Metro de Quito Ordered to Pay Multi-Million Dollar Sum Following International Arbitral Awards
TL;DR
- Two arbitral tribunals ruled the Municipality of Quito must pay roughly $10 million to Acciona consortium.
- Awards stem from contractual disputes over Line 1 of the Metro de Quito project.
- The decisions were rendered under International Chamber of Commerce arbitration rules.
- Legal analysis of the awards' scope is ongoing; official response from Metro de Quito is pending.
Overview
The Municipality of Quito faces payment obligations of around $10 million after two arbitral tribunals found in favor of the Acciona consortium in disputes related to Line 1 of the Metro de Quito. The decisions address price adjustments triggered by legislative changes during project execution, with arbitral proceedings governed by the International Chamber of Commerce.
What Happened
According to the Procuraduría General del Estado, two international arbitral tribunals administered under the International Chamber of Commerce (ICC) rules issued awards in disputes involving the Metro de Quito project.
The disputes centered on claims by the Acciona consortium-comprised of Acciona Construcción S.A., Acciona Industrial S.A., and Acciona Infraestructuras México S.A. de C.V.-for contractual price adjustments based on legislative changes.
Tribunals determined that conditions were met for these price adjustments, which included compensation for a temporary contribution to the equity of companies in 2020-2022 ($2.52 million), an income tax rate increase from 22% to 25% ($7.17 million), and a COVID-19 contribution ($684,000).
The Procuraduría and a legal firm are currently analyzing the awards' implications under the legal framework of Santiago de Chile, where the arbitration was seated. Metro de Quito has not yet publicly commented.
Context
Metro de Quito's Line 1, operational since December 2023, is a major infrastructure project connecting the north and south of the city. The contract for this project has been subject to disputes over changes in local legislation affecting project costs.
Adjustments triggered by such legislative changes are common points of contention in international infrastructure contracts, often resolved through arbitration.
Why It Matters
- The awards highlight the financial implications of contractual risk allocation for public infrastructure projects.
- The rulings may set precedents for how legislative changes are addressed in similar contracts in Ecuador and the region.
- The outcome puts significant financial pressure on the Municipality of Quito.