Chinese company loses arbitration case in Peru

Photo: China Daily.

The Peru branch of the Chinese company China Railway 20 Bureau Group Corporation has lost an arbitration against the Peruvian authorities related to a contract to develop and improve the Huánuco-La Unión-Huallanca road.

The company sought a refund of approximately 51 million peruvian soles (over US$13 million), but the court rejected all of its claims, including a request to extend the appeal time and the right to collect higher “overhead expenses.” The Tribunal’s decision, issued on April 16, 2024, claims that the company was unable to adequately prove its claims.

In addition, China Railway was ordered to cover the full costs of the process. The arbitration was initially filed in 2021, and the Chinese company has 32 other arbitrations pending with the Peruvian authorities.

There are reportedly 89 ongoing arbitrations with Chinese companies in Peru, totalling more than US $86 million. The Investigative Commission of the Peruvian Congress is the entity in charge of investigating irregularities in contracts and works carried out by Chinese companies.

Local authorities fear these companies could be taking advantage of benefits granted by the Peruvian government to establish “express” arbitration centers, which allows them to influence decisions such as the extension of deadlines. An alleged network of officials who facilitate the obtention of tenders in favor of these companies is also reportedly being looked into. This case highlights the complexities and challenges in commercial relations between Peru and Chinese companies, evidencing the importance of transparent and equitable management in contracts and legal disputes.

On the other hand, the Chancay megaport, built by the Chinese consortium Cosco Shipping Ports, represents the other side of the coin of Sino-Peruvian collaboration. According to the Peruvian Minister of Production, this project will generate annual income of approximately US $4.5 billion for the Andean country.

The port, whose first phase will be inaugurated next November, is expected to have a significant economic and social impact, strengthening Peru’s position as a regional economic leader and facilitating the export of its main products worldwide.

The project also includes measures to promote local development, such as the construction of a landing stage for artisanal fishing in the Chancay area. With sufficient depth to receive large cargo ships, the port is expected to become China’s main commercial connection in South America.

Main source:

China Railwall pierde arbitraje en Perú y tiene abiertos otros 32 casos | CIAR Global . (April 23, 2024).

Others related source:

Perú pierde arbitraje por metro de Lima | bnamericas. (March 23, 2024)