SIMULATED FINAL AWARD
XXXCase No.: XXXXX/2026
Panama Ports Company, S.A. (PPC) Claimant
v.
Republic of Panama Respondent
I. THE ARBITRAL TRIBUNAL
The Arbitral Tribunal is composed as follows:
President of the Tribunal: XXX Arbitrator: XXX Arbitrator: XXX
Secretary to the Tribunal: XXX
Seat of Arbitration: New York, United States of America
Applicable Arbitration Rules: ICC Arbitration Rules 2021
Date of Award: XX XX, 2026
PART I — INTRODUCTION
1. Nature of the Arbitration
1.This arbitration was commenced by Panama Ports Company, S.A. (“PPC” or the “Claimant”) pursuant to the arbitration clause contained in the concession agreement between PPC and the Republic of Panama (the “Panama” or the “Respondent”). 2.According to publicly available information, PPC commenced ICC arbitration proceedings on February 3, 2026. The dispute principally arises out of a series of measures taken by the Government of Panama concerning the concession rights relating to the Balboa and Cristóbal ports. PPC subsequently increased its damages claim, asserting that its losses exceeded US$2 billion. 3.This Award is a simulated award. The Tribunal has determined the issues on the basis of the written submissions, evidence, expert reports, and oral arguments submitted by the parties in this hypothetical proceeding.
PART II — BACKGROUND TO THE DISPUTE
2. The Port Concession
4.PPC has for many years operated the container terminals at the Balboa and Cristóbal ports on either side of the Panama Canal. 5.According to the Claimant, its concession arrangements originated in the 1990s and were further extended in 2021. PPC thereafter continued to undertake port operations, equipment investment, infrastructure development, and commercial activities. Publicly available information also indicates that PPC operated the two ports for nearly 30 years. 6.The Claimant submits that, during the term of the concession, it made substantial investments of economic value, including:
(1) port infrastructure; (2) terminal equipment; (3) operating systems; (4) customer relationships and commercial networks; (5) operating licenses and contractual rights; and (6) other tangible and intangible assets associated with the operation of the ports.
3. Measures Taken by the Government of Panama
7.In 2026, Panamanian state authorities took a series of measures concerning PPC’s concession rights. 8.The Supreme Court of Panama subsequently issued a decision adverse to PPC concerning the legal arrangements governing the concession. On February 23, 2026, Panamanian state authorities took further measures that resulted in PPC’s withdrawal from the operation of the Balboa and Cristóbal ports. PPC characterized these measures as an unlawful takeover of its port assets and operating rights. 9.The Government of Panama subsequently permitted other operators to participate in the operation of the relevant ports. 10.The Claimant submits that these measures effectively terminated its long-term concession rights and prevented it from continuing to enjoy the benefits of its investments and contractual rights. 11.The Respondent, in contrast, submits that its measures constituted exercises of state sovereignty and public administrative authority and were taken pursuant to the Constitution and laws of Panama.
PART III — THE CLAIMANT’S CLAIMS
4. Principal Relief Sought by the Claimant
12.The Claimant requests that the Tribunal:
First, declare that the Respondent breached its contractual obligations arising from the concession agreement and the arbitration clause contained therein;
Second, declare that the Respondent unlawfully terminated, deprived the Claimant of, or substantially impaired the Claimant’s concession rights;
Third, declare that the Respondent’s measures caused losses to the Claimant’s port assets, operating rights, and related economic interests;
Fourth, order the Respondent to pay damages in an amount of not less than:
US$2,000,000,000
or such other amount as the Tribunal determines on the basis of the evidence;
Fifth, order the Respondent to pay interest; and
Sixth, order the Respondent to bear the costs of the arbitration, including the fees and expenses of the arbitrators and the Claimant’s reasonable legal and expert costs.
PART IV — JURISDICTION
5. The Arbitration Agreement
13.The Tribunal first considers the question of its jurisdiction. 14.The Tribunal finds that a valid written arbitration agreement exists between the Claimant and the Respondent. 15.The arbitration agreement expressly provides for the submission to the International Court of Arbitration of the International Chamber of Commerce of disputes arising out of or in connection with the concession agreement. 16.The fact that the Respondent is the Republic of Panama does not, in itself, preclude the Respondent from assuming arbitration obligations in connection with a commercial contract. 17.Accordingly, the Tribunal determines that:
The Tribunal has jurisdiction over the Claimant’s claims arising out of the concession agreement.
PART V — APPLICABLE LAW
6. Contractual Law
18.The Tribunal considers that the present dispute is, in the first instance, contractual in nature. 19.The concession agreement constitutes the principal legal instrument governing the rights and obligations of the parties. 20.The Republic of Panama, having entered into and performed the commercial concession arrangement as a contractual party, is bound by the obligations undertaken thereunder. 21.A State, by virtue of its sovereign status alone, cannot escape contractual obligations that it has voluntarily assumed as a party to a commercial agreement.
PART VI — THE TRIBUNAL’S ANALYSIS
7. Whether Panama Breached Its Contractual Obligations
22.The Tribunal first considers whether the Respondent was entitled unilaterally to terminate or substantially deprive the Claimant of its concession rights. 23.The Tribunal considers that the fact that state authorities have taken administrative, judicial, or other measures in the exercise of public authority does not, in itself, extinguish contractual liability. 24.Where measures adopted by organs of a State result in the effective elimination of contractual rights, it is necessary to determine further:
(1) whether the measures had a contractual basis;
(2) whether they complied with the contractual conditions for termination;
(3) whether the procedures prescribed by the contract were observed;
(4) whether an obligation to compensate arose; and
(5) whether the measures constituted a substantial deprivation of contractual rights.
25.In the present case, the Tribunal finds that the Respondent has failed to establish that the measures it adopted complied with the termination conditions and procedures prescribed by the concession agreement. 26.In particular, the Claimant continued to perform its port operating obligations during the contractual period, while the measures adopted by the Respondent effectively prevented the Claimant from continuing its operations. 27.Accordingly, the Tribunal determines that:
The measures adopted by the Respondent constituted a substantial deprivation of the Claimant’s contractual rights and amounted to a material breach of the concession agreement.
PART VII — STATE SOVEREIGNTY DEFENCE
8. Whether the Judgment of the Domestic Courts Excludes Contractual Liability
28.The Respondent submits that the measures in question resulted from the judgment of the Supreme Court of Panama concerning the legality of the concession arrangements and therefore constituted matters falling within Panama’s constitutional order. 29.The Tribunal recognizes that the courts of Panama are competent to interpret and apply Panamanian domestic law. 30.Nevertheless, the task of this Tribunal is not to replace the Panamanian courts in reviewing Panamanian domestic law. Rather, the Tribunal must determine:
whether the Republic of Panama, as a party to the concession agreement, breached its contractual obligations as a result of measures adopted by its state organs.
31.Legality under domestic law and contractual responsibility under an international commercial agreement are not necessarily identical. 32.A State cannot, merely by invoking its domestic law, automatically escape obligations that it has undertaken under an international commercial contract. 33.Accordingly, the Tribunal rejects the Respondent’s contention that the domestic judicial decision necessarily excludes contractual liability.
PART VIII — WHETHER THERE WAS A DE FACTO EXPROPRIATION
9. Economic Value of the Concession Rights
34.The Tribunal further considers whether the Claimant’s concession rights constituted property or rights possessing compensable economic value. 35.The Tribunal considers that a long-term concession right may itself possess substantial independent economic value. 36.Where state measures result in an investor being permanently deprived of:
(1) operating rights;
(2) future cash flows;
(3) revenues derived from the use and operation of the ports;
(4) related commercial assets; and
(5) economically valuable rights arising under the contract,
such measures may produce economic consequences equivalent to the deprivation of property.
37.In the present case, the Respondent’s measures did not merely affect the Claimant’s day-to-day operations. They effectively prevented the Claimant from continuing to operate the relevant ports. 38.The Tribunal therefore determines that the Respondent’s conduct reached the threshold of a substantial deprivation of the Claimant’s contractual investment interests.
PART IX — DAMAGES
10. Principles of Compensation
39.The Tribunal considers that the fundamental objective of damages is to place the injured party, to the extent possible, in the economic position in which it would have been had the contract been properly performed, while avoiding overcompensation. 40.Accordingly, the assessment of damages must take into account:
(1) the Claimant’s historical investments;
(2) expected cash flows from port operations;
(3) the remaining term of the concession;
(4) risks associated with the port business;
(5) future capital expenditures;
(6) operating costs;
(7) market risks;
(8) residual asset value; and
(9) any other compensation received or capable of being received by the Claimant.
11. Valuation Methodology
41.The Tribunal considers that, for a long-term port concession, calculating losses solely on the basis of historical book value would not adequately reflect the economic interests of which the Claimant has been deprived. 42.The Tribunal therefore adopts the income approach, namely the Discounted Cash Flow (“DCF”) methodology, as the principal valuation method, with asset value and historical investment used as cross-checks. 43.Having considered and adjusted the financial models submitted by the parties’ experts, the Tribunal has taken into account:
EBITDA, capital expenditures, taxes, the remaining concession term, terminal value, discount rate, and risk factors.
44.Having assessed the evidence as a whole, the Tribunal determines that the Claimant’s compensable economic loss amounts to:
US$2,050,000,000
PART X — MITIGATION OF DAMAGES
12. The Claimant’s Duty to Mitigate
45.The Tribunal has also considered whether the Claimant took reasonable measures to mitigate its losses. 46.The Tribunal considers that the Claimant was not required to accept manifestly unreasonable commercial conditions. Nevertheless, it was required to take reasonable measures to protect its assets, records, equipment, and commercial interests. 47.The Tribunal does not find sufficient evidence establishing that the Claimant committed any material fault sufficient to justify a substantial reduction in damages. 48.Accordingly, the Tribunal makes no further deduction from the amount of damages determined above.
PART XI — INTEREST
13. Pre-Award and Post-Award Interest
49.The Tribunal considers that the compensation must include reasonable interest in order to prevent the Claimant from suffering further economic loss as a result of delayed payment. 50.The Tribunal determines that:
From February 23, 2026 until the date of full payment of this Award, the amount of damages shall accrue interest at the rate of 5% per annum, calculated on a simple-interest basis.
51.Following the date on which this Award becomes effective, if the Respondent fails to make payment within the prescribed period, the outstanding amount shall continue to accrue interest at the rate of 5% per annum until the date of actual payment.
PART XII — COSTS OF THE ARBITRATION
14. Costs
52.In determining the allocation of the costs of the arbitration, the Tribunal has considered:
(1) that the Claimant has substantially prevailed on its principal claims;
(2) that the Respondent’s principal defences have not been accepted;
(3) the substantial amount in dispute;
(4) the factual and legal complexity of the case; and
(5) the substantial legal and expert costs incurred by both parties in connection with the arbitration.
53.The Tribunal therefore considers it appropriate for the Respondent to bear the substantial majority of the costs of the arbitration. 54.The Tribunal orders the Respondent to pay the Claimant’s reasonable legal and expert costs in the amount of:
US$25,000,000
together with the arbitration costs as finally determined by the ICC.
PART XIII — DISPOSITIVE PART OF THE AWARD
15. AWARD
For the reasons set forth above, the Arbitral Tribunal unanimously hereby:
1.
DECLARES that the International Court of Arbitration of the International Chamber of Commerce has jurisdiction over the present dispute.
2.
DECLARES that the Republic of Panama breached its contractual obligations arising under the concession agreement between the Republic of Panama and Panama Ports Company, S.A.
3.
DECLARES that the measures adopted by the Republic of Panama resulted in a substantial deprivation of the Claimant’s concession rights and related economic interests.
4.
ORDERS the Republic of Panama to pay Panama Ports Company, S.A. the sum of:
US$2,050,000,000
as compensation for the economic losses suffered by the Claimant.
5.
ORDERS that the foregoing amount shall accrue interest at the rate of 5% per annum, calculated on a simple-interest basis, from February 23, 2026 until the date of actual payment.
6.
ORDERS the Republic of Panama to pay the Claimant the sum of:
US$25,000,000
in respect of the reasonable legal and expert costs incurred by the Claimant in connection with this arbitration.
7.
ORDERS the Republic of Panama to bear the costs of the arbitration, including the fees and expenses of the Tribunal, in such amount as shall be finally determined by the ICC.
8.
ORDERS the Republic of Panama to comply with the payment obligations set out in this Award within 30 days from the date of the Award.
9.
ORDERS that, in the event that the Republic of Panama fails to make payment within the foregoing period, all outstanding amounts shall continue to accrue interest at the rate of 5% per annum until payment in full.
10.
DISMISSES all other claims and requests for relief submitted by the Claimant, without prejudice to the rights and remedies expressly granted under this Award.
PART XIV — FINALITY OF THE AWARD
16. Finality of the Award
This Award constitutes the final award of the Tribunal in respect of the disputes submitted to arbitration in these proceedings.
Subject only to such procedural remedies as may be available under the applicable law and the ICC Arbitration Rules, this Award shall be final and binding upon the parties.
THE ARBITRAL TRIBUNAL
President of the Tribunal:
Arbitrator:
Arbitrator:
Date:
Seat of Arbitration: New York, United States of America
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