April 6, 2014 – Eusebius Luk
In anticipation of Mr. Jonathan C. Hamilton’s evening talk, The Intersection of International Development and Dispute Resolution: Complex Negotiations and Crisis Management in Latin America, at the Harvard Law School, this brief primer on the Panama Canal and its latest work stoppage crisis examines some relevant elements of this topic.
In response to rising demand for efficient global shipping routes, in 2006 then-Panamanian President Martin Torrijos proposed the Panama Canal expansion project, also referred to as the Third Set of Locks project. The $5 billion USD endeavor is expected to triple the canal’s capacity with the construction of two lock facilities and new access channels, and the widening of existing channels.
These changes are no doubt timely as South American ports prepare for expected increase in activity owing to the Pacific Alliance trade bloc becoming active. Indeed, while Panama is not among the four original members of the pact (Chile, Columbia, Mexico, and Peru), a substantial factor in its canal network’s future success may well depend on the outcome of the Pacific Alliance’s ambitions. Beyond the instant dispute is also the concern of smoothly integrating Panama into the Pacific Alliance in light of the country’s notoriety as a haven for tax evasion.
Begun in 2007 and expected to be completed 2015, the project as of late has been beset by disputes over $1.6 billion USD in cost overruns, paralyzing construction. While motionless equipment lie around half-finished locks, the Panama Canal Authority and a developer consortium have engaged in heated negotiations, leading to some resolution as of mid-March. When Mr. Hamilton joins us later this month, the White & Case partner will discuss his role resolving these disputes, and perhaps use this latest incident as the starting point for a discussion of the historical development and current state of dispute resolution over development projects in the region.
If you are interested participating, please attend the evening talk, to be hosted by LIDS at the Harvard Law School on April 15, 5:00pm – 6:30pm, in Langdell North.