63
190.
Because of the requirement that the diversion should be permanent, GUPC believed that the only feasible design for the diversion was an open trench. In order to do this, GUPC needed an extension of the site to encroach outside the Contractor’s limit line. Thus, GUPC, in accordance with Sub-Clause 4.23 of the Conditions of Contract, requested an extension of the Site to carry out the permanent diversion of the Cocoli River. However, ACP refused to extend the Contractor’s limit line, preventing GUPC from carrying out a permanent diversion, which ACP itself had required.64
191.
Because of ACP’s refusal, GUPC had no option but to give up the diversion of the Cocoli River. ACP’s behavior was contrary to its duty under Contract and Panamanian law to act in good faith and cooperate with GUPC, resulting into a loss of the benefit of [REDACTED] reduction in direct cots it had passed on to ACP in its tender, as well as additional costs and delays during the Phase 2 dredging works.65

Claimants are thus Entitled to Extension of Time and Damages due to ACP’s Breach of its duties

GUPC complied with the notice requirements

192.
Contrary to ACP’s claim that Claimants’ delay claim is time-barred, Claimants contend that GUPC timely served its claim for additional time and further payment in its notice of 5 February 2010.66 This will be more comprehensively discussed in Chapter IX below.

GUPC is entitled to an extension of time

193.
Because of ACP’s breaches, GUPC was forced to abandon the Cocoli River diversion and relocate the cofferdam. Moreover, GUPC had to build a wider and deeper cofferdam. Thus, GUPC claims that it is entitled to an extension of time of 246 calendar days. According to Claimants, supported by the Claimants’ delay expert, Ms. Marianne Ramey, the breakdown of GUPC’s entitlement is as follows:

73 calendar days of delay to the critical path assessed in the period from 15 January 2010 to 9 July 2010 (Cofferdam re-design);

97 calendar days of delay to the critical path assessed in the period from 10 July 2010 to 28 January 2011 (Phase 1 dredging); and

76 calendar days of delay to the critical path caused by the Phase 2 dredging and Cofferdam removal works, which became necessary as a result of the Cofferdam/Cocoli River events that occurred in 2010.67

GUPC is entitled to damages

194.
Because of ACP’s breaches, Claimants argue that GUPC is entitled to full compensation. According to Dr. Hoyos, the principle of full compensation means that the aggrieved party "should be put back in the position [it] would have been in had the breach not occurred."68
195.
Claimants’ position is that it is entitled to full compensation for the following:

the [REDACTED] direct costs savings it passed on to ACP;

additional direct costs and corresponding overheads;

prolongation costs corresponding to its Extension of Time entitlement;

head office overhead costs;

profit; and

finance costs.

196.
As discussed above, when GUPC decided to divert the Cocoli River and relocate the Cofferdam at 8P+900, it passed on the direct costs saving of [REDACTED] to ACP by deducting it from its overall costs estimates. Because GUPC had to give up this planned diversion and build the Cofferdam at 8P+700 due to ACP’s breaches of its duties, GUPC lost the benefit of its direct costs savings. It is thus entitled to recover this amount.69
197.
The additional direct costs are for the additional works carried out by GUPC in relation to the Cofferdam issues, additional quantities of works corresponding to the dredging that GUPC had to carry out prior to building the Cofferdam and the construction of a larger Cofferdam (Phase 1), and the dredging and Cofferdam removal (Phase 2).70
198.
Site overheads were incurred in respect of the direct costs resulting from the additional works GUPC had to carry out due to ACP’s breaches. As Mr. Hunter explains, "as the scope of a project increases, the resources required to manage and support the increase in scope also necessarily increase."71
199.
Prolongation costs include site overheads, constituting staff or labor costs, insurance and bond costs, and other indirect costs. This is because "where there is a critical delay to a project, additional costs may be incurred for time-related (core) staffing, equipment and overhead costs for the extended project duration."72 Prolongation costs also include plant and equipment costs, comprising relevant time-related equipment costs for extended project duration.
200.
Head office overhead costs are the costs incurred by GUPC, as well as the Second to Fourth Claimants.73
201.
Claimants contend that profit should be calculated pursuant to the provisions of the Contract which define Profit as "a sum of 5%" of the relevant costs.74
202.
Finance costs are for interest that GUPC would have earned on sums corresponding to the additional costs incurred. It is also for further additional financing costs, by way of bank loans, loans from the Second to Fourth Claimants, non-payment of sums owed to the Second to Fourth Claimants, etc.75

III. Secondary Case

GUPC is Entitled to Full Compensation Pursuant to Unforeseeable Physical Conditions (Sub-Clause 4.12)

203.
Even if ACP were not in breach of its obligations, GUPC would still be entitled to compensation under Sub-Clause 4.12 of the Conditions of Contract for the unforeseeable physical conditions in the area of the Cofferdam. Sub-Clause 4.12 states that ACP must grant GUPC an extension of time and compensate GUPC for any additional cost incurred if GUPC encounters, in respect of a Lock Structure, certain physical conditions more adverse to the Contractor than the Employer’s geotechnical characterization and interpretation of such conditions in the GIR, or adverse man-made conditions, which are unforeseeable. The provision also states some requirements that have to be met before these physical or man-made conditions can trigger GUPC’s entitlement, set forth below:

...the physical conditions encountered by GUPC are:

either natural (Sub-Clause 4.12.2(a) or man-made (Sub-Clause 4.12.2(b)));

more adverse than the geological and geotechnical conditions described by ACP in the GIR (Sub-Clause (a)), or simply adverse (Sub-Clause 4.12.2(b));

[u]nforeseeable;

in respect of a Lock Structure;

within the area inside the footprint of the Lock Structure; and

at and/or below (Sub-Clause 4.12.2(a)), or at, or above or below (Sub-Clause 4.12.2(b)) the Foundation Level of the Lock Structure.76

204.
GUPC contends that the conditions meet all these criteria, and GUPC is thus entitled to compensation pursuant to the said Sub-Clause. This will be further discussed with the Tribunal’s analysis below.

GUPC is Entitled to Full Compensation far Unforeseeable Ground Conditions Pursuant to Mandatory Panamanian Law.

205.
GUPC also claims entitlement to compensation pursuant to Panamanian Law for the unforeseeable ground conditions in the PEAC (specifically the Cofferdam area at 8P+700 and 8P+900) and in the area of the Cocoli River diversion. Article 133(5) of ACP’s Regulation, setting out the obligation to maintain the technical, financial, and economic conditions existing at the time the Contract was entered into, applies in the case of unforeseen circumstances.77 Because of ACP’s failure to provide accurate and complete information, the ground conditions were unforeseeable for GUPC. Consequently, ACP must compensate GUPC for its losses.78

GUPC is Entitled to Full Compensation for Losses Due to Error in the Employer’s Requirements (Sub-Clause 1.9.4)

206.
Sub-Clause 1.9.4 of the Conditions of Contract provides:

If the Contractor suffers delay and/or incurs Cost as a result of an error in the Employer’s Requirements...the Contractor shall...be entitled...to (a) an extension of time for such delay...and (b) payment of any such Cost Plus Reasonable Profit.79

207.
GUPC contends that the following Employers Requirements ("ER") were in error, and it is thus entitled to full compensation:

"ER Section 35 20 23 provided that dredging would be required in the PEAC area from around Station 8P+731 to Station 9P+021 (i.e. the Contractor’s Limit Line). However, GUPC was forced to dredge a much wider area - the entire PEAC area in fact, including north of 8P+731 - when it discovered that the PEAC area had previously been dredged and infilled with mud;

The ER provided that a maximum of 600,000 cubic metres of dredging would be required in the PEAC area. However, GUPC had to dredge much larger quantities, around 2,000,000 cubic metres of soft sediments (over three times the quantities set out in the ER); and

The ER provided that the corresponding dredging waste was to be sent to the Victoria disposal area. However, GUPC could not use the Victoria disposal site to dispose of the additional waste, because the waste was too liquid and in too great quantities."80

In any Event, ACP Breached its Obligation to Make a Fair Determination of GUPC’s Entitlements.

208.
Under the Contract and Panamanian Law, ACP is obligated to make a fair determination of GUPC’s entitlements, taking due regard for all relevant circumstances (Sub-Clause 3.5 of the Conditions of Contract). In deciding on the Contractor’s claims, ACP must inform the Contractor of its determination with supporting particulars (Sub-Clause 3.5 of the Conditions of Contract). Law 38 also necessitates ACP to conduct itself "in accordance with rules of impartiality...with no prejudice to []due process, with objectivity, and with adherence to the principle of strict legality...The acts of public servants shall be governed by the principles of loyalty to the State, honesty and efficiency..."
209.
This goes hand in hand with its duties of good faith, fairness, impartiality, and cooperation, as set forth in its Regulation. The Regulation also contains specific provisions on ACP’s duty to attempt in good faith to reach an agreement with the Contractor with respect to any claim.
210.
In breach of these obligations, ACP summarily denied all of GUPC’s claims, did not attempt to reach any agreement, and did not document any effort to do such. After GUPC validly notified ACP of its claim in accordance with Sub-Clause 20.1 of the Conditions of Contract on 5 February 2011, ACP summarily denied it six days later, despite not yet having received the particulars of the claim. The denial merely said that GUPC’s notice of claim "[could] not be further entertained."81 Despite providing clarification and more details of its claim, GUPC ultimately dismissed GUPC’s claim for being "without any merit."82
211.
To date, GUPC says that only [REDACTED] of all claims made by GUPC have been voluntarily accepted by ACP.83 According to GUPC, ACP’s acts described above demonstrate the summary and unreasonable way that ACP makes determinations of GUPC’s reasonable claims.

IV. The Second to Fourth Claimants’ Case

ACP’s Breaches Towards the Second to Fourth Claimants

212.
ACP’s breaches, in addition to its wrongful demands under the JSG, also give rise to separate losses incurred by the Second to Fourth Claimants. ACP’s breaches caused damage to the Second to Fourth Claimants, which are separate and distinct from GUPC’s damages.
213.
These breaches include:

abusively requiring performance of the Second to Fourth Claimants and thus abusing its rights under the JSG. Respondent did this by mandating direct involvement of the Second to Fourth Claimants to provide additional funding, and managerial and technical expertise to fix the consequences of its own breaches.84 This included demands in 2011, 2012, 2013, and 2014;85

acts constituting dolo incidental for its misrepresentations as mentioned above, causing the Second to Fourth Claimants to contribute additional expertise, money, and credit;86

ACP’s failure to provide accurate and complete information regarding the dredging and existing geological conditions to the Second to Fourth Claimants before it signed the Contract, AAA, or JSG;87

Grossly aggravating the Second to Fourth Claimants’ obligations.88

214.
ACP misrepresented the financial premise of the TSLP when it said that the TSLP would be "funded from a combination of ACP generated funds and external financing for the Project," and that the funds necessary were approximately "USD 3.48 billion."89 ACP also informed the contractor that "it would receive interim payments from ACP for the work performed, in addition to the advance payments, which would be offset against work performed on the Project."90
215.
Contrary to these representations, the Second to Fourth Claimants had to provide significant amounts of direct financing and managerial and technical expertise in order to fund the cost overruns due to ACP’s breaches. They had to provide additional financing of over [REDACTED] to cover cost overruns associated directly with the Cofferdam and Cocoli River diversion issues.91

The Second to Fourth Claimants are Entitled to Damages

216.
ACP’s breaches led to the Second to Fourth Claimants suffering lost opportunity costs -as measured by each Claimant’s individual Returns on Investment ("ROI"), amounting to [REDACTED].92
217.
According to Dr. Hoyos, the full compensation principle also includes compensation for loss of opportunity or lost profits under Panamanian law. He cites Article 991 of the Civil Code which provides for "[c]ompensation for damages and harm (perjuicios)... not only [for] the value of the loss that has been suffered but also the profits that the creditor has forgone."93
218.
Claimants’ expert Professor Coates explains that "ROI is a commonly used measurement of the opportunity cost of capital required for potential project or investment, in a variety of business and planning settings. It is calculated by dividing total capital into earnings before interest, taxes, and dividends."94
219.
Mr. Hart calculates the lost ROI related to the Cofferdam on the basis of their Operating Profits divided by Net Invested Capital. The lost ROI of each Claimant is broken down as follows:

[REDACTED]

220.
These will be further discussed with the Tribunal’s analysis below.
221.
The Claimants’ submissions comprise thousands of pages. Even if they are not all specifically mentioned in the present Award, the Tribunal has taken into consideration all the Claimants’ arguments in their respective written and oral submissions before deciding upon the issues before it.

Section II. Respondent’s Case

I. The Contractual Allocation of Risk

222.
According to the Respondent, the allocation of risk and responsibility of physical conditions is common in construction and engineering contracts. In a design and build contract, since it is the contractor who must come up with a design suitable for the physical conditions, it is logical that the risk of such design should remain with the contractor. This applies even more strongly in temporary works, which are not subject to employer requirements, and would largely depend upon a particular contractor.95
223.
The Contract provides for the party’s agreement as to the risk of unexpected physical conditions - whether it will be allocated to one party, or shared as a risk by both. In the instant case, Respondent alleges that the Conditions of Contract, supplemented by the GIR, express the Parties’ agreement as to the claims a Contractor may claim in defined parts of the site.96 A brief description of these provisions is found below.
224.
First, Sub-Clause 1.16 [Entire Agreement], first sub-paragraph, delineates the documents that make up the contract, and clearly provides that the Parties cannot rely on any representations made that induced them to enter into the contract. The second-subparagraph specifies that prior negotiations and discussions, and prior drafts of the Contract, cannot be used to interpret the final agreement. The third sub-paragraph provides that any document or material during the RFP period but not incorporated into the final agreement, cannot hold any relevance in relation to the final agreement. The fourth sub-paragraph specifies that the terms agreed upon cannot be amended unless authorized in writing by the Parties.97
225.
Second, Sub-Clause 5.1 [General Design Obligations] sets out the Parties’ agreement with regard to the Volume VI Documents — that the Employer "shall not be responsible in any way whatsoever for the Volume VI Documents...that the Volume VI Documents are included in the Contract for information purposes only..."98 Moreover, it states that "nothing contained therein shall relieve the Contractor from his responsibility for the design and execution of the Works in accordance with the Employer’s requirements."99
226.
Third, Sub-Clause 1.5 [Priority of Documents] makes it clear that Volume VI Documents "have no status in the priority or hierarchy of documents, and so are not to be considered in relation to any ambiguity or discrepancy."100
227.
Fourth, Sub-Clause 4.10 [Site Data], first subparagraph states that ACP will make available "to the Contractor the Geotechnical Interpretative Report and certain other data...in the Employer’s possession on physical conditions, including sub-surface, hydrogeologic and topographic conditions at the Site, including environmental aspects." (Underlining added.) The Respondent emphasized that "certain" is not synonymous to "all", as Claimants argue. The second subparagraph places the onus on the Contractor to obtain the necessary information that may affect its tender. It also states that the contractor is deemed to have inspected and examined the site. The third subparagraph provides that the Employer gives no warranty as to the data or information, and provides for limited exceptions.101
228.
Fifth, Sub-Clause 4.12 [Unforeseeable Physical Conditions] sets forth the extremely specific criteria which must be met before a claim may be made for Unforeseeable Physical Conditions.102 These will be further discussed in the Tribunal’s analysis below.
229.
Sixth, Sub-Clause 5.2 [Contractor’s Documents] states that any feedback from the ACP will not relieve the Contractor from any of its obligations or responsibilities under the Contract. Respondent argues that the sub-clause reflects the Parties’ agreement that the "Contractor cannot escape its responsibilities by seeking to blame the ACP for not correcting a Contractor’s mistake."103
230.
The Respondent also argues that the GIR’s purpose and limitations are provided in its paragraph 1.2, which provides that (a) it is related to defined parts/portions of the lock structures only (and not to temporary works such as the cofferdam), (b) it should be used only as to natural subsurface and hydrogeological conditions at or below the upper levels of the foundations of the lock structures, and, for slopes for excavations, in the material surrounding lock structures within the specified limits in Sub-Clause 4.10.3(b); (c) ACP provides no warranty and shall have no responsibility if the GIR is used for other areas; (d) Tenderers were expected to make their own interpretation of the material in the RFP; and (e) Tenderers were expected to supplement the information as they thought necessary.104
231.
Respondent also argues that the Plates are part of the GDR, which is part of the Volume VI Documents, which are for information purposes only (under Sub-Clause 5.1). The borehole logs are also part of the Volume VI Documents.105

II. With Regard to the Cofferdam

Information on Dredging was Provided

232.
The Respondent contends that the temporary cofferdam in the PEAC, the subject of Claimants’ claim, is a small part of the works. The design of the cofferdam, being part of the temporary works, was under the Contractor’s discretion, and was therefore within the Contractor’s risk and responsibility.106
233.
Contrary to Claimants’ position that information with regard to the prior dredging was not provided or was difficult to find, Respondent alleges that the historical information in the Contract would have put the Contractor on notice. In fact, the Contractor uses the same information to make its other claims against the ACP. Drawing 5651-6-R1 ("The Third Locks Project New Miraflores Locks - Excavation Site Map South Approach Channel"), the ACP’s Proposal for Expansion of the Panama Canal, ACP’s presentation of March 2008, drawings in Volume VI comprising the 5803-40 series, Borehole M-53, excerpts from the Isthmian Report, the Governor’s Report, the Widening and Deepening Contract documents, among others, all contain information on the prior dredging.107 These documents will be discussed below with the Tribunal’s analysis.
234.
Respondent also asserts that CANAL recognized that the area of the PEAC needed further geotechnical investigation.108 Thus, Respondent argues that it was irresponsible for Contractor not to know, or to have known that there was dredging but ignoring the risk and not investigating further.109

GUPC’s Tender Showed that the Contractor was Aware of the Prior Dredging

235.
Respondent argues that a cofferdam as planned by the Contractor was "never appropriate, whether there had been dredging or not".110 Respondent claims that at tender stage, the Contractor recognized that it was going to eliminate the muck or soft materials, and that the Contractor said that the weakest case was a foundation on La Boca rock. If it were true, as Claimants’ expert Mr. Sembenelli suggests, that the main cofferdam would have been founded on Pacific muck, then the Contractor’s Design Basis Memorandum was also wrong, since La Boca formation was not the weakest of the foundation materials. Respondent asserts,

In reality, the Contractor intended to remove the soft Pacific muck but had made a mistake about the characteristics of the geological formation at -6m PLD, meaning that dredging or no dredging, it was always going to have to revisit the design of its cofferdam post tender. In making such mistake, it is clear GUPC had ignored the Plates which showed muck far below the planned cofferdam foundation level of -6m PLD.111

236.
CANAL and BTM, the other tenderers, intended to build a much deeper cofferdam and recognized the need for further geotechnical studies in the PEAC. They set the foundation at -14m, contrary to GUPC’s -6m.112
237.
According to Respondent, Claimants also unjustifiably blame it for failing to inform the Contractor that its assumptions were wrong because of the prior dredging. As discussed above, the Contractor’s Tender showed that it was aware of the dredging. Even assuming it wasn’t, the ACP had no duty to assist the Contractor to improve its bid. It would have been a breach of duty to the other Tenderers to give the Contractor unfair advantage.113

III. The Cocoli River Diversion

238.
Respondent’s position is that the alternative alignment provided in Amendment 23 to the RFP was a part of temporary works. Being temporary, the Contractor would have to return the temporary alignment to the ACP’s original alignment after completion of the Works.114
239.
However, the Contractor never intended to comply with Amendment 23, but instead wanted to insist on a different diversion, and wanted to work outside the limit line of the Contract to be able to implement its desired diversion.115
240.
In response to this, the Respondent argued that this would have an adverse effect on its ongoing business. The Respondent argued that it could not extend the limit line, but would grant the Contractor access to the area in order to perform the work.116
241.
Claimants also complain of ACP’s requirement that the Contractor submit a design package for a permanent or 100-year design. Respondent counters that the Contractor never objected to this, and there are no contemporary documents that reflect its objections.117

IV. The Requirements for Notice were Not Met

242.
Sub-Clause 2.1 [Contractor’s Claims] set forth the procedure for the Contractor to give notice of its claims. Respondent argues that in accordance with such Sub-Clause, an initial notice must be provided within 28 days, and updates and particulars must be given.
243.
Respondent argues that Claimants’ initial notice was late. The initial notice was given on 5 February 2010.118 Respondent argues that this was filed out of time because the Contractor already knew of the results of the geotechnical investigations in the area of the Cocoli River diversion in December 2009.119
244.
For Claimants’ claims with regard to the unrealized savings for the Cocoli River diversion, the Contractor never gave notice. Also, no claim was given with respect to the lack of access or supposed errors in the Employer’s Requirements.120 This applies to the dredging claims advanced by the Contractor in the SoR.121
245.
Respondent’s arguments will be more comprehensively discussed in Chapter IX below.

V. Delay was Not Caused by ACP

246.
Respondent claims that there is no contemporaneous evidence that suggests that the cofferdam was on the critical path of the Works. Claimants’ delay expert, Ms. Ramey, has given inconsistent opinions in the DAB and in the arbitration.122
247.
Respondent argues that delay was actually caused by problems associated with the concrete, and not the design and construction of the cofferdam. Both parties allegedly agree that concrete work started late in the Upper and Middle Chambers of the Water Saving Basins, leading to problems in concrete production, thus causing critical delay to the completion of the Works.123 In support of this, Respondent cites Ms. Ramey’s DAB Referral No. 11 Expert Report, which states,

Concrete mix design was always critical and had the Contractor included the true forecasts and kept the concrete sequence and methods the same, the delays would have been much higher.

In my opinion, the delay caused by the concrete mix design is not less than 265 days.124

248.
Using the Red-Amber-Green analysis by Respondent’s expert, Mr. Harvey, Respondent argues that the majority of the Pacific Locks Complex was actually available for excavation and concreting despite the unavailability of the cofferdam.125
249.
Thus, Respondent argues that the cofferdam was not critical. Even if it was, the delays are not attributable to ACP, but to the Contractor’s tardiness in its work, such as the delay in redesigning the cofferdam, delay in starting dredging, and delays in the east lateral cofferdam.126

VI. The Claim for Dredging is Unsupported

250.
According to Respondent, Claimants raised for the first time in its SoR new dredging claims for the Phase 2 works of removing the cofferdam. This added approximately [REDACTED] to the claims. Respondent requests the Tribunal to disregard this claim for lack of proper notice, and for being belatedly introduced in the SoR. Moreover, there is a lack of documents relating to the claim, and Contractor’s claims are merely based on estimates and not actual records.127

VII. Quantum Issues

251.
Respondent argues that in accordance with Clause 20.1 [Contractor’s Claims], the Contractor was obligated to (a) maintain contemporary records as may be necessary to substantiate any claim; (b) provide the Employer’s Representative with access to these records; and (c) update particulars as necessary.128
252.
[REDACTED].129

The tender adjustment claimed. [REDACTED]

253.
Respondent argues that the tender adjustment claim of [REDACTED] is not supported by any document proving that the tender was in fact reduced. Moreover, Mr. Fuchs concludes that it was impossible for the contractor to realize savings of this amount, and that the maximum savings could not be more than [REDACTED]. It may be less, but lack of proper disclosure by Claimants makes the claim impossible to quantify.130

The Increased PEAC and Cofferdam Costs

254.
Respondent criticizes the methodology used by Claimants’ quantum expert, Mr. Hunter, as follows:

i. Mr. Hunter used quantities based on manual take-offs from drawings apparently provided by the Contractor, and allegedly based on a 3D model which has never been disclosed. Mr. Hunter has not provided his worksheets and calculations for how he carried out his takeoffs. On the other hand, Respondent’s expert Mr. Fuchs relied on a detailed and substantiated 3D model prepared by Gannett Fleming, on an independent expert basis.

ii. With regard to excavation and fill rates, Mr. Hunter simply slightly adjusted the unsubstantiated rates provided to him by the Contractor, while Mr. Fuchs based his rates on those actually recorded in the Contractor’s Cost Control System.

iii. With regard to dredging rates - for Phase 1, both experts relied on the associated JDN subcontract but Mr. Fuchs excluded mobilisation, demobilisation and fuel price adjustment costs on the basis that these costs are fixed or otherwise recoverable. For Phase 2, Mr. Hunter merely relies on Contractor’s provided rates, which are merely estimates. Mr. Fuchs relied upon rates from historical signed dredging proposals to develop a reasonable rate.

iv. The experts arrive at vastly different amounts for alleged additional work costs, with the difference amounting to more than [REDACTED].131

The Contractor’s Claims for Time-related Costs

255.
[REDACTED].132

VIII. The Claims Made by the Second to Fourth Claimants Have No Merit

256.
Respondent’s main case with regard to Second to Fourth Claimants’ claims is summarized as follows:

ACP’s case is that neither the JSG nor Panamanian law confer upon the Second to Fourth Claimants the right to advance the claims made against the ACP. The Second to Fourth Claimants are not the Contractor. Any claims, to the extent that they exist at all, are for the Contractor to advance under the Contract - not the Contractor’s shareholders -because any entitlement to be paid anything for the Works arises under the Contract, or not at all. The Claimants have failed to deal with this threshold point.133

257.
Furthermore, Respondent asserts that the Second to Fourth Claimants’ duty under the JSG can only be triggered by a demand from ACP for performance (Sub-Clause 1.1(b)). ACP has made no such demand, and therefore, there is no dispute under the JSG that is ripe for review.
258.
Respondent also takes exception to the Claimants’ claim that Respondent gave the assurance that the TSLP was to be "cash flow positive".134 However, Sub-Clause 14.8 [Delayed Payment] provides for a situation wherein payment by ACP is not made, and giving Contractor the right to "receive financing charges on the amount unpaid during the period of delay...135" This proves that the Contract contemplates a possibility in which the Contractor may not be cash flow positive.
259.
The Contract also provided a warranty by the Contractor "that it has the requisite degree of...resources (including financial resources) available to it to perform its obligations under the Contract and execute the Works."136
260.
In any event, the claims fail because the Second to Fourth Claimants have failed to establish any causal link between the breaches alleged, the additional funding claimed to have been committed, the projects allegedly forgone, and the losses claimed. They also provide no evidence of actual opportunities and forgone projects during the relevant period. The losses are also unsubstantiated by any records with regard to the anticipated profitability of the projects allegedly forgone.137
261.
Respondent also contests the use of the ROI method in calculating lost profits damages for the following reasons:

(a) lost ROI is not a recognised method of calculating lost profits damages;

(b) conceptually, the claim for ROI is flawed as it eliminates investment risk over and above any borrowing cost which provides a claimant with a guaranteed return equivalent to an investment return. This would result in a poorly run and highly speculative claimant receiving damages in excess of the well-managed and conservative claimant;

(c) the Claimants have assumed the use of an average return or opportunity costs which assumes that any funds would not have been invested in a project that generated a lower return than the average;

(d) the Claimants use of an ROI as a measure of compensation for delay assumes that the alleged funds used for the cost overruns could have been used in existing projects available to the Claimants; however, the Claimants have provided no evidence to suggest that this was the case;

(e) the use of an ROI as a measure of compensation for delay compensates the Claimants for a risk to which they were never exposed which results in them being put in a better position than if there had been no cost overruns; and, finally

(f) the claim for the alleged ROI on the opportunity cost of investing in alternative projects does not appear to make sense when one compares the amount of the cost overruns in each year with the cash balances held by the Claimants.138

262.
These issues are further discussed with the Tribunal’s analysis below.

IX. Panamanian Law

263.
The parties differ on their interpretation of the Constitution and the law on the legal status and obligations of the ACP. This will be further discussed in Chapter VIII below.
264.
The Respondent’s submissions comprise thousands of pages. Even if they are not all specifically mentioned in the present Award, the Tribunal has taken into consideration all the Respondent’s arguments in their respective written and oral submissions before deciding upon the issues before it.

Chapter VII. The Claims for Relief

Section I. Claimants’ Claims for Relief

265.
In the Terms of Reference139, the Claimants formulated their claims for relief as follows:

54. Claimants respectfully request that the Arbitral Tribunal grant the following relief:

(a) ascertain and declare that Claimants are entitled to an appropriate extension of time, which is provisionally quantified in 121 days and, in any event, are not liable for the delay caused to the Project by the execution of the relevant works;

(b) ascertain and declare that Claimants are entitled to recover the additional costs they incurred to overcome the post-Contract changes by the Respondent and the undisclosed and unforeseeable actual conditions and events in the area of the Cofferdam, which are presently estimated in the amount of [REDACTED] subject to more precise substantiation in the course of the proceedings, plus interest;

(c) order Respondent to grant the above extension of time and to pay to Claimants the amount to be established by the Arbitral Tribunal on the basis of the evidence that will be discussed during the proceedings;

(d) order any other relief that the Arbitral Tribunal considers appropriate; and

(e) order Respondent to pay the costs of the arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the costs of Claimants’ legal representation.

266.
In the SoC140, the Claimants formulated their claims for relief as follows:

VI. Request for relief

487. In consideration of the above, the Claimants respectfully request that the Arbitral Tribunal:

(a) award GUPC S.A. (Claimant one) 259 calendar days of extension of the Project’s time for completion;

(b) award GUPC S.A. (Claimant one) additional payments and/or damages from ACP in the amount of [REDACTED] (not including taxes) for the consequences of ACP’s breaches of Panamanian law;

(c) award Sacyr S.A. (Claimant two) damages from ACP in the amount [REDACTED] for the consequences of ACP’s breaches of Panamanian law;

(d) award Salini-Impregilo S.p.A. (Claimant three) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of Panamanian law;

(e) award Jan De Nul N.V. (Claimant four) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of Panamanian law;

(f) award Claimants interest on all sums awarded to them, running from the date of the award;

(g) order Respondent ACP to pay to Claimants their costs in this arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the costs of the Claimants’ legal representation and experts; and

(h) order any other relief that the Arbitral Tribunal considers appropriate.

VII. Reservation of rights

488. The Claimants reserve their right to amend, supplement, update and extend their claims, and the relief sought, during the course of the arbitration.

267.
In the SoR141, the Claimants formulated their claims for relief as follows:

IX. Request for relief

1115. In consideration of the above, the Claimants respectfully request that the Arbitral Tribunal:

(a) award GUPC 246 calendar days of extension of the Project’s time for completion;

(b) award GUPC additional payments and/or damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(c) award Sacyr S.A. (Claimant two) damages from ACP in the amount [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(d) award Salini-Impregilo S.p.A. (Claimant three) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(e) award Jan De Nul N.V. (Claimant four) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(f) award Claimants interest on all sums awarded to them, running from the date of the award;

(g) order Respondent ACP to pay to Claimants their costs in this arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the costs of Claimants’ legal representation and experts; and

(h) order any other relief that the Arbitral Tribunal considers appropriate.

X. Reservation of rights

1116. The Claimants reserve their right to amend, supplement, update and extend their claims, and the relief sought, during the course of the arbitration. This arbitration does not cover the disruption to the works suffered by the Project as a consequence of the events covered by the present claims, which is the subject of a separate claim by GUPC.

268.
In Claimants’ Summary of the Case142, the Claimants formulated their claims for relief as follows:

VIII. Request for relief

366. In consideration of the above, the Claimants respectfully request that the Arbitral Tribunal:

(a) award GUPC 246 calendar days of extension of the Project’s time for completion;

(b) award GUPC additional payments and/or damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(c) award Sacyr S.A. (Claimant two) damages from ACP in the amount [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(d) award Salini-Impregilo S.p.A. (Claimant three) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(e) award Jan De Nul N.V. (Claimant four) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(f) award Claimants interest on all sums awarded to them, running from the date of the award;

(g) order Respondent ACP to pay to Claimants their costs in this arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the costs of Claimants’ legal representation and experts; and

(h) order any other relief that the Arbitral Tribunal considers appropriate.

IX. Reservation of rights

1116. The Claimants reserve their right to amend, supplement, update and extend their claims, and the relief sought, during the course of the arbitration. This arbitration does not cover the disruption to the works suffered by the Project as a consequence of the events covered by the present claims, which is the subject of a separate claim by Claimants.

269.
In Claimants’ PHB I143, Claimants formulated their claims for relief as follows:

XIV. Request for relief

1385. In consideration of the above, the Claimants respectfully request that the Arbitral Tribunal:

(a) award GUPC S.A. 246 calendar days of extension of the Project’s time for completion;

(b) award GUPC S.A. additional payments and/or damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract and Panamanian law;

(c) award Sacyr S.A. (Claimant two) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(d) award Salini-Impregilo S.p.A. (Claimant three) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(e) award Jan De Nul N.V. (Claimant four) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(f) award Claimants interest on all sums awarded to them, running from the date of the award;

(g) order Respondent ACP to pay to Claimants their costs in this arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the costs of Claimants’ legal representation and experts; and

(h) order any other relief that the Arbitral Tribunal considers appropriate,

X. Reservation of rights

1386. The Claimants reserve their right to amend, supplement, update and extend their claims, and the relief sought, during the course of the arbitration. This arbitration does not cover the disruption to the works suffered by the Project as a consequence of the events covered by the present claims, which is the subject of a separate claim by Claimants.

270.
In Claimants’ PHB II144, Claimants formulated their claims for relief as follows:

XIII. Request for relief

959. In consideration of the above, the Claimants respectfully request that the Arbitral Tribunal:

(a) award GUPC S.A. 246 calendar days of extension of the Project’s time for completion;

(b) award GUPC S.A. additional payments and/or damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(c) award Sacyr S.A. (Claimant two) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(d) award Salini-Impregilo S.p.A. (Claimant three) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(e) award Jan De Nul N.V. (Claimant four) damages from ACP in the amount of [REDACTED] for the consequences of ACP’s breaches of the Contract, the JSG and Panamanian law;

(f) award Claimants interest on all sums awarded to them, running from the date of the award;

(g) order Respondent ACP to pay to Claimants their costs in this arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the costs of Claimants’ legal representation and experts; and

(h) order any other relief that the Arbitral Tribunal considers appropriate.

XIV. Reservation of rights

960. The Claimants reserve their right to amend, supplement, update and extend their claims, and the relief sought, during the course of the arbitration. This arbitration does not cover the disruption to the works suffered by the Project as a consequence of the events covered by the present claims, which is the subject of a separate claim by Claimants.

Section II. Respondent’s Claims for Relief

271.
In the Terms of Reference145, the Respondent formulated its claims for relief as follows:

55. The Respondent respectfully requests that the Arbitral Tribunal:

(a) Declare that it has no jurisdiction over the claims of the Second to Fourth Claimants and dismiss them from this arbitration;

(b) Subject to its decision on jurisdiction, dismiss as inadmissible all claims asserted by the Second to Fourth Claimants;

(c) dismiss as without merit all of the Claimants’ claims for declarations or other relief;

(d) award any other relief which the Arbitral Tribunal considers appropriate; and

(e) Without prejudice to the Respondent’s challenge to jurisdiction, order the Claimants to pay the costs of the arbitration, including the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the legal and other costs of the Respondent, including the costs of its legal representatives.

272.
In the SoD146, the Respondent formulated its claims for relief as follows:

PART VI: THE REQUEST FOR RELIEF

33. THE REQUEST FOR RELIEF

33.1 The ACP therefore requests that the Arbitral Tribunal reject all relief sought by the Claimants, including:

(a) reject the Contractor’s claim for an extension of time for completion;

(b) reject the Contractor’s claim for additional payments and/or damages;

(c) because it has already ruled that the Second through Fourth Claimants are not parties to the Contract, reject the claims of each of the Second through Fourth Claimants that are based on the Contract as inadmissible in this arbitration;

(d) reject the claims of each of the Second through Fourth Claimants based on the JSG as inadmissible in this arbitration;

(e) that the Second through Fourth Claimants may not, on a true construction of the JSG or Panamanian law, make claims for damages against the ACP;

(f) and/or in the alternative to (d), reject the claims of the Second through Fourth Claimants for damages; and

(g) order that First through Fourth Claimants are obligated, jointly and severally, to pay to the ACP its costs in this arbitration, including, but not limited to, the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the legal costs of the ACP, including all legal and professional fees, expert and other costs and disbursements, and order that the First through Fourth Claimants shall pay interest on those sums until paid in full at an amount to be determined; and

(h) order any further relief to which the ACP is entitled.

PART VII: RESERVATION OF RIGHTS

34. RESERVATION OF RIGHTS

34.1 The ACP reserves its right to amend the submissions in this [SoD], including the relief sought, during this arbitration...

273.
In the SoRej147, the Respondent formulated its claims for relief as follows:

PART I: THE REQUEST FOR RELIEF

1. THE REQUEST FOR RELIEF

1.1 The ACP therefore requests that the Arbitral Tribunal reject all relief sought by the Claimants, including:

(a) reject the Contractor’s claim for an extension of time for completion;

(b) reject the Contractor’s claim for additional payments and/or damages;

(c) because it has already ruled that the Second through Fourth Claimants are not parties to the Contract, reject the claims of each of the Second through Fourth Claimants that are based on the Contract as inadmissible in this arbitration;

(d) reject the claims of each of the Second through Fourth Claimants based on the JSG as inadmissible in this arbitration;

(e) that the Second through Fourth Claimants may not, on a true construction of the JSG or Panamanian law, make claims for damages against the ACP;

(f) and/or in the alternative to (d), reject the claims of the Second through Fourth Claimants for damages; and

(g) order that First through Fourth Claimants are obligated, jointly and severally, to pay to the ACP its costs in this arbitration, including, but not limited to, the fees and expenses of the Arbitral Tribunal, the ICC’s costs and the legal costs of the ACP, including all legal and professional fees, expert and other costs and disbursements, and order that the First through Fourth Claimants shall pay interest on those sums until paid in full at an amount to be determined; and

(h) order any further relief to which the ACP is entitled, or the Arbitral Tribunal in its discretion considers appropriate.

Chapter VIII. The Law

274.
The decision of the claims submitted by the parties in this arbitration presupposes the resolution of various Panamanian legal issues which are disputed between the parties. Claimants and Respondent have both submitted various legal opinions. With the agreement of the parties, the Tribunal decided to only cross-examine the two main Panamanian law experts, Dr. Arturo Hoyos, legal expert for Claimants, and Prof. Octavio Del Moral, legal expert for Respondent. The legal issues to be determined are successively examined below.

The Applicable Law

275.
The Contract is governed by Panamanian law. The first paragraph of Article 1.4 of the Conditions of Contract provides that: "[t]he Contract shall be governed by the laws of the Republic of Panama". The parties however disagree not only on the legal provisions of Panamanian law which are applicable but also on the validity in Panamanian law of various contractual provisions. All these issues will be discussed below.

The Legal Nature of the Contract

276.
The parties agree that the Contract is an administrative contract.148
277.
The Arbitral Tribunal however emphasizes that the Contract is also an international contract, the disputes relating to which are submitted under the rules of arbitration of the International Chamber of Commerce in accordance with Article 20.6 of the Contract. Article 21.2 of the Rules provides that "[t]he Arbitral Tribunal shall take account of the provisions of the Contract, if any, between the parties and of any relevant trade usages".

The Legal Status of ACP

278.
The first question which has to be examined is the legal status of ACP in Panamanian law.
279.
It is undisputed that the ACP is a public legal entity established under Title XIV (Articles 314-323) of the Constitution of the Republic of Panama. As mentioned, pursuant to the Panama Canal Treaty of 1977, Panama took over the administration of the Canal which until then was in the hands of the United States. According to what is referred to as the Neutrality Treaty (more precisely the Panama Canal Treaties of 1977, consisting of the main Panama Canal Treaty and the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal), the Republic of Panama first recovered sovereign rights over the Canal Zone in 1979 and gradually assumed full control over the Panama Canal itself. Pursuant to the Panama Canal Treaty, the transition period ended at noon on December 31, 1999, with the total transfer of the waterway to the Republic of Panama.
280.
In accordance with the commitments contained in the Neutrality Treaty, the Constitution of the Republic of Panama provides in its Article 315 that "the Canal shall remain open to the peaceful and uninterrupted transit of ships of all nations".
281.
In its Article 316, the Constitution created the ACP which is defined as an "autonomous Public Law entity which shall be exclusively in charge of the administration, operation, conservation, maintenance and modernisation of the Panama Canal".
282.
Article 318 of the Constitution entrusts the administration of the ACP to a Board of Directors. Article 319 grants the Board certain exclusive powers, one of which is the exclusive power to issue regulations with regard of contracting, acquisitions or any other matter required for the functioning, maintenance, conservation and modernisation of the Canal, within the national maritime strategy:

Article 319. The Board of Directors shall have the following powers and duties, without prejudice to any other as determined by the Constitution and the Law:

[...]

6. Exclusively approve regulations to implement the general policies issued by the Legislative Branch, as proposed by the Executive Branch, on contracts and procurement, and on any matters as may be required for the best operation, maintenance, conservation and modernisation of the Canal within the national maritime strategy.

283.
This exclusive power of ACP is reinforced by Article 323 of the Constitution, which provides that the Legislative Branch can only develop the chapter of the Constitution referring to the Panama Canal at a general level. The development of these matters at a specific level belongs exclusively to ACP through the issuance of regulations:

Article 323. The regime contained in this title may only be developed by laws that establish general rules. The Panama Canal Authority may regulate these matters and shall send copies of all regulations issued in the exercise of this faculty to the Legislative Branch, in a term of no more than 15 calendar days.

284.
It is clear that the ACP has a unique status under Panamanian law, as recognised in various decisions of the Supreme Court of Justice of Panama. In a ruling dated December 19, 2001149, the Supreme Court pointed out that:

...[I]t is by virtue of the constitutional mandate contained in Title XIV, about the Panama Canal, that the Panama Canal Authority has a special regime that encompasses not only the attributions that are exclusively for the Administration and functioning of the Canal, which includes, among others, the power to exclusively approve its own regulations to implement the general provisions issued by the Legislative Branch, as proposed by the Exclusive Branch, on its regime of Procurement and further matters necessary for the better functioning, maintenance, preservation and modernization of the Canal...

285.
In another ruling of April 27, 2009150, the Supreme Court of Justice, deciding on the

constitutionality of a prohibition of the right to strike in the Canal, emphasised that:

All the consulted sectors, including the Legislative Committee, that studied in the first reading the draft constitutional amendments submitted by the Executive Body, agreed that the matter relating to the Panama Canal was to be enshrined in the constitutional level to clearly differentiate it and to take it out of the application of already existing rules in the Constitution and thus ensure the autonomy of the entity that would be created, compared to other state institutions, with the objective the Canal retains its strategic value to the world economy according to firm international orders.

Thus, the Plenary of the Legislative Assembly approved the draft submitted by the Executive as a new constitutional title, in accordance with the opinion of the majority of the groups consulted, so that the new Panama Canal Authority is an autonomous Public Law legal entity, with special features and powers and a special labour regime.

286.
In accordance with the constitutional provisions, the Legislative Branch passed Law 19, the Organic Law of the ACP on 11 June 1997.151 It states in its preamble that the rules included therein are intended to be of a general nature and shall provide the framework for the regulations to be issued by the ACP.
287.
Law 19 is a general framework law. It focuses on issues such as the ACP’s organisation, regulatory powers and status as a legal entity. In respect of contracts entered into by the ACP, it only includes general provisions and the framework to be followed by the regulations to be issued by the Board of Directors of the ACP in accordance with the Constitution.
288.
Article 1 of Law 19 provides:

The Panama Canal Authority is an autonomous legal entity established and organised under the terms of the National Constitution and this Law.

289.
Article 4 further provides:

The Authority shall have the exclusive charge of the operation, administration, management, preservation, maintenance, improvement, and modernisation of the Canal, as well as its activities and related services, pursuant to legal and constitutional regulations in force, so that the Canal may operate in a safe, uninterrupted, efficient, and profitable manner. The Authority may delegate to third parties, either totally or partially, the implementation and performance of certain projects, works, or services according to this Law and the regulations.

290.
Article 18.5 of Law 19 states that in accordance with the powers given to the ACP’s Board of Directors under the Constitution, the Board shall have the power to approve, among others, regulations concerning the contracting of work, supply of goods and provision of services necessary or convenient for the operation and modernisation of the Canal.
291.
Article 52 of Law 19 further provides that the ACP shall have the power to contract for or acquire works, services, and the supply of goods and shall have the exclusive power to adopt the regulations concerning these matters, Further, Article 56 states that contracts executed by the ACP shall be subject to the Regulations issued by it with respect to acquisitions, as well as to the terms and conditions of each particular contract. It also states that the Regulations shall have rules that establish mechanisms for the just and expeditious resolution of the objections of the proponents, as well as the claims of the contractors.
292.
Articles 52 and 53 of Law 19 further provide that the fundamental principle for ACP contracting is to obtain the best possible contracting conditions for the ACP. More precisely, Article 52 refers to "ensur[ing] the best quality, the most favourable prices, efficiency and competitiveness". Article 53 provides that the Regulations issued by ACP must "guarantee appropriate or highest quality, the most favourable prices and the most timely delivery or performance of projects or supply of goods and services".
293.
ACP’s freedom of contract and the principle of sanctity of contract are confirmed in Article 56 of the Law, providing that "[c]ontracts entered into by the Authority shall be subject to the Regulations issued by the Authority concerning contracting, as well as to the terms and conditions of each particular contract". They are also confirmed in Article 90 of the Regulation, according to which "[c]ontracts entered into by the authority shall be subject to the provisions in this regulation as well as to the terms and conditions provided in each contract in particular".
294.
Moreover, that Law 19 and regulations issued by the Board takes precedence over other Panamanian laws is emphasised in Article 134 of Law 19, which states,

Whenever there is a conflict between the provisions of this Law or in the Regulations issued to implement it, and any law, legal provisions, or regulation or contract-law for a concession of any other type in which the State is a party or hold an interest, either directly or through any of its entities or enterprises, other than the Authority, whether of a general or special nature, national or municipal, the Organic Law of the Authority and its Regulations will take precedence.

295.
Pursuant to its Authority under the Constitution and Law 19, the ACP enacted what is now commonly referred to as "the Regulation" by means of Agreement No. 24 of 4 October 1999, subsequently amended a substantial number of times. Pursuant to Article 1 of the Regulation, it establishes the rules and procedures applicable to the acquisition of works, goods and services for the functioning, maintenance, modernisation and expansion of the Panama Canal.
296.
In accordance with the principles contained in Law 19, Article 1B of the Regulation provides that "[n]othing in this Regulation shall be applied or interpreted in the sense of granting to any contractor rights or benefits that exceed those stipulated in the contract it entered into with the Authority". The parties’ legal experts have agreed during the hearing that this principle was only a restatement of the principle of sanctity of contract, pacta sunt servanda.152
297.
Article 131 of the Regulation provides in its first paragraph, "[c]ontracts entered into by the Panama Canal Authority shall be subject to and performed pursuant to Panama Canal Authority regulations and "supletoriamente" by the provisions of Panamanian Law"153. The Parties’ experts and other authorities have debated over the meaning of the word "supletoriamente" - does it mean "in a suppletory manner" or "supplemented by"? During his examination at the hearing, Claimants’ legal expert confirmed that he did not believe that "suppletory" or "supplementary" made a great difference. He said:

I just believe that this is consistent with the general idea that special provisions prevail over other general provisions... And I believe that also that this means that the regulations can and should be complemented where there are legal vacuums... If ~ even if you take a traditional view of supplementary, only to the extent that it is not regulated in the particular provision, you can apply others, then you come to the same conclusion.154

298.
This interpretation was confirmed by Respondent’s legal expert during the same examination, when he said, "[I]t means, more precisely...the application of other provision only when two suppositions are that there is a legal void to a certain situation, that there are no rules..."155
299.
There is therefore no disagreement between the legal experts. Article 131 means that contracts entered into by the ACP shall be regulated by Law 19 and the Regulation. Other Panamanian laws will apply when there is a legal vacuum, i.e., when these texts fail to deal with a legal situation or a legal problem.
300.
Article 130 of the Regulation further provides, with respect to contracts entered into by the ACP:

Contracts are entered into and formalized primarily because this allows for a closer concerted effort between the parties and permits greater administrative efficiency. Notwithstanding the preceding purpose, the contract shall also strive to guarantee the rights and interests of the parties. All actions taken by those persons to participate in the procurement shall be based upon principles of transparency, economy and responsibility, in accordance with the rules that govern administrative functions, as well as the rules of ethics and conduct that apply to the Authority, the rules of contract interpretation, and those general principles of law and specific provisions contained in administrative regulations.156

301.
It results from the above that:

- ACP contracts shall be subject to the terms and conditions of the relevant contract and the Regulation;

- other laws of Panama will only apply when there is a vacuum in the Law or the Regulation;

- the actions of the parties intervening in the contracting process will be based upon principles of transparency, economy and responsibility, general principles of law and specific provisions contained in administrative regulations. They will also be subject to the rules of ethics and conduct that apply to the Authority and the rules of contract interpretation.

302.
However, there remains a substantial disagreement between the legal experts. Claimants’ legal expert opines that according to what he refers to as "the principle of strict legality" contained in Article 17 of the Constitution, ACP status would be similar to any other public law entity in Panama. As a consequence, ACP should be subject to all general provisions of Panamanian law. Article 17 of the Constitution provides in its first paragraph that "[t]he authorities of the Republic are instituted to protect life, honour and property of the nationals whenever they may be, and of foreigners under its jurisdiction; ensure effectiveness of the rights and individual and social duties, and comply with and enforce the Constitution and the law". In other words, it is the position of Claimants’ legal expert that, even if ACP is subject to specific provisions of the Constitution as described above, it remains to be a public legal entity. And like all other legal entitles, it is subject to all Panamanian laws, in particular Law 22 of 27 June 2006, which regulates public contracting.
303.
Claimants’ legal expert further submits that in accordance with Article 206 of the Panamanian Constitution establishing the hierarchy of norms, the Regulation is below the laws. Thus, ACP’s Regulations must comply with the other laws of the Republic of Panama. Claimants’ legal expert also refers in this respect to Article 35 of Law No. 38.157 This is fully disputed by Respondent’s legal expert.
304.
The Tribunal does not agree with the conclusions drawn by Claimants’ legal expert. Even if it is correct that in Panama, regulations are below the laws, it remains that the Constitution itself - the highest in the hierarchy of laws- has provided for a specific system of distribution of matters that reserves the matter of ACP’s contracting to the Regulation and gives priority to the Regulation over other Panamanian laws in case of conflict. The system established by the Constitution, Law 19 and the Regulation is stated in the provisions that have been described above.
305.
An analysis of Law 22 itself confirms this conclusion. First, many of Law 22’s provisions regulate the same matters which the Regulation does. Most of the provisions contained in the Regulation would have no purpose if Law 22 also applied to contracts entered into by the ACP. Moreover, when the Tribunal asked what could be the purpose of applying Law 22 to ACP since there seems to be duplication between its provisions and the Regulation with regard to contracting, Claimants’ legal expert could not immediately refer to provisions other than Articles 21 and 75, which state:158

Article 21 - Contractual balance

In public contracts of extended duration, clauses and conditions aimed at maintaining, during the term of the contract, the contractual balance existing at the time of contracting, may be agreed, with the purpose that if, such conditions are altered by extraordinary and unforeseeable acts, such can be modified to maintain the equilibrium.

The parties may enter into agreements necessary to re-establish the contractual balance, including amounts, conditions, forms of payment of additional expenses, acknowledgement of financial expenses and interest, if necessary, in a manner provided for in the modification of the contract, which additional payment, if necessary will be performed as established in the modified contract and in accordance with the provisions over expenditures provided for in the General Budget of the State, in the term in which the disbursement should be made.

The contractual balance referred to in this article will not comprise, in any case, the modification of the contract clauses entered into with the State in order to achieve equalization of the conditions and terms of the contract. Consequently, any form of equivalence is eliminated to guarantee competitiveness and the development of work and activities, as well as the provision of services through uniform rules, clear and transparent in accordance with the contractual balance.

In contract for works, supply of construction goods or turnkey, when, as a result of events and circumstances arising after the execution of the contract which could not have been foreseen at that moment or by force majeure or fortuitous events, an alteration or obstruction of the costs occurs, which impedes the fulfilment of the objective of the contract, the State may be considered as included in the contract the contractual balance clause, even if not agreed, in order to permit the respective amendment.159

Article 75. Clauses and uses of the place.

Public entities will be able to include, within the contracts that they enter into the agreements, the clauses and the uses of the place, the facility depending on the essence and nature of the contract, as well as others that they deem convenient, provided that they do not oppose the public interest, but the existent judiciary order, without prejudice at the privileges and prerogatives of the state, which will not be subject to limitation, denial or renounced by the contracting entity. Any condition opposed to this provision will be null in total right.160

306.
But more fundamentally, Law 22 contains in its Article 17, a provision which differs from Article 130 of the Regulation. Article 17 of Law 22 entitled "General principals (sic) of public procurement" provides:

Those who participate in public procurement shall behave on the basis of the principles of efficiency, effectiveness, transparency, due process, publicity, economy and responsibility, in accordance with the principles that govern civil service. At the same time, they are governed by the principles that govern the conduct of public servants, the rules on contract interpretation, the general principles of law, the rules of administrative law and the rules in civil and commercial matters that are not contrary to the present law.161

307.
Article 130 of the Regulation is much more limited in its scope. It provides:

Contracts are entered into and formalized primarily because this allows for a closer concerted effort between the parties and permits greater administrative efficiency. Notwithstanding the preceding purpose, the contract shall also strive to guarantee the rights and interests of the parties. All actions taken by those persons to participate in the procurement shall be based upon principles of transparency, economy and responsibility, in accordance with the rules that govern administrative functions, as well as the rules of ethics and conduct that apply to the Authority, the rules of contract interpretation, and those general principles of law and specific provisions contained in administrative regulations.162

308.
The reference in Article 130 is only to "general principles of law" as opposed to Article 17 of Law 22, which also refers to "rules in civil and commercial matters that are not contrary to the present law"; and to "specific provisions contained in administrative regulations" rather than to "the rules of administrative law".
309.
Further confirmation that Law 22 does not apply to the ACP can also be found in Panamanian court decisions which have decided that the predecessor of Law 22 - Law 56 of 1995 - did not apply to the ACP.
310.
In its decision dated 19 December 2001163, the Supreme Court of Justice recognised that the Constitution grants to the ACP’s Board of Directors "the exclusive power to approve the Regulations"; that Law 19 "develops the constitutional mandate, by empowering the Board of Directors of the Panama Canal Authority to approve the Regulations necessary or convenient for the functioning of the Canal"; and that Law 19 "envisions procedures and conditions different from those stipulated in Law 56 of 1995". It recognised Article 120 of the Regulation as a provision "intended to fulfil the objectives that apply exclusively to it" in order to ensure the continued functioning of the Panama Canal.
311.
The second decision referred to by Respondent’s expert is a judgment of the Supreme Court of Justice dated 3 December 2009164, which states:

Lastly, regarding the possible breach of Article 16 of Law 56 of 1995 on public contracting, this chamber considers that [...] such legal provision was not applicable to the bidding on and awarding of the [contract] put out by the Panama Canal Authority for bidding, all the more because public contracting by this Authority is not governed by the procedures of public contracting established under Law 56 of 1995 but by the Regulations that arise out of the provisions of Article 319, paragraph 6, under Title XIV of the Constitution of Panama; Law 19 of 20 June 1999, the Acquisition Regulation of the Panama Canal Authority; and the internal proceedings of contracting of the Panama Canal Authority.

312.
Furthermore, Claimants’ legal expert could not point to any Panamanian case law which could show the contrary.
313.
It is correct that Law 22 provides in its Article 1 that it "establishes the rules and basic principles of mandatory compliance which will govern the public contracts by the central government, autonomous and semi-autonomous entities, municipalities,... For:... 6. Concessions or any other contract not regulated by special law". It is also correct that Article 1 provides some exceptions to this rule and that ACP is not included. However, as pointed by Respondent’s legal expert:

[N]o exception was made simply because the Constitution had set forth already that that area - contractual area of ACP belong (sic) exclusively to the ACP.

What was the need then - what was the need then to make this exception when there is a constitutional rule that is setting it forth in a very categoric (sic) manner like has been done by the rules of Title XIV of the national Constitution?165

314.
The Tribunal therefore decides that ACP is not subject to Law 22 of 27 June 2006 regulating public contracting, subject to the Tribunal’s further discussion below.
315.
Finally, the Tribunal also notes that Claimants’ legal expert overstates the scope of Article 1109 of the Panamanian Civil Code. This provision, which is found word for word in most civil law systems, may be considered a general principle of contract law. It provides that contracts are not only binding as to their terms but also to the consequences that, according to their nature, are in accordance with good faith, uses and the law. Claimants’ legal expert refers to this article as the "rule of integration of contracts"166. However, the Tribunal finds that it does not imply that contracts entered into by ACP are subject to all the laws of Panama. Its only implication is that, beyond their terms, such contracts are also subject to mandatory rules of Panamanian law whose scope of application extends to such agreements.

The Scope of the Last Sentence of Article 130 of the Regulation

The Principles of Transparency, Economy and Responsibility

316.
It remains for the Arbitral Tribunal to determine the scope of the last sentence of Article 130 of the Regulation. More precisely, to determine the meaning of "principles of transparency, economy and responsibility, in accordance with the rules that govern administrative functions, as well as the rules of ethics and conduct that apply to the Authority, the rules of contract interpretation, and those general principles of law and specific provisions contained in administrative regulations"167 applicable to ACP contracts.
317.
With regard to the principles of transparency, economy and responsibility, it results from the testimony of the legal experts that there are no general definitions in the law, but that there are specific definitions of these principles in Articles 18, 19 and 20 of Law 22. Claimants’ legal expert submits that this is the definition that should apply in the context of Article 130 of the Regulation. However, as the Tribunal has decided above, ACP is not subject to Law 22.
318.
In any case, as pointed out by Respondent’s legal expert, these articles refer to matters that have nothing to do with the functions of the Panama Canal. For example, Article 18 on the principle of transparency mentions the Public Procurement Electronic System. However, the ACP has different mechanisms of acquisition which is not in such system.
319.
He further submitted that although the first sentence of these articles may have as their titles the principles of transparency, economy, and responsibility, the body of the articles deals with specific matters not applicable to the ACP.168
320.
The Arbitral Tribunal considers that there is merit in the Respondent’s expert’s remarks. Articles 18, 19 and 20 of Law 22 discuss general principles concerning transparency, economy and responsibility but also make specific applications of these principles which cannot necessarily be transposed to ACP, given its special status and legal regime. Moreover, Law 19 and the Regulation also contain articles which apply the principles of transparency, economy and responsibility to the specific situation of ACP.169 In other words, to the extent that there is a void in Law 19 and the Regulation with respect to a general definition of the above principles, reference can be made to Articles 18, 19 and 20 of Law 22. However, the content of these articles cannot be applied in full for the reasons correctly mentioned by Respondent’s legal expert.
321.
In this respect, the principle of transparency clearly means that ACP must act in a transparent manner at all stages of the contracting procedure. The contract must be carried out through ACP selection procedures, with the exception of what is determined by law. The proponents must have the opportunity to know the reports, concepts and the decisions given or adopted, via the ACP information system, and have the opportunity to express observations and dispute them. ACP will not act with deviation of power or abuse of authority, and will exercise its competence exclusively for the purposes established by law. And it will be prohibited from circumventing procedures on contractor selection and other requirements provided by the law.
322.
The principle of economy means that in selecting a contractor, the selection rules and the tender documents must be complied with, for the purpose of objectively selecting the most advantageous proposal for ACP. In other words there should be at all stages of contracting, economy of time and money. The rules of the contractor selection procedures will be interpreted in a manner in which they will not allow different or additional procedures other than those expressly established. The procedures will be followed with austerity of time, resources, and costs to avoid delays in the execution of the contract. Procedures will be adopted that guarantee the timely resolution of the different disputes that may arise regarding the conclusion and execution of the contract. The adjudication action and the contract will not be submitted to approvals, variations or subsequent administrative reviews, nor to any other type of requirements different from those provided by the applicable legal provisions.
323.
Finally, the principle of responsibility clearly means that public servants will not be able, for themselves or other parties, to enter into contracts with the entity or agency in which they work, nor participate in it as owners, partners or shareholders of a company or administrators, managers, directors or legal representatives of the proponent in a public act. It also means that public servants that participate in the contractor selection procedures and the contracts will act responsibly at all stages of the contracting procedure and the performance of the contract.
324.
Beyond these general definitions which take their inspiration in Articles 18, 19 and 20 of Law 22, it is clear that these principles have also been taken into consideration by the drafters of Law 19 and the Regulation, as they are clearly subsumed in numerous provisions of these two legal texts.

The Rules of Contract Interpretation

325.
The rules of contract interpretation in Panamanian law are similar to those contained in the civil codes of most civil law countries.
326.
The basic principle is enunciated in Article 1132 of the Civil Code: "[i]f the terms of the contract are clear and leave no doubt as to the intent of the contracting parties, the literal sense will prevail". This is an application of the general principle that what is clear should not be interpreted. In other words, if there is no obscurity or ambiguity in a contract, the literal meaning must prevail.
327.
However, there is an exception to this rule in the second paragraph of Article 1132, in cases where the intention of the parties is evident but is not reflected in the words: "[i]f the words appear to be contrary to the evident intention of the parties, the intention shall prevail over the words". It is obviously a very exceptional situation and therefore, this provision should only be applied in very rare instances. The general principle enunciated in paragraph 1 of Article 1132 should prevail in normal cases: you do not interpret what is clear. And the standard to determine if the terms of a contract are clear or obscure must be an objective one. Therefore, the remaining rules of contract interpretation will only come into play if the terms of the contract are objectively unclear or ambiguous.
328.
In this respect, Article 1133 of the Civil Code provides that "to assess the intention of the contracting parties, one shall primarily take into account their conduct, be it contemporaneous or posterior to the contract".
329.
Article 1135 also states that if a clause is ambiguous, the interpreter should adopt the meaning which best makes that clause effective.
330.
Under Article 1136 of the Civil Code, clauses must be interpreted in an integrated manner. Doubtful clauses shall have the meaning which emerges from the whole contract considered together.
331.
Under Article 1137 of the Civil Code, expressions with multiple potential different meanings should be construed using the meaning which best conforms to the nature and object of the contract.
332.
Finally, under Article 1139, obscure or contradictory clauses must be interpreted so as to avoid favouring the party who drafted them. This provision is generally considered in most civil law legal systems as a subsidiary rule of interpretation, or a rule of last resort.
333.
The Contract itself also contains rules of interpretation. Article 1 provides that "words and expressions shall have the same meanings as are respectively assigned to them in the conditions of contract hereinafter referred to". And indeed, Article 1.1 of the Conditions of Contract contains a very long list of definitions, providing that "[t]he following words and expressions shall (unless otherwise stated) have the meanings stated".
334.
Article 2.2. of the Contract also provides that the documents listed in this Article shall be deemed to form, and be read as construed, as part of the agreement and Article 1.2 of the Conditions of Contract under the title "Interpretation" provides that except where the context requires otherwise:

a) words indicating one gender include all genders;

b) words indicating the singular also include the plural and words indicating the plural also include the singular;

c) "including" means including without limitation (with related words being construed accordingly), "in particular" means "in particular but without limitation" and other general words shall not be given restrictive interpretation by reason of their being preceded or followed by words indicating a particular class of acts, matters or things;

d) provisions including the word "agree", "agreed" or "agreement" require the agreement to be recorded in writing;

e) "written" or "in writing" means hand-written typed-written, printed or electronically made, and resulting in a permanent record; and

f) any reference to time shall be considered to be UTC/GMT -5 hours.

The marginal words and other headings shall not be taken into consideration in the interpretation of the Contract.

335.
Finally, Article 1.5 of the Conditions of Contract provides under the title "Priority of Documents" that:

Other than the Volume VI Documents which are, as stated in Sub-Clause 5.1, included in the Contract for information purposes only, the documents forming the Contract are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be in accordance with the following sequence:

a) the Contract Agreement;

b) the Letter of Acceptance;

c) the Letter of Tender;

d) these Conditions of Contract;

e) the Price Adjustment Timetable;

f) the Appendices to the Conditions of Contract;

g) the Employer’s Requirements;

h) the Contractor’s Technical Proposal;

i) the Contractor’s Price Proposal; and

j) the Volume VII Documents.

If an ambiguity or discrepancy is found in the above documents, the employer’s representative shall issue any necessary clarification or instruction.

336.
The Conditions of Contract also contain an Entire Agreement clause in Article 1.16. It provides as follows:

The Contract and the documents incorporated herein by reference constitute the entire agreement between the Employer and the Contractor and supersede all prior negotiations, commitments, representations, communications and agreements relating to the Contract either oral or in writing except to the extent they have been expressly incorporated herein. The Employer and the Contractor confirm that they have not relied upon any representation inducing them to enter into the Contract and agree to waive any right which they might otherwise have to bring any action in respect of such representation.

The parties agree and acknowledge that the Contract shall be interpreted and construed without reference to any prior negotiations or communications and without reference to any changes or amendments to the RFP during the course of the tender process which changes or amendments were not expressly incorporated into the Contract.

In furtherance of the foregoing and for the avoidance of doubt, the parties agree and acknowledge that the contract shall be interpreted, construed and enforced without reference to any document or other material submitted to the Employer by or on behalf of the Contractor, any member and/or any parent company of either thereof in response to or in connection with the RFQ and/or the RFP, and in no event shall the fact that the Employer shall have received any such document or other material be construed as an approval or consent of any matter, or waiver or modification of any term or provision of the Contract, which shall take precedence thereover.

No change in, or addition to, or waiver, relaxation, forbearance, delay or indulgence in enforcing the terms and provisions here of shall be binding upon the Contractor or the Employer unless approved and dated in writing by their respective authorised representatives in express terms that identify this sub-clause 1.16.

337.
Entire agreement clauses are standard clauses in all international agreements. Some of them are short and include only the first sentence above, others are more detailed. This particular clause is one of the more elaborate ones that this Tribunal has encountered in its practice.
338.
Claimants dispute the validity of Article 1.16. On the other hand, Respondent considers that the clause is valid. It submits that the contract is very detailed, self-sufficient; that the contractual provisions are very clear and do not need any research on the intention of the parties to determine their meaning.
339.
The Tribunal considers that entire agreement clauses are generally valid but are not usually interpreted as prohibiting reference to pre-contractual documents and negotiations in order to determine the scope of the contractual provisions. In this case, what the entire agreement clause provides is, in a nutshell: "the contract and only the contract, nothing else". In other words, if a contractual provision is not clear, it should only be interpreted on the basis of other contractual provisions or documents.
340.
In the Tribunal’s view, even if parties are entitled to agree on rules of contract interpretation, they may not prevent the determination of the real intention of the parties, in case a provision is obscure or ambiguous. Interpreting Article 1.16 as restricting the interpretation process to the terms of the contract would run afoul of the principle that permits the research of the real intention in case of ambiguity or obscurity of a contractual term, a principle which must be considered to be mandatory, a qualification with which Respondent’s legal expert agrees.170
341.
The Tribunal therefore decides that Article 1.16 is valid, subject to the possibility for the Parties to refer to pre-contractual negotiations and documents to determine the real intention of the Parties. However, this referral to pre-contractual negotiation and documents can only be done if there is ambiguity or obscurity in a contractual term. Moreover, this process of interpretation must be strictly observed and may not lead to adding contractual terms to the parties’ agreement.
342.
Claimants’ legal expert also submits that entire agreement clauses are not enforceable in the event of negligence or dolo.171 The Tribunal disagrees with this overbroad conclusion. As will be explained later, the experts agree that limitations of liability clauses are invalid in cases of gross negligence or dolo. You cannot on the one hand, commit an intentional breach and on the other hand limit your liability consecutive to this breach. Dolo has a direct connection with the limitation of liability clause and therefore vitiates it. By application of the same principle, dolo can have no effect on an entire agreement clause unless it is proven that the insertion of the clause in the agreement has a direct connection with, or in other words, has been motivated by dolo. It is true on the other hand that an entire agreement clause cannot be invoked to prevent a party from proving that the contract was entered into as a result of dolo.

General Principles of Law

343.
The ACP website’s translation of Article 130 of the Regulation provides that all actions taken by those persons who participate in procurement shall be based on "those general principles of law and specific provisions contained in administrative regulations." Claimants’ translation refers to "those general principles of law and specific provisions of administrative law."172 Respondent’s translation states, "...general principles of law and particular [principles] of administrative law."173
344.
These general principles are not identified but definitely include principles of due process and good faith. Good faith encompasses other principles such as the principle of loyalty. Reference can also be made to Article 1109 of the Civil Code which itself can be considered a general principle of law common to all civil law countries: "Contracts are perfected by mere consent, and from that moment bind the parties, not just to the performance of the matters expressly agreed therein but also to all consequences which, according to their nature, are in accordance with good faith, custom and the law". The same is true of Article 1106 of the Civil Code that provides that "the contracting parties may establish the covenants, clauses and conditions they deem convenient, provided they are not contravened to law, morals and public order".
345.
Good faith has been central to the parties’ discussions, both in their submissions and at the hearing. It is the Tribunal’s opinion that good faith should be reasonably construed. There is a tendency in many arbitrations for parties to invoke good faith in order to try to rewrite their contract and insert more favourable terms in it, once a dispute has arisen. This cannot be done. This is contrary to the very principle of good faith. In the same vein, the Tribunal considers that there is no "general" concept of good faith and nor is there a "higher" one. There is only one concept of good faith and its scope and purpose is twofold:

- on the one hand, good faith is a standard of conduct: all contractual provisions have to be interpreted and performed in good faith. To this extent, good faith is mandatory and cannot be waived;

- on the other hand, good faith - to a limited extent - can be the source of contractual obligations but the existence of these obligations cannot be left to the imagination or speculation of lawyers. They are those that have been confirmed in case law or are commonly agreed by doctrinal authorities in the legal system concerned. In this respect, the Tribunal agrees with Respondent’s legal expert that "excluding good faith as a standard of conduct and regulating specific duties arising out of good faith are two very different aspects which should not be mistaken"174. In other words, if, as the Tribunal mentioned above, it is not possible to exclude good faith as a standard of conduct, parties can determine the scope and limits of duties arising out of good faith and these agreements will be valid and enforceable, unless they are contrary to the law, morals and public order. In the opinion of the Tribunal, this is applicable to the case of the duties to inform and self-inform, which will be further examined below.

Specific Provisions Contained in Administrative Regulations

346.
This part of the second sentence of Article 130 has not been specifically addressed by the legal experts. An analysis of their testimony would however lead to consider that this would include among others, specific provisions of Law 38 of 31 July 2000, on General Administrative Procedure, to the extent they are not contrary to Law 19 and the Regulation.

The Duty to Inform and the Duty to Self-inform

347.
The Parties agree that there is in Panamanian law a duty to inform and a duty to selfinform. However, they disagree as to the scope of these duties.175
348.
It must be recalled that Article 130 of the Regulation provides, "Contracts are entered into and formalized because this allows for a closer concerted effort between the parties and permits greater administrative efficiency..."176 Claimants propose the following translation - "The execution and performance of the contract has the purpose of obtaining the collaboration from the private parties and the efficiency of the administrative functions. Notwithstanding the preceding purpose, it shall also strive to guarantee the rights and interests of the contractors."177 On the other hand, Respondent’s translation states, "The execution and performance of contracts has as purpose obtaining the collaboration of private parties and the efficiency of administrative functions. Without prejudice of the preceding, the contracts shall also strive to protect the interests and rights of the contractors."178 What is expected, in other words, is that the Parties will collaborate during the negotiation and performance of the Contract. This does not change in meaning whether Claimants’ or Respondent’s translation is used.
349.
Article 134.2 of the Regulation further provides that the contractor shall "[c]ooperate with the Authority, as necessary, to insure that the purpose of the contract is accomplished and is of the best quality"179.
350.
The Tribunal agrees with Claimants’ legal expert that the determination of the scope and extent of the duties to inform and self-inform required by good faith has to take into consideration: 1) the specific nature of the legal relationship, including any statutory duty; 2) the personal circumstances of the parties; 3) the circumstances of time and place; and 4) the fact that the obligation to provide information must be understood under the principles of proportionality and reasonableness.180 It also agrees with Respondent’s legal expert that in order to evaluate the existence and scope of these duties, one should take into consideration:

- first, any agreements of the parties in this respect;

- the personal circumstances of the parties;

- the purpose of the contract;

- the nature of the information;

- the difficulty of access to the information;

- the cost of obtaining the information and whether it is possible for one party to charge the other for this cost.181

351.
The Arbitral Tribunal also agrees with Claimants’ legal expert that in accordance with the duty of good faith, loyalty and cooperation, a party may not deliberately withhold relevant information of which it was aware or deliberately provide information which it knew was incomplete, or deliberately fail to correct any information given to tenderers which later it learned was incorrect.182
352.
In the present case, the Conditions of Contract contains several provisions dealing with information, namely sub-clauses 4.10.1, 4.10.2, 4.10.3 and the last paragraph of 5.1. Similar provisions can also be found in Sections A(4)183 and B(1)184 of the ITT. They provide that the ACP’s duty to provide information is limited, that the Contractor is responsible for verifying the information provided, that the ACP only guarantees the information provided with respect of certain elements of the work and that there is a Volume VI which is provided for information purposes only and that the ACP does not guarantee the completeness or accuracy of this information.
353.
These clauses have been freely agreed upon by the Parties and therefore, in accordance with the principle pacta sunt servanda, they are valid and enforceable. They must however be applied taking into consideration the principles of transparency and good faith, taking into consideration the personal circumstances of the Parties, the purpose of the contract, the nature of the information and the difficulty of access to it. Moreover, the principle of self-responsibility, a corollary of the principle of good faith, prevents one party from relying on a duty of its counterpart to inform. It still has the duty to selfinform.
354.
The Tribunal notes in this respect, with Respondent’s legal expert185, that:

- the Tenderers were explicitly warned that the documentation provided was "reference information" with no guarantee of completeness or accuracy; they assumed the duty to visit the site and verify the information, including the inspection and examination;

- the information provided was very extensive and included historical data, some dating back many decades, prepared by previous administrations;

- the tenderers were world-leading construction companies, with wide experience in projects of this kind;

- the tenderers had "ample and unrestricted" opportunity to scrutinize and diligently examine the site and were advised to do so; and

- a substantial stipend was provided to all non-successful tenderers submitting compliant offers, to encourage the work in the preparation of the offer, which included the verification of data and inspection of the site.

Allocation of Risks and Limitation of Liability Clauses.

355.
Another issue which has been strongly debated is the validity of clauses of allocation of risks and of limitation of liability clauses.
356.
Clauses providing for the allocation of risks are standard in EPC contracts. The Tribunal considers that it is normal for contractors to clearly determine in their contracts the risks that they accept to assume considering the amount of the bid that they have submitted. Some risks are so considerable that if a contractor had to assume them, they would have to refrain from bidding or would propose a bid so high that it would be unacceptable. And it is indeed for this reason that CAPP, one of the four pre-qualified contractors, notified ACP that it would refrain from bidding, since it was not prepared to assume the risks allocated to it, as stated in the Tender documents.186
357.
The Tribunal is satisfied that such allocation of risks clauses is valid and enforceable in contractual matters under Panamanian law. This is confirmed by Article 990 of the Civil Code which expressly allows for agreed allocation of risks even in cases of unforeseeable or inevitable risks, i.e., force majeure: "Outside the cases expressly mentioned in the law, and those in which the obligation declares it, no one shall be liable for events which cannot be foreseen or which, being foreseen, should be inevitable".
358.
As far as limitation of liability clauses are concerned, the Parties agree that they are valid but will not operate in case of dolo and gross negligence. Article 987 of the Civil Code indeed provides that "the waiver of the action to claim it [liability arising from dolo] is null and void". On the other hand, Article 34-C of the Civil Code187 leads to the conclusion that clauses limiting liability cannot operate in cases of gross negligence.
359.
Claimants’ legal expert also submits that limitation of liability clauses in administrative contracts would not operate in cases of simple negligence, arguing that Panamanian administrative law does not make a distinction between the various levels of negligence.
360.
However, as demonstrated by Respondent’s legal expert, this is not correct. In the first place, Panamanian administrative law does recognize the existence of gross negligence in a number of situations and therefore, several provisions express a gradation of extent of negligence: Law 38, the General Law of Administrative Procedure in Article 58188, Article 23 of Law 32 of I984189, Article 80(4) of Law 67 of 2OO8190, Article 6B of the Regulation191. Moreover, Claimants’ expert’s reasoning, if correct, would lead to the opposite conclusion that he reaches. If no distinction of degrees of negligence existed under Panamanian administrative law, the prevailing rule would be that of Article 987 of the Civil Code, which only excludes the application of clauses of limitation of liability in cases of dolo. In fact, it is the distinction between categories of negligence which allows for the extension of the effect of dolo to breaches committed with gross negligence192.
361.
It is clear therefore that clauses of limitation of liability are valid in Panamanian law, subject to the exceptions of dolo and gross negligence. The experts however disagree on the scope and conditions of these two notions, while the applicable texts are very clear as determined by the Tribunal below.
362.
First, a distinction must be made between dolo at the pre-contractual stage and dolo in the performance of the contract.
363.
Article 1116 of the Civil Code provides that "consent given in error, violence, intimidation or wilful misconduct/misrepresentation (dolo) is null". In this respect, Article 1120 of the Code - which applies to dolo both at the pre-contractual and contractual stages - provides that "[t]here is dolo when with words or deceitful machinations one of the contracting parties induces the other to enter into a contract that otherwise such party would not have entered into". And Article 1121 of the same Code provides in its second paragraph that "[i]ncidental misrepresentation (dolo incidental) only obliges the party that employed it to indemnify [the other party for its] damage". In other words, if the contracting party would not have entered into the contract if there had not been dolo, the contract may be regarded as null and void (dolo grave). If, on the other hand, it would have entered into the contract but on other terms, the contractor is entitled to damages.
364.
There must of course be a link of causality between the acts which amount to dolo and the damages claimed. It is not sufficient that the acts were objectively capable of misleading the other party. They must have effectively misled this other contracting party and caused it to enter into the contract, or to agree to it under different conditions than if the acts had not been done.
365.
Since in this particular case, Claimants are claiming damages for alleged dolo which led them to enter into contractual terms which it would not have agreed to had it been aware of the true circumstances, the Tribunal is concerned with dolo incidental.
366.
Claimants are also claiming damages on the basis of dolo in the performance of the contract. Reference may be made to Article 34-C of the Civil Code which defines dolo as "the positive intention to cause damage to the person or property of the other". This is the subjective component of dolo. The text of the law is clear: a positive intention to cause damage must be established by the party invoking dolo. In this respect, the Panamanian Civil Code follows the Chilean and Colombian Codes and departs from the concept of dolo in Spain, which requires an intention to breach one’s obligation but not necessarily an intention to cause damage.193 The expert notes that the authorities cited by Claimants’ legal expert are Spanish and therefore cannot be relied upon with respect to the subjective component of dolo in Panamanian law.’194
367.
According to Article 1120 of the Civil Code quoted above, dolo also requires an objective element, that is, "deceitful words or machination" of a sufficient magnitude to be capable of misleading. The Tribunal agrees with Respondent’s legal expert that in this respect, the specific circumstances of the injured party are relevant to determine if there were actions that amount to dolo.195
368.
Finally, given the objective component of dolo, i.e., deceitful works or machination, the possibility of committing dolo by omission is only limited to cases where this omission may amount to a machination196.
369.
As far as gross negligence is concerned, it is defined in Article 34-C of the Civil Code as "[t]he one that consists in not managing the affairs of others with the care that even negligent people with little prudence generally employ in their own affairs". The classical example which is given of gross negligence is the person driving a car under the influence of alcohol at 120 km in the narrow streets of a village. This person certainly does not have the intention to kill but his conduct is so reckless that it is assimilated into dolo. Respondent’s legal expert also mentions that the equivalence in civil law of the effects of dolo and gross negligence has its origin in the difficulty of proving the subjective element of dolo. For this reason, when the acts of the breaching party are objectively similar to those of a wilful breaching party but there is insufficient evidence of the intent to cause damage, the consequences will be the same as if dolo had been found197.
370.
Finally, according to the principle actori incumbit probatio, it belongs to the party that invokes dolo or gross negligence to prove that their conditions are fulfilled in the case concerned.

Legal Regime of Damages Under Panamanian Law

371.
In Panamanian law, in order to claim damages, a party must show three elements:

a) an unlawful conduct of the other party;

b) the damage caused; and

c) a link of causality between a) and b).

372.
Article 986 of the Civil Code indeed provides, "Are subject to compensation for damages and harm caused those who in the compliance of their obligations commit wilful misconduct (dolo), negligence or default (mora), and those who in any manner contravene the tenor of such [obligations]."198
373.
The burden to prove all three elements falls on the party claiming damages. Actori incumbit probatio.
374.
According to Article 992 of the Civil Code, the damages which can be recovered are those that the debtor had foreseen or could have foreseen at the time the obligation was established and that are the necessary consequences of the breach. Foreseeability must be determined at the time the obligation was entered into.
375.
However, unforeseeable damages at the time of the creation of the obligation are subject to compensation in case of dolo or gross negligence pursuant to the last paragraph of Article 992 of the Civil Code, which states, "In the event of wilful misconduct (dolo), the debtor shall be liable for all those [damages] which are known to have resulted from the breach of the obligation."199
376.
Finally, according to Article 991 of the Civil Code, "Compensation for damages and harm (perjuicios) includes not only the value of the loss that has been suffered but also the profits that the creditor has foregone..."
377.
In other words, damages subject to compensation include both the loss suffered (daño emergente) and loss of profit (lucro cesante).
378.
It should also be pointed out that in Panamanian law, loss of profit must be distinguished from loss of opportunity. Loss of profit refers to actual profit that a party failed to obtain as a consequence of the other party’s breach, while the loss of opportunity refers to eventual profits that a party would have been in a position to obtain, had the breach not occurred. Both Parties agree that tribunals in Panama have awarded compensation for loss of opportunity. But compensation will only be awarded after assessing a probability of success of the lost opportunity.200

Unforeseeable Circumstances, Hardship and the Principle of Contractual Rebalance

379.
Claimants’ legal expert submits that under Panamanian administrative law, ACP is obligated to maintain and restore the original technical and economic balance of the contract, as provided in Article 133(5) of the Regulation and Law 22. He submits that the principle of contractual rebalance is mandatory and cannot be waived.201
380.
The Arbitral Tribunal is not convinced by this argument.
381.
In the first place, Article 1B of the Regulation provides that "[n]othing in the Regulation shall be applied or interpreted in the sense of granting to any contractor rights and benefits that exceed those stipulated in the contract it entered into with the ACP". This means that even if the articles of the Regulation referred to by Claimants’ legal expert did in fact establish a right to contractual rebalance, this could not result to granting the contractor rights exceeding those contained in the Parties’ agreement.
382.
The provisions contained in Article 133 of the Regulation only allow the introduction of clauses of contractual rebalance. Article 133(5) allows the adoption of measures for maintaining the original technical and financial conditions "as authorised by law or by the contract". And Article 133(8) provides that in "long term contracts, clauses and conditions may be agreed to for the purpose of maintaining, during the life of the contract, the contractual balance existing at the time of the contract formalization".
383.
These provisions are consistent with Article 5 of the Regulation which also allows for the inclusion of mechanisms of contractual rebalance: "[p]rice adjustment clauses based upon cost variations may be included in the tendering documents and in the contracts, preferably by means of mathematical formulas approved by the head of the contracting office."
384.
Moreover, the Contract contains various rebalancing mechanisms, such as those contained in Sub-Clauses 4.12, 13.8 and 13.9, which permit price adjustments to maintain the contractual balance in cases of unexpected soil conditions, changes in the price of materials or labour force.
385.
The Tribunal also does not consider that Article 133(6) of the Regulation provides for an obligation of contractual rebalance. It only requires the Authority to proceed in a timely manner, correct any disruptions that may occur and provide for mechanisms for dispute resolution in accordance with the contract.
386.
The Claimants’ legal expert’s reliance on Article 21 of Law 22 is also irrelevant. First, the Tribunal has determined that Law 22 is not applicable to ACP. Even if it were, Article 21 only applies when conditions are altered by "extraordinary or unforeseeable acts" or "force majeure or fortuitous events". Article 21 does not provide for an obligation to insert such clauses in the parties’ agreement. The same is true for Article 1161-A of the Civil Code, which regulates hardship. Article 1161-A provides that if the discharge of the obligation by a party becomes too onerous due to unforeseen and extraordinary circumstances, the party suffering the hardship may opt for the termination of the contract. In such case, the defendant may avoid the termination by offering relief for hardship by equitably modifying the contract.
387.
Therefore, contrary to what was submitted by Claimants’ legal expert, ACP is not subject to a mandatory duty of contractual rebalance nor to a duty to explore equitable amendments to the contract. Nothing to this effect is provided in the Parties’ Agreement or in the Regulation.

Deviation of Power

388.
Claimants’ legal expert also invokes the theory of deviation of power to dispute the validity of clauses of allocation of risks and limitation of liability. In particular, he refers to exculpatory clauses in the Conditions of Contract, including Sub-Clause 4.12.6.
389.
The Tribunal does not agree with Claimants’ legal expert. The Tribunal considers that the expert’s position is based on a misunderstanding of the theory of deviation of power. As clearly explained in various judgments of the Panamanian Supreme Court of Justice,202 deviation of power occurs when "the administrative authority executes or issues an act of its competence, but in developing a different purpose than the one for which the act could be lawfully issued." The key element in deviation of power is whether or not the administrative act is issued pursuant to the purpose for which the competence was granted. Deviation of power therefore occurs when an administrative act is issued pursuant to interests which are contrary to public interest. In a Judgment of 17 August 1992, the Supreme Court of Justice ruled that entering into a contract "in conditions less advantageous for the public administration" than a previous contract which was replaced confirmed the finding of deviation of power, since "the public interest was not considered in a principal and determinant manner, but it was motivated to grant advantages to a third party."203
390.
Accordingly, the Arbitral Tribunal cannot see how the allocation of risks or the limitation of liability clauses could constitute deviation of power especially since Article 133.1 of the Regulation provides that a fundamental principle for the ACP when contracting is "to obtain the greatest benefit for the state or the public interest". This principle was also reinforced by Article 6D of the Regulation which allows the ACP to agree to terms and conditions to protect its interests more effectively than the provisions contained in the Regulation.

Chapter IX. GUPC’s Claims

Section I. Are the Claims Admissible? The Time Bar Defense

I. Respondent’s Position

391.
As mentioned above, Respondent contends that the Contractor’s claims are timebarred.204 It bases this conclusion on Article 20.1 of the Conditions of Contract which provides as follows:

If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or to any Milestone Date, and/or any additional payment, under any Clause of these Conditions of Contract or otherwise in connection with the Contract, the Contractor shall give notice to the Employer’s Representative, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and no later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance.

Notwithstanding any other provisions in the Contract, if the Contractor fails to give notice of a claim within such period of 28 days, neither the Time for Completion nor any Milestone Date shall be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim. Otherwise, the following provisions of this Sub-Clause 20.1 shall apply.

392.
The provision further provides that:

Within 42 days after the Contractor became aware (or should have become aware) of the event or circumstance giving rise to the claim, or within such other period as may be proposed by the Contractor and approved by the Employer’s Representative, the Contractor shall send to the Employer’s Representative a fully detailed claim which include full support in particulars of the basis of the claim and the extension of time and/or additional payment claim...

393.
Respondent submits that the notice was out of time and was not followed by the particulars of the claim within forty two days.
394.
According to Respondent, the initial notice which the Contractor relies upon is dated 5 February 2009 (but should be read 5 February 2010). It read:

Based on initial results of the ongoing geotechnical investigations performed in the access channel of the Pacific logs for the Pacific Entrance Cofferdam, it appears that neither the cofferdam design proposed by the GUPC Tender, nor the realignment option recently proposed by GUPC, will function with the actual ground conditions encountered. GUPC hereby gives notice to the Employer under the provisions of the Contract Conditions, Clause 4.12, Unforeseeable Physical Conditions, that any costs associated with this issue and any time impact to the Baseline Schedule will be submitted as a claim.

395.
According to Respondent, the Contractor admits to first have known of the results of the geotechnical investigations in the area of the Cocoli River diversion in December 2009. The notice sent on 5 February 2010, was therefore late. Respondent adds that no claim was ever notified under Sub-Clause 20.1 with respect to the Cocoli River (Contractor’s Claims), lack of supposed access to the Site under Sub-Clause 2.1 (Right of Access to the Site), supposed errors in the Employer’s Requirements, or in relation to the new dredging claim (those which Respondent argues were introduced in the Statement of Reply). Finally, it submits that two major parts of the Contractor’s claim - the bid reduction and for the dredging - were never previously advanced, even in the DAB claim with regard to the Cofferdam.

II. Claimants’ Position

396.
First, Claimants contend that ACP’s time-bar defense is based on a flawed interpretation of the Contract. They submit that it is well established that the Contractor is not required to mention every legal basis for its claim, or every effect of the event or circumstance giving rise to the claim, or indeed every potential head of claim. Nothing in Sub-Clause 20.1 prevents the Contractor from (i) developing the legal ground of its entitlement and (ii) adding additional heads of claims at a later stage. To expect a Contractor to fully articulate the factual, technical and legal basis of its claimed entitlement in an initial notice of claim, when the extent of the impact of the triggering facts is likely not yet known, is not only contrary to the wording of Sub-Clause 20.1, but also unrealistic from a practical point of view.
397.
Further, while a failure to give notice in accordance with the first paragraph of SubClause may bar the Contractor from pursuing its entitlement (assuming in particular that the Employer is not aware of the conditions or events giving rise to the claim), a failure to comply with the other paragraphs of Sub-Clause 20.1 does not have the effect of invalidating the Contractor’s claim. Rather, the final paragraph of Sub-Clause 20.1 provides, "The requirements of this Sub-Clause 20.1 are in addition to those of any other Sub-Clause which may apply to a claim. If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause 20.1."
398.
Claimants submit that for this paragraph to apply in the event of a failure by the Contractor to comply with the other requirements of Sub-Clause 20.1, the Employer would have to present evidence of the extent to which the Contractor’s failure has prevented or prejudiced the proper investigation of the claim. Claimants submit that ACP has shown no such prejudice, and that none exists.
399.
Claimants also point out that the DAB has systematically rejected all of ACP’s many attempts to deny GUPC’s entitlements on the basis of an alleged failure to comply with Sub-Clause 20.1.
400.
Second, Claimants submit that ACP’s time-bar defense fails under Panamanian law. According to Claimants, the evidence on the record demonstrates beyond any doubt that GUPC validly notified its claim within the time limit established by the first paragraph of Sub-Clause 20.1. In any event, ACP bears the burden of proving that GUPC did not comply with this time limit, which it has failed to do. According to Article 784 of the Judicial Code of Panama: "[i]t is for the parties to prove the facts or information that constitute the factual basis of the legal provisions that are favorable for them." ACP has not discharged that burden.
401.
Claimants add that in any event, even if GUPC’s initial notice of claim was issued out of time, GUPC’s claims would not be time-barred in the present circumstances, consistent with Panamanian law. Indeed, ACP’s own case is that it knew all along about the actual conditions in the PEAC and Mr. Belken admitted during the hearing that it was obvious (at the latest in early 2010) that these conditions would have had a substantial impact on the Cofferdam works and the Project in general.205 Therefore, ACP had actual notice of the "event or circumstance" giving rise to GUPC’s claim under Sub-Clause 20.1. Claimants submit that according to its duty of good faith, ACP cannot now claim that GUPC’s claims are invalid merely because ACP did not receive a formal and timely communication from GUPC about the facts triggering its claims, when ACP was admittedly already aware of those facts.
402.
Third, Claimants submit that GUPC validly notified its claim in accordance with SubClause 20.1. On 5 February 2010, GUPC submitted its notice of claim to ACP in accordance with Sub-Clause 20.1 of the Conditions of Contract. GUPC’s notice read in relevant part:

Based on initial results of the ongoing geotechnical investigations performed in the access channel of the Pacific locks for the Pacific Entrance Cofferdam Agreement, it appears that neither the Cofferdam design proposed in the GUPC’s Tender, nor the realignment option recently proposed by GUPC [i.e., for the Cofferdam at 8P+900, instead of 8P+700], will function with the actual ground conditions encountered. GUPC hereby gives notice to the Employer under the provisions of the Contract Conditions, Clause 4.12, Unforeseeable Physical Conditions, that any costs associated with this issue and any time impact to the Baseline Schedule will be submitted as a claim.206

403.
GUPC proceeded to supplement this notice with a further notice of claim dated 1 March 2010.207 At that time, ACP itself acknowledged the timeliness of GUP’s notice. In a letter dated 5 March 2010, ACP declared that GUPC’s notice of claim was indeed "properly recorded" but that ACP had rejected the claim because it was allegedly not covered by Sub-Clause 4.12.208 ACP did not contest the validity or timeliness of GUPC’s initial notice of claim in any of the letters exchanged over the following months.
404.
Further, Claimants submit that ACP is wrong when the latter argued that GUPC had sufficient knowledge of the Cofferdam/Cocoli River events in December 2009 and that GUPC should have issued a notice of claim at the time.209 While the results of some of the initial SPT tests that Trevi Galante was carrying out in the PEAC were reported to Mr. Sembenelli in late December 2009 via telephone, it was only in January 2010 that comprehensive results became available and were made known to GUPC.210
405.
As Mr. Sembenelli explained in his witness statement and at the hearing, in late December 2009 he received a "warning phone call" from Mr. Luna, the Field Manager at Trevi Galante, who reported some "quite worrying" tests results in the area of the Cofferdam.211 Mr. Sembenelli received more tests results in the course of January 2010212 and informed both ACP and GUPC of the outcome of these tests results at a meeting on 21 January 2010.213
406.
In relation to the Cocoli River diversion, Claimants add that it was only in late January 2010/early February 2010, after ACP’s refusal to extend the Contractor’s limit line, that GUPC envisaged the possibility to abandon the Cocoli River diversion, as Mr. Zaffaroni explained in his second witness statement.214