Autoridad del Canal de Panamá v Sacyr SA and others

6 October, 2017

On 5 September 2017, Mr Justice Blair handed down judgment in the Commercial Court on a series of applications and cross-applications in Autoridad del Canal de Panamá v Sacyr SA and others [2017] EWHC 2228 (Comm).

The background to the proceedings is a major engineering project involving the expansion of the Panama canal. The Claimant, Autoridad del Canal de Panamá (ACP) was the employer, and the contractor was a Panamanian company, Grupo Unidos por el Canal (GUPC).

The main contract provided for the provision of a number of advance payments by ACP to GUPC, and their eventual repayment. Such repayment was guaranteed by the shareholders in GUPC, which were the Defendants in the English proceedings. ACP’s claim is brought under a series of guarantees governed by English law and containing exclusive jurisdiction clauses in favour of the English court.

ACP sought summary judgment against the Defendants, contending that the guarantees in question were akin to demand bonds. Blair J dismissed that contention, holding that the instruments were properly to be construed as “see to it” guarantees, which required ACP to establish that GUPC was in default under the principal contract.

The Defendants in turn sought a stay of the proceedings in favour of arbitration, pursuant to s.9 of the Arbitration Act 1996, on the basis that they had been brought in respect of a matter – whether GUPC was in default under the main contract – which the parties had agreed to refer to arbitration, pursuant to arbitration agreements contained in the main contract and in other guarantees covering the same obligations as the English law guarantees. Blair J dismissed that application, holding that the “matter” in respect of which the proceedings had been brought was the claim under the English law guarantees and not the question of whether GUPC was in default.

An alternative application by the Defendants for a stay on case management grounds pending an ICC arbitration in Miami was also unsuccessful. The judge held that the application was within the arbitration exception in the Brussels Recast Regulation and not precluded by the principle in Owusu v Jackson [2005] QB 805 but was not prepared to stay the proceedings at this stage, leaving the door open to a possible future application.

Graham Dunning QC and Damien Walker acted for the Claimant, ACP, instructed by Raid Abu-Manneh at Mayer Brown LLP.

David Foxton QC and James Sheehan acted for three of the Defendants, instructed by Philip Capper and Paul Brumpton at White & Case LLP.