The parties in a $238-million dispute over the construction of the third set of locks for the Panama Canal is raising issues concerning alleged conflicts of interest on the part of the International Chamber of Commerce (“ICC”) arbitrators in the United States District Court for the Southern District of Florida.[1] The case may resolve rarely litigated issues concerning whether arbitrators who sit on multiple arbitration panels together or who support appointment of each other to lead arbitration panels have disabling conflicts of interest.

The case pits Grupo Unidos por el Canal, S.A. (“Grupo”), a consortium of Spanish, Italian, Belgian, and Panamanian construction firms, against Autoridad del Canal de Panama (“ACP”), the Panamanian entity that operates the Panama Canal and that sponsored the multi-billion-dollar, decade-long project to expand the Canal’s capacity by building a new set of locks (the “Project”). The current dispute (the “Panama 1 Arbitration”), which centers on the suitability of the rock coming from the excavations to be used to produce concrete aggregates for the Project, was arbitrated before a three-member ICC Tribunal and resulted in a $238-million award to ACP and against Grupo. The ICC Tribunal reversed a decision of the dispute review board established in the parties’ contract.

Grupo has filed a motion to vacate the award, claiming undisclosed conflicts of interest on the part of the arbitrators involving “multiple cross-appointments and interrelationships among themselves and other involved in the dispute.” (Grupo Motion to Vacate, at 2.)

In particular, Grupo is claiming that it was improper for the arbitrators not to disclose that: (1) ACP’s arbitrator purportedly “appointed” the Tribunal president to a different arbitration tribunal before the Panama 1 Arbitration Tribunal began its deliberations, a position that Grupo said could garner the Tribunal president several hundreds of thousands of dollars; (2) during the Panama 1 Arbitration, the Tribunal president sat on multiple arbitral tribunals with the tribunal president in an earlier arbitration between the parties (the “Cofferdam Arbitration”), which dealt with “questions of principle” also at issue in the Panama 1 Arbitration; (3) potential conflicts of interest arising from the activities of the barristers’ chambers to which ACP’s arbitrator belongs; and (4) one of the arbitrators was sitting on an arbitration panel with counsel for ACP. (Grupo Motion to Vacate, at 7-12.)

For its part, ACP argues that none of Grupo’s claims raises true conflict requiring vacatur of the award.

The case is entitled Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, Case No. 1:20-cv-24867 (S.D. Fla.). The issues are raised in Grupo’s motion to vacate the award and ACP’s cross-motion to confirm and enforce the award. Sarah Biser represents Constructora Urbana, the Panamanian contract that is one of the four shareholders of Grupo.

[1]             The parties to the motion to vacate include Grupo Unidos por el Canal, S.A., Sacyr, S.A., Webuild S.p.A., Jan De Nul, N.V.