Arbitration Rulings Favor Consorcio Acciona in Metro de Quito Dispute
TL;DR
- International arbitration decisions favored Acciona in its dispute with the Municipality of Quito.
- Awards stem from contract adjustments relating to taxes and Covid-19 impacts during Metro Line 1 construction.
- The Municipality must pay Acciona approximately $10.4 million in total economic adjustments.
- The Ecuadorian State is still reviewing the implications of these rulings.
Overview
Recent international arbitration awards have resolved a contractual dispute between Consorcio Acciona and the Municipality of Quito over the Metro de Quito Line 1 project, leading to significant financial obligations for the city. The disputes centered on adjustments for tax changes and pandemic-related costs, and both were adjudicated under the rules of the International Chamber of Commerce (ICC).
What Happened
The Procuraduría General del Estado (Attorney General's Office) of Ecuador announced the issuance of two international arbitration awards concerning Acciona Línea 1 and the Municipality of Quito, related to the Metro de Quito construction contract.
Both cases (No. 28376/AJP and No. 28446/AJP) were administered under ICC rules, and the tribunal found in favor of Acciona-comprising Acciona Construcción S.A., Acciona Industrial S.A., and Acciona Infraestructuras México S.A. de C.V.
The arbitration tribunal ordered the Municipality of Quito to make economic adjustments for: about $2.52 million for temporary contributions to company assets (2020-2022), around $7.17 million for an increased income tax rate, and approximately $684,000 for pandemic-related contributions.
The Ecuadorian State, with international law firm Clark Hill, is reviewing the awards, which were issued at the tribunal seat in Santiago de Chile, to determine further legal steps.
Context
The Metro de Quito is one of Ecuador's largest infrastructure investments, and its contracts provided for international arbitration in case of disputes. The matter arose from changes in Ecuadorian tax laws-including an increase in the corporate income tax rate-and special contributions created in response to the Covid-19 pandemic.
Subclause 13.7 of the contract required economic adjustments in case of such legal changes, leading to Acciona's claims and the subsequent arbitrations.
Why It Matters
- The Municipality of Quito faces significant new financial obligations at a time of ongoing infrastructure and budgetary challenges.
- The case underscores the enforceability of contractual adjustment clauses in large public-private infrastructure projects subject to international arbitration.
- The government's analysis of the awards will guide subsequent legal or financial actions, and may influence future contract negotiations and risk allocations in public projects.