ACS, FCC and their partners have won the first arbitration filed against Peru for differences regarding the construction of line 2 of the Lima metro.
The three judges of the tribunal of the International Center for Settlement of Investment Disputes (ICSID), an arbitration body dependent on the World Bank, issued their ruling this week.
In it, they condemn Peru to pay extra costs and damages for the construction of the infrastructure.
The consortium, the company Metro de Lima Línea 2, has filed two other lawsuits against Peru that are still ongoing.
In March 2014, ACS (25%), FCC (18.25%) and other partners were awarded the mega contract for the construction and operation of line 2 of the Lima Metro for an amount then estimated at 3.9 billion euros.
The planned period for the construction phase was five years, until 2019, and the exploitation phase extended for 30 years, with an expected turnover of 2.4 billion euros.
The now resolved arbitration claim was registered with the ICSID on February 1, 2017 by the company Metro de Lima Línea 2, represented by Cuatrecasas.
It alleged the failure to deliver the concession area, the land on which to carry out the works, in the terms and conditions established in the contract and the lack of approval or late approval of the detailed engineering studies.
During 2018, through various documents, an extension of the execution period of the project works was requested, as well as damages exceeding 700 million dollars that affected different parties involved in the project: concessionaire, construction group, material supplier. rolling, etc.
Peru rejected the claims presented and filed a counterclaim against the concessionaire company, claiming an amount exceeding 700 million dollars in socioeconomic and environmental damages.
Both claims were consolidated into a single proceeding.
In May 2019, the hearing took place in Washington in which statements were taken from several witnesses, two rounds of briefs were filed during June and July 2019 in relation to the issues raised during the hearing, and closing briefs were filed by both the concessionaire company as by Peru on September 20, 2019.
The court already issued on July 6, 2021 a long 244-page decision on jurisdiction and liability that is very favorable to companies.
It rejected Peru's counterclaim, declared that Peru had failed to fulfill its obligation to deliver within the agreed deadlines most of the areas for Stage 1A work and all of the areas of Stages 1B and 2, and thereby the corresponding delay damages.
It also ruled that Peru had breached its contractual obligations relating to the procedure for supervising and approving detailed engineering studies and had incorrectly exercised its supervisory function.
The arbitrators gave more time for the execution of the project, which is being carried out in stages and in part is already in service, and asked the parties to calculate the damages based on these criteria.
The concessionaire reduced its claims from 109 to 84.7 million dollars and the other members of the consortium other than the concessionaire also made an adjustment to the damages initially claimed.
Peru, however, presented much lower alternative calculations and the ball was left in the court's hands.
“favorable” award
The figure set in the final decision, dated March 21, has not been revealed.
However, the local Peruvian partner Cosapi, which has a 10% stake, describes the arbitration award as “favorable for the concessionaire company.”
This company has explained that the court obliges the Peruvian State to pay compensation for cost overruns for instructions to change the design of Metro line 2, economic construction damages, compensation for financial damages, as well as interest accrued since 31 December 2018 until the effective payment of said compensation.
"Considering that our participation in the concessionaire company and in the construction consortia of metro line 2 is a minority, we are waiting for the official calculations of said entities to evaluate the impact that these compensations will generate on the financial statements of Cosapi," indicates the company in a so-called significant event registered with the Peruvian Securities Superintendence.
The concessionaire company, Metro de Lima Línea 2, presented a second arbitration claim in August 2021, again for the failure to deliver the land and for the detailed engineering studies, as well as for the update of the extra costs, damages and damages produced from the cut-off dates of the first arbitration.
In November 2021, a third arbitration request still arrived.
On this occasion, due to the lack of approval of the formulas for the adjustment of work progress and provision progress, the delay in certification and payment of adjustments derived from the application of said formulas and the economic damage and financial derived from the delay in payment of the adjustments.
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