"Whereby the contract between the State and the Panama
Ports Company, S.A. corporation is approved, for the development,
construction, operation, administration and management of the port
terminals for containers, RO-RO, passengers, bulk cargo and general
cargo in the ports of Balboa and Cristobal"
THE LEGISLATIVE ASSEMBLYDECREES
Article I. Approve in its entirety the contract for
development, construction, operation, administration and management of
the terminals for containers, ro-ro, passengers, bulk cargo and general
cargo in the Ports of Balboa and cristobal, between THE STATE and PANAMA
PORTS COMPANY, S.A., the text of which reads as follows:
CONTRACT
Between the undersigned, namely, Raul Arango Gasteazoro,
Minister of Commerce and Industries, acting in representation of the
Republic of Panama, duly authorized to act in this matter by Resolution
No. 237 of the Council of the Cabinet on November 27, 1996, who herein
after shall be designated as THE STATE, on the one hand, and on the
other, Paul R.C. Rickmers and Enrique A. Jimenez, Jr., acting jointly in
their capacity of General Manager and Representative respectively, of
the Panama Ports Company, S.A. corporation, constituted and existing in
accordance with the laws of the Republic of Panama, registered in File
319669, Roll 50940, Image 0002, of the Microfilm Section (Mercantile) of
the Public Registry of the Republic of Panama, duly authorized to act in
this matter by Resolution of the Board of Directors of said corporation
on November 21, 1996, who herein after shall be designated as THE
COMPANY, have agreed to enter into this Concession and Investment
Contract, herein after designated as THE CONTRACT, in accordance with
the following
CLAUSES
1. LEGAL BASIS OF THE CONTRACT
Paragraph 3 of article 195 of the Political Constitution of the Republic
of Panama, whereby authority is granted to Council of the Cabinet to
agree to contracts such as the one granting this concession.
Article 153
of the Political Constitution of the Republic of Panama, whereby the
Legislative Assembly is authorized to approve this Concession Contract.
2: GENERAL CONDITIONS
2.1 Concessions by THE STATE
In accordance with the terms of this contract, THE STATE grants in
concession to THE COMPANY, the development, construction, operation,
administration and management of the terminals for containers, ro-ro,
passengers, bulk cargo and general cargo, and their respective
infrastructures and installation, in the ports of Balboa and Cristobal,
the infrastructures, installation, facilties and physical areas of which
are described in detail in Annex I, which forms an integral part of this
contract (which herein after shall be referred to, for purposes of this
contract, as "The Existing Port", said reference to include all the
areas, facilities and installation detailed in Annex I). The parties to
this contract have agreed that all the annexes form an integral part of
the contract.
Further, THE STATE hereby grants an Option (the Option) to THE COMPANY,
in the same terms and conditions of this contract, for the development,
construction, operation, administration of those areas of land,
facilities and installations known as Diablo and Telfers Island, also
detailed in Annex I, which are part of this contract (which herein after
shall be referred to, for purposes of this contract, as "The Future
Extension", which together with the "Existing Port" shall herein after
be referred to, for purposes of this contract, as: "The Ports". THE
COMPANY has the right to exercise the Option at any time during the
first fifteen (15) years of this contract, from its effective date, by
means of written notification to that effect to THE STATE.
No additional payment will be made for the granting of the Option or for
the legal exercise of the same, nor will additional payment be made for
the Future Extension.
It is understood that, at all
times, THE STATE shall consult with THE COMPANY before granting any
concession in the Future Extension and shall obtain approval for any
concession, and said approval may only be objected to by THE COMPANY if
the latter determines that said concessions represent activities similar
to those granted by means of this contract (including, but not limited
to, the handling of cargo, transportation, container cargo stations and
any other facilities associated with the general operation of a port).
In addition, the respective concession contracts shall include as a
limitation, the right and obligation by THE STATE to terminate them as
soon as reasonably practical to do so and without additional cost to THE
COMPANY, based on the right of THE COMPANY to exercise the Option for
use of the Future Extension, in accordance with this contract.
THE STATE, shall compensate and shall continue to compensate THE COMPANY
against any and all claims made against THE COMPANY, if such exist;
whether it be by the parties to said concession or by third parties who
may be affected by the termination of said concessions.
During the life of this contract and its extension, THE COMPANY shall
have the exclusive right to develop, construct, operate, administer and
manage The Ports, in accordance with the provisions of this contract.
THE COMPANY may carry out its operations, transactions, negotiations,
and activities in general, be they local or international, with any
person or public, provate or mixed entity.
Similarly, THE COMPANY may utilize the services of the contractors it
considers necessary for the development, construction, operation,
administration and management of The Ports.
For the development of its activities, THE COMPANY may transport and
handle all classes of merchandise, products, sub-products, raw material
and any type of legal articles, and shall have the right to improve and
continue developing, from time to time, the facilities and installation
in The Ports during the life of the concession and extension of this
contract. In addition, THE COMPANY shall have the right to conduct all
the business and activities that, from time to time, may be incidental
and/or related to the development, management, administration and
operation of the Ports.
It is agreed that during a period of three (3) years beginning on the
effective date of this contract, THE STATE shall not grant the right to
operate cargo handling in the area of the piers (quayside), (including
general cargo, containers, passengers, bulk cargo and ro-ro, but
excluding warehousing activities and the supply of fuel), at the
Rodman Naval
Station, to any person, entity or unforeseen party (herein after
referred to generally as "third parties"), without first granting THE
COMPANY the first option to accept or reject the operation of that
business in the Rodman Naval Station, under the same terms and
conditions, or under terms and conditions that are no less favorable
than those offered by said third party or parties (whichever is the
case). Upon receipt by THE STATE of the terms and conditions of the
offer to operate the referenced business by a third party, said terms
and conditions being considered acceptable by THE STATE. THE STATE shall
provide THE COMPANY with said terms and conditions of the offer received
and the latter shall have thirty (30) calendar days to consider them.
If THE COMPANY makes an offer to THE STATE under the same terms and
conditions, or under terms and conditions that are no less favorable
than those presented by the third party, THE STATE shall grant THE
COMPANY the concession to operate the business. If THE COMPANY does not
make an offer with the thirty (30) calendar day period, THE STATE may
grant that concession to that third party under terms and conditions
that are no more favorable than those submitted by THE COMPANY for its
consideration.
From the effective date of this
contract, The Existing Port and Future Extension, as defined in this
contract and detailed in the description and maps contained in Annex I
to this contract, with the exception of any public access routes, shall
comprise a Bonded Area which will enjoy all the fiscal and custom
benefits in accordance with the laws of the Republic of Panama.
It is agreed that THE COMPANY shall have the right to fence in, at
any time, and entirely at its discretion, the area referred to herein as
the Bonded Area.
THE STATE shall ensure that all government entities comply with the
obligations stipulated in this contract, including those that in the
future may be provided by any public service or activity as a result of
privatization.
2.2 Concessions previously granted by the National Port Authority
THE COMPANY shall take charge of all of the concessions granted by the
National Port Authority that are not retained by said government
institutions in The Existing Port. In Annex III of this contract are
listed the concessions received by THE COMPANY and those concessions
retained by the National Port Authority within the Existing Port. THE
STATE guarantees to THE COMPANY the utilization of all the land and sea
concessions located with The Existing Port, designated in Annex I. The
National Port Authority shall maintain the utilization of the
concessions located within the Future Extension, until such time as THE
COMPANY requests said extension or part of it for its operations.
It is understood between THE STATE and THE COMPANY, that THE COMPANY
shall receive all income arising from those concessions within the
Existing Port that are retained by THE COMPANY.
In addition, THE STATE shall transfer and turn over to THE COMPANY, in
accordance with agreement between the parties, by means of a separate
document signed by THE COMPANY and the Director General of the National
Port Authority, duly authorized by the Executive Committee of that
Institution, the moneys corresponding to the income arising from those
concession retained by THE STATE (including any concessions for maritime
service) and from those that THE STATE may later grant or review, the
infrastructure and installations of which THE COMPANY is responsible for
maintaining, and from those concessions that restrict in any way the use
of The Existing Port by THE COMPANY.
The amounts agreed to, corresponding to the incomes, shall be
transferred and turned over by THE STATE to THE COMPANY, during the life
of this contract and its extension, regardless of any changes in the
terms of said concessions or identity of the concessionnaires.
THE STATE has provided THE COMPANY in Annex V, of all the pertinent
information and documentation regarding the responsibilities and
obligations, if such exist, that THE COMPANY shall assume for the
concessions that THE COMPANY shall retain entirety, that it is
incorrect, or that it does not reflect a correct and adequate perception
of the financial and commercial position of said concessions, any costs,
losses, or responsibilities subsequently incurred by THE COMPANY,
determined in conjunction
with THE STATE, shall be reimbursed by THE STATE to THE COMPANY. In
this regard, THE COMPANY shall submit to the National Port Authority a
written request for payment. If THE STATE has not paid THE COMPANY the
corresponding amounts within ninety (90) calendar days beginning on the
date the National Port Authority receives said request for payment, THE
COMPANY shall have the right to deduct the amount for said costs, losses
or obligations from the variable annual fee payable to THE STATE in
accordance with clause 2.3.2 of this contract and any pending balance
after said deduction shall be deducted by THE COMPANY from the fixed
annual fee payable to THE STATE in accordance with clause 2.3.1 of this
contract until such time as THE COMPANY recovers all of the costs,
losses or obligations.
In the event this contract is terminated for any reason, THE STATE shall
pay THE COMPANY any remaining balance related to said costs, losses or
obligations within thirty (30) calendar days from the date of said
termination.
2.3 Payments by THE COMPANY
By virtue of the granting of the concession established by this
contract, THE COMPANY agrees to pay THE STATE to the order of The
National Treasury through the Ministry of Finance, the following
amounts, following a transition grace period of three months, beginning
on the effective date of this contract, herein after referred to as the
"First Payment Date", said grace period to be used by THE COMPANY to
become familiar with the operation of The Ports:
2.3.1 Fixed Annual Fee
An annual fee in the amount of TWENTY TWO MILLION TWO HUNDRED THOUSAND
BALBOAS (B/.22,200,000.00)
payable in equal monthly payments at the end of the month, the first
payment of which shall be due one month after the First Payment Date.
The parties agree that beginning on the sixth year from the First
Payment Due Date and subsequently during the life of this contract and
its extension, at the beginning of each consecutive five-year period,
the annual fee which is the subject of this clause will be revised based
on the average of the consumer price index of the preceding five years,
published by the Comptroller General of the Republic of Panama, up to a
maximum adjustment of ten percent (10%) over the amount of the last
annual fee paid. This revision shall establish the amount of the fixed
annual fee payable during the following five years.
2.3.2 Variable Annual Fee
A variable amount corresponding to ten percent (10%) of the gross
income from all of the sources of income derived from activities carried
out by THE COMPANY in The Ports, which will be calculated and paid
on a monthly basis within two months following its due date, the first
payment due two months after the First Payment Date.
2.4 Participation by THE STATE as a Stockholder in THE COMPANY
When the contract becomes effective, THE STATE shall receive from THE
COMPANY, In the name of the Minister of Finance, fully paid
shares equivalent to ten percent (10%) of the capital of THE COMPANY.
The participation referred to in this clause shall be subject to the
following terms:
a. THE STATE shall have the right to select a member of the Board of
Directors of THE COMPANY, said designation to be
made by the Executive Branch of the Government.
b. THE STATE shall be exempt from any obligation for contributions and
payments in the event of increases in capital and/or for any other
reason.
c. In the event of increases in capital, THE COMPANY shall make the
necessary adjustments in order to maintain the ten percent (10%)
participation of THE STATE in THE COMPANY.
d. The participation of a stockholder that THE STATE will receive may
not be ceded, transferred or be subject to any tax.
2.5 Plans
for Investment and Development by THE COMPANY
THE COMPANY shall provide THE STATE with its plan for development for
The Existing Port, indicating the investments to be made and the
respective amounts, as evidence of the expenditures and investments to
be made.
In this regard, THE COMPANY agrees to invest in The Ports (to include
self financing, financing through debts with third parties, financial
leasing, operational leasing or any other source of credit that can be
obtained for the purpose of investment, excluding operation and
maintenance costs of THE COMPANY) during the first five (5) years from
the effective date of this contract,
an amount totaling no less than FIFTY MILLION BALBOAS
(B/.50,000,000.00), to be invested directly or indirectly through
its subsidiaries or affiliates or any other investor or investors or
through external financing through banks or other financial
institutions. Said investment shall include the following:
a. Investment to condition the Port of Balboa for access by Panamax
type vessels.
b. The repair of the cranes in the port of Cristobal to eturn them to
their normal level of
operation, in accordance with the manufacturer's specifications.
All the container
cranes shall have sufficient support equipment in order to have
the capacity to
perform at least twenty five (25) container movements per
hour/crane.
c. THE COMPANY shall provide the additional equipment that may be
necessary in
accordance with the development program of The Ports.
d. Develop directly, indirectly, or through third parties, a passenger
terminal for cruise
ships in The Ports.
2.6 Workers
2.6.1 Termination of Employment by THE STATE
a. Prior to the effective date of this contract, THE STATE, shall
terminate the employment of all employees of the National Port Authority
in The Existing Port and of the personnel in the Central Office of the
National Port Authority, who are directly involved in the operation of
The Existing Port and whose services are not required by the National
Port Authority in the future. For purposes of this contract, all of
these workers shall herein after be referred to as "The Workers".
b. Upon approval of this contract by the Legislative Assembly, THE
STATE, through the National Port Authority, shall be obligated to pay
The Workers compensation in the amounts agreed upon, and shall be
authorized to execute the respective payments of each of those workers
with funds advanced by THE COMPANY as a loan, in accordance with clause
2.6.2 in the manner and terms established in this contract and those
additional state funds that may be necessary in order to execute the
payments of that compensation by THE STATE.
c. Once The Workers have been compensated in accordance with the
preceding paragraph and clause 2.6.2, all individual and collective
relations between The Workers and the STATE shall be terminated,
including the internal relations existing with the
National Port Authority.
d. THE COMPANY shall not be obligated to initiate any relationship
with the current unions of the ports of Balboa and Cristobal, or with
their representatives. It is accepted, however, that the employees of
THE COMPANY will be entirely free to unionize.
In matters pertaining to the work force, the granting of this concession
does not constitute or result in the substitution of the employer.
e. THE COMPANY shall not be obligated to enter into labor
agreements during the first two years of operation.
f. Inasmuch as THE COMPANY will develop a professional relationship
with its employees to include training and productivity incentive
programs, upon publication of this contract in the Official Gazette,
following its approval by the Legislative Assembly, Decree No. 20 of
September 1980 establishing the minimum wage in the areas of Ancon and
Cristobal; laws 39 and 40 of 1979 and all other provisions that
regulate labor
relations in the Ports of Cristobal and Balboa shall be abolished.
THE STATE and THE COMPANY shall negotiate in order to submit to the
Legislative Assembly modifications to Law 34 of 1979, in order to
incorporate appropriate requirements for the efficient port operation.
g. THE STATE is responsible for the continued operation of The Existing
Port up to the effective date of the contract, which means that the
employees of The Existing Port that are necessary shall continue working
for the Government up to that time in order to guarantee the efficient
continuity of operation.
2.6.2 Loans by THE COMPANY
THE COMPANY agrees to advance to THE STATE, upon publication of this
contract in the Official Gazette, an interest-free loan in an amount
of up to THIRTY MILLION BALBOAS (B/S30,000,000.00), to be used
exclusively towards payment of the compensations of The Workers. Said
amount shall be deposited by THE COMPANY in an Escrow Account in the
National Bank of Panama, subject to the condition that said money be
utilized exclusively to compensate The Workers, according to the
compensation calculations prepared on a case by case basis by the
National Port Authority, with the approval of the Ministry of Labor and
Social Welfare and THE COMPANY.
The compensation calculations and the approval by the Ministry of Labor
and Social Welfare and THE COMPANY shall be accomplished prior to
publication of this contract in the Official Gazette.
The funds corresponding to the liquidation shall be distributed to The
Workers directly by the National Bank of Panama prior to the effective
date of this contract, without any administrative cost to THE COMPANY,
after receiving from the National Port Authority the compensation
calculations for each of The Workers and a list duly endorsed and
approved by the Comptroller General of the Republic, that includes all
of The Workers and the amount of compensation due each one. THE COMPANY
shall have the right to supervise the process of distributing the
compensation to The Workers by the National Bank of Panama, either
directly or through a designated agent.
THE STATE shall provide THE COMPANY with evidence signed by each of The
Workers reflecting receipt of the liquidation of the previous
employment.
The income derived as interest from said account up to the time of the
final payment, shall revert to THE COMPANY. Said interest and the
balance of the loan that is not distributed shall be returned to THE
COMPANY, no later than the fifth day from the effective date of this
contract.
The parties agree that, if THE STATE pays The Workers the total amount
of the compensation prior to the date of publication of this contract in
the Official Gazette, THE COMPANY shall be obligated to deposit the
amount of the loan of up to Thirty Million Balboas (B/.30,000,000.00) in
the referenced escrow account. Instead, THE COMPANY willl advance the
loan of up to Thirty Million Balboas (B/.30,000,000.00) directly to THE
STATE, to the order of the National Treasury, through the National Port
Authority, following publication of this contract in the Official
Gazette and after receipt by THE COMPANY of written evidence that the
corresponding payments of full and final compensation have been received
The Workers based on their previous employment.
The parties agree that, for purpose of reimbursing THE COMPANY the
amount advanced as a loan, the latter may deduct from those payments to
be made to THE STATE, equal monthly sums for a period of seven (7) years
from the date of publication of this contract in the Official Gazette.
2.6.3 Training Program
THE COMPANY commits itself to establish a training program for those
employees identified by THE COMPANY as necessary for the operation of
The Existing Port.
2.7 Acquisition of Equipment
THE COMPANY is committed to purchase from THE STATE, free from
taxes, debts and/or fees and paid in full, all of the equipment
existing in The Existing Port, for the total amount of TEN
MILLION BALBOAS (B/.10,000,000.00) to be paid on the day this
contract enters into effect. This equipment is listed in Annex II,
which is an integral part of this contract.
In the event
THE COMPANY incurs losses, damages or expenses as a result of any
existing obligation, lien or debt related to the equipment, as
determined by THE COMPANY in consultation with THE STATE, the latter
shall reimburse THE COMPANY the corresponding amounts for said losses,
damages or expenses. In this regard, THE COMPANY shall provide the
National Port Authority a written request for payment. If THE STATE
does not pay THE COMPANY the corresponding amounts within ninety (90)
calendar days from the date of receipt the request for payment by the
National Port Authority, THE COMPANY shall have the right to deduct the
amount for said losses, damages or expenses from the variable annual fee
payable to THE STATE in accordance with clause 2.3.2 of this contract
and any pending balance after said deduction shall be deducted by THE
COMPANY from the fixed annual fee payable to THE STATE in accordance
with clause 2.3.1 of this contract until THE COMPANY recovers all of the
corresponding loss, damage of expense.
In the event said losses, damages or expenses are the result of liens or
debts on the equipment, THE COMPANY and THE STATE shall resolve their
differences by means of a friendly agreement. If the parties do not
reach an agreement within fifteen (15) calendar days from the first
written notification to THE STATE, the parties are hereby obligated to
submit their difference to arbitration in accordance with clause 3.4 of
this contract.
In the event of termination of this contract for whatever reason, THE
STATE shall pay THE COMPANY any pending amount with respect to said
losses, damages, and expenses within thirty (30) calendar days from the
date of the termination.
2.8 Authority for the Transfer of Rights
THE COMPANY may cede or transfer
all or part of the rights and obligations arising from this concession
contract or from the activities derived from said contract, as log as it
is to Panamanian corporations of foreigh corporations duly registered to
conduct business in the Republic of Panama.
When the ceding or transfer is made in favor of a subsidiary or
affiliate of THE COMPANY, a written communication of said action from
THE COMPANY to THE STATE will suffice.
When the ceding or transfer is made in favor of a third party that is
not a subsidiary or affiliate of THE COMPANY, prior written
authorization shall be required by the Council of the Cabinet, which may
not be denied without reasonable justification.
The ceding, transfer or subcontracting of this contract shall not
generate any type of tax, right, contribution, fee or payment to THE
STATE.
For purposes of this contract, included as subsidiary or affiliate
corporations of THE COMPANY, without limitations, are those that,
although maintaining their individuality, are involved within The Ports
in the same activities as THE COMPANY or in complementary activities
related to the operation of The Ports.
2.9 Duration of the Concession
This contract shall have a duration of twenty five (25) years from the
its effective date. The parties agree that this Contract shall be
extended automatically for an additional period of twenty five (25)
years under the same terms and conditions, as long as THE COMPANY has
complied with its basic obligations as stipulated in this contract.
2.10 Rights of THE COMPANY
Without prejudice to the general concession rights hereby granted, and
for the purpose of facilitating the execution of this contract, THE
STATE grants THE COMPANY, its subsidiaries, affiliates and
concessionaires all the rights inherent in and in support of the port
operations in The Ports, including but not limited to, the following
rights:
a. To carry out the improvements to The Ports in accordance with the
provisions of this contract, including the design, engineering, studies,
analysis, evaluation, construction, development, administration and
management of same, either directly or through local or international
contractors.
b. To transport by any means in, from or to the territory of the
Republic of Panama,
containers, cargo, products, merchandise and any other legal products.
c. The right to have and operate,
under separate concession by the National Port Authority, tug boats and
work boats, vessel repair service and piloting service.
d. To store containers and cargo and operate container cargo stations,
container repair facilities, installation and other marine equipment and
any other related services for the purpose of this contract.
e. To construct, operate, administer, manage, control, subcontract and
dispose at its own discretion, within The Ports, in consultation with
THE STATE, of all roadways and facilities and railroad infrastructures
(without competing with the operator of the railroad between the ports
of Balboa and Cristobal), including the right of THE COMPANY to
redesignate Diablo Road as a private service road instead of a public
street, and the right to divert that road at the expense of THE COMPANY,
as well as the right to divert Gaillard Avenue (a public thoroughfare)
at the expense of THE COMPANY, if it becomes necessary for the efficient
operation of the Port of Balboa, said cost to be determined by THE
COMPANY and subject to prior approval by THE STATE. THE STATE shall
reimburse THE COMPANY for the referenced costs. In this regard, THE
COMPANY shall submit to the national Port Authority a written request
for payment. If THE STATE
does not pay THE COMPANY the corresponding amounts within ninety (90)
calendar days from the date of receipt by the National Port Authority of
the referenced request for payment, THE COMPANY shall have the right to
deduct the amount for said cost from the variable annual fee payable to
THE STATE in accordance with clause 2.3.2 of this contract and any
pending balance after said deduction shall be deducted by THE COMPANY
from the fixed annual fee payable to THE STATE in accordance with clause
2.3.1 of this contract, until said cost is recovered by THE COMPANY.
THE COMPANY shall enter into operational agreements with the operator of
the railroad, under terms acceptable to THE COMPANY, concerning the
access to the round house in the Port of Balboa and to any pull-off
lines in the Port of Cristobal, in order to ensure the continuous and
effect operation of The Ports
f. To operate the installations and facilities of The Ports
g. To continue with the current practice that allows any vessel in the
port of Cristobal to maintain a transit reservation in the transit
itinerary of the Panama Canal
h. To enter into contract with third parties for the transportation,
cargo and container handling and for any other legal service or activity
i. To provide services to third parties and to charge fees, prices and
tariffs that THE COMPANY may establish
j. To utilize at its own discretion, but subject to the supervision of
THE STATE, the piers and other facilities that THE COMPANY may construct
in relation to the activities envisioned in the contract
k. To utilize for the construction and operation of The Ports, without
cost to THE COMPANY, all of the materials found in The Ports, such as
dirt, gravel, sand, rock and other materials. In the event that the
materials are located in adjacent areas controlled by THE STATE, its
agencies, municipalities of other government entities, their use shall
be approved for use by THE COMPANY by the pertinent entity as a cost no
greater than required from any other user
l. The right to use, without cost to THE COMPANY, water from natural
sources for the execution of the activities of THE COMPANY related to
this contract
m. The right to use in The Ports, at any time, electricity, gas or
other alternative energy sources, as well as communication systems at
the regular rates or a preferential rates applicable in Panama to large
industrial users. In spite of the foregoing, THE COMPANY shall have the
right to establish and operate its own energy sources and communication
systems
n. To remove earth, rocks, vegetation in general and other obstacles
that interfere with the execution of its activities, in accordance with
the governing regulations and after obtaining the necessary permits.
Said permits shall be issued by THE STATE, in accordance with the
request made by THE COMPANY.
To dredge, fill or reinforce the coastal areas assigned to THE
COMPANY and their entrances and, with the approval by THE STATE, dispose
of the waste material at sea in the most convenient locations and at the
least cost to THE COMPANY, taking into account environmental
considerations.
o. To request and
obtain from THE STATE, its agencies or other entities, all of the
licenses, permits, and authorizations needed for the development and
adequate operation of The Ports. In this regard, THE COMPANY shall
comply with the same requirements that are generally needed for
obtaining said licenses and authorizations and THE COMPANY will not be
required to comply with greater requirements, or to obtain other
licenses, permits, approvals or authorizations that are not generally
applicable in the Republic of Panama,
p. To operate, administer, manage, transport, own, ship, supply,
acquire, sell, repair, dig, dredge, fill, reinforce and carry out all
other activities necessary for the adequate administration and
exploitation of The Ports either directly or through contractors.
q. To obtain income for services charged for by THE COMPANY, some of
which are listed in Annex IV by way of example. Said listing is in no
way to be considered as a limitation.
r. To fix and charge at its
discretion the tariffs, fees and payment that it considers
convenient for all of the operation and activities of THE COMPANY in The
Ports, such as, but not limited to, the handling, transportation,
transshipment of all types of cargo and providing any services
performed, furnished or executed by THE COMPANY, its affiliates,
subsidiaries or subcontractors. The tariffs shall be established on a
non-discriminatory commercial basis. THE COMPANY may establish
reductions in the tariffs based on volume discounts or in accordance
with applicable commerical practices for this type of activity.
s. To store in The Ports or in adjacent areas, the offloaded containers
when the need for space so requires, subject to compliance with the
current legal provisions and those that may be established in the
future.
t. To rent buildings, installations and land to third parties in The
Ports.
u. To subcontract all of its rights and activities granted by this
concession contract, without the need for approval by THE STATE.
v. To establish and vary the size of the work force and the labor
practices in accordance with the Labor Code in order to ensure the
efficient and competitive operation of THE COMPANY.
w. To renegotiate the commercial and legal terms of those
concessions previously granted by the National Port Authority in the
Existing Port, that have been retained by THE COMPANY and that are
detailed in Annex III of this contract.
2.11 Obligations of THE COMPANY
The obligations of THE COMPANY in accordance with this contract are the
following.
a. Initiate and carry out the modernization of the Existing Port in the
first year of administration, from the effective date of the contract,
subject to the submission of a program which must be approved by the
National Port Authority and which may not be disapproved without
reasonable justification. The approval and/or comments shall be made by
THE STATE within thirty (30) calendar days from the date of submission
of any plan by THE COMPANY.
b. Allow third parties to use The Existing Port, in accordance with the
standards and regulations of THE COMPANY. THE COMPANY may charge the
fees it deems convenient on a commercial basis. However, when it
concerns a concession previously granted by the National Port Authority
for assistance or service to vessels, THE COMPANY shall determine if a
fee is applicable for the additional services it may provide.
c. Apply for and obtain the necessary permits from national or
municipal authorities regarding the construction of civil works in The
Ports and payment of the corresponding rights, which shall be those
customary for obtaining such permits.
d. Allow the use of the installations in The Existing Port by
vessels of the United States Army in accordance with the provisions of
The Panama Canal Treaty until the expiration of said treaty at the
beginning of the year 2,000, and by those vessels covered by
technical assistance and cooperation international agreements (as
detailed in Annex VII)
as long as said use does not interfere with daily operation of the
business of THE COMPANY in The Existing Port. It is understood that
these vessels shall be exempt
from the payment of berthing
and demurrage fees in The Existing Port, but THE COMPANY shall have the
right to charge for the services provided at the same commercial rates
applied by THE COMPANY to its clients.
e. Carry out corrective, maintenance and repair projects; or at the
option of THE COMPANY, replace any facility or installation if
considered convenient for technical and/or economic reasons. Said
maintenance includes dredging projects to be conducted by THE COMPANY in
the marine area of The Existing Port and the marine access to the Panama
Canal, as detailed in Annex I, that will allow THE COMPANY to charge
fees for moorage and anchorage.
f. Maintain The Ports operating in good operating and utilization
condition.
g. THE COMPANY shall guarantee
compliance of its obligations in accordance with this contract, by means
of a performance bond in favor of THE STATE in the amount of five
hundred thousand Balboas (B/.500,000.00) to be issued by a first class
financial institution chosen by THE COMPANY, subject to prior
approval by THE STATE.
2.23 Obligations of THE STATE
THE STATE shall have the following obligations:
a. Guarantee THE COMPANY'S use and full and peaceful possession of The
Ports, including, but not limited to, the right to use on a priority
basis all the piers in The Existing Port (including those piers granted
to third parties by means of other concessions, such as Astilleros
Braswell International, S.A., and Atlantic Pacific, S.A.)and the right
to utilize the Albrook area assigned to THE COMPANY within The Existing
Port. It is understood by the parties that any development in other
areas of Albrook shall not affect the efficient operation of THE
COMPANY. If such development affects the efficient operation of The
Ports, THE COMPANY shall have the right to quantify the costs caused by
such disturbance, subject to consultation with THE STATE. THE STATE
shall reimburse THE COMPANY for the amounts corresponding to the
referenced costs. In this regard, THE COMPANY shall submit to the
National Port Authority a written request for payment. IF THE STATE
does not pay THE COMPANY the corresponding amounts within ninety (90)
calendar days from the date of receipt by the National Port Authority of
the referenced request for payment, THE COMPANY shall have the right to
deduct the amount for said cost from the variable annual fee payable to
THE STATE in accordance with clause 2.3.2 of this contract and any
remaining balance after said deduction shall be ducted by THE COMPANY
from the fixed annual fee payable to THE STATE in accordance with clause
2.3.1 of this contract.
b. Expeditiously issue THE COMPANY any permit, license or
authorization, through the corresponding agencies of the Government of
Panama, that may be required in order to exercise the rights granted to
THE COMPANY under this contract for the operation of The Ports. This
issuance shall be made if THE COMPANY complies with the documentation
normally required for these processes, including the issuance of visas
and work permits for personnel of THE COMPANY arriving in Panama.
c. Provide in The Ports, when necessary, such services as marine
traffic control, health and quarantine, customs, immigration and other
public services. THE COMPANY will pay the cost of salaries for the
personnel required to offer these public services, and said personnel
shall be employed subject to prior consultation and approval by THE
COMPANY with respect to the number of personnel and the mount of their
salaries. It is understood that such officials shall be employees of
THE STATE and under no condition shall be considered as employees of THE
COMPANY.
d. Not grant any new concession in The Existing Port, from the date of
publication of this contract in the Official Gazette, without consulting
with and obtaining prior authorization from THE COMPANY. It is
understood that the National Port Authority may renew or grant new
concessions regarding those retained by THE STATE in The Existing Port.
However, it is agreed that for the concessionaire proposed in each
specific case THE COMPANY and the National Port Authority shall reach an
operational agreement prior to contracting those concessions, which will
govern the operating relationship between the parties.
e. Allow access to The Existing Port, without restrictions, by
employees of THE
COMPANY from the moment this contract is published in the Official
Gazette. Physically vacate, prior to the effective date of this
contract, all of the government offices in The Existing Port. It is
understood that any public services that needs to be provided in
accordance with clause 2.12c can be relocated with The Existing Port at
the discretion of THE COMPANY.
f. (Non-existent)
g. Physically vacate and turn
over to THE COMPANY at the end of the Panama Canal treaties, or prior to
that date, the areas, facilities and installations currently occupied
with The Ports by the Panama Canal Commission and the Government of the
United States, which once vacated shall constitute assets of The Ports,
at no cost to THE COMPANY or to the National Port Authority. It is
understood that this obligation shall be complied with even if said
areas, facilities and installations are occupied by the Panama Canal
Commission or by any other person or government entity, inasmuch as it
is the obligation of THE STATE to turn over such areas, facilities and
installations to THE COMPANY.
h. Coordinate through the Ports and Railroad Committee, prior to the
termination of the Panama Canal Treaties, the termination of the rights
of the Panama Canal Commission and of the United States regarding the
use of the areas and installations in The Ports or surrounding areas,
that have been granted in concession to THE COMPANY in accordance with
this contract, specifically including the right of THE COMPANY to
utilize buildings No. 2A, 3, 4, 5, 8, 8A, 10, 28 and 44B, as detailed in
Annex IX, located in The Existing Port and which are necessary for THE
COMPANY to develop its cargo handling operation. Any relocation cost
incurred by THE COMPANY shall be coordinated beforehand with the Ports
and Railroad Committee. THE STATE shall reimburse THE COMPANY the
amount corresponding to said cost. In that regard, THE COMPANY shall
submit to the National Port Authority a written request for payment.
If THE STATE does not pay THE COMPANY the corresponding amount within
ninety (90) calendar days from the date of receipt by the National Port
Authority of the referenced request for payment, THE COMPANY shall have
the right to deduct the amount for said cost from the variable annual
fee payable to THE STATE in accordance with clause 2.3.2 of this
contract and any remaining balance after said deduction shall be
deducted by THE COMPANY from the fixed annual fee payable to THE STATE
in accordance with clause 2.3.1 of this contract.
i. At the choice of the clients of THE COMPANY and on a
non-discriminatory basis, guarantee the services of any pilots
authorized by the National Port Authority or those designated by the
Panama Canal Commission or its successors after termination of the
Panama Canal Treaties, and provide such piloting services in accordance
with the established rules. Said rules shall require that a pilot board
the vessel with 30 minutes after being advised of the requirement for
the service. However, said rules may be modified from time to time to
adapt them to commercial practices. If the levels of service are not
provided, the clients of THE COMPANY have the right to contract directly
the pilots they consider necessary to provide the service.
j. Coordinate with the Panama Canal Commission or with any other
entity, until the termination of the Panama Canal Treaties, the service
of pilots in The Ports and ensure that such services are provided in
accordance with the established rules. Said rules shall require that a
pilot board a vessel within 30 minutes after being advised of the need
for the service. However, said rules may be modified from time to time
to adapt them to commercial practices. If said levels of service are
not provided, THE COMPANY may request THE STATE to provide, and THE
STATE shall provide to the Canal Commission, or the successor agency,
sufficient additional pilots in order to permit the institution to
provide an efficient service at a reasonable cost.
k. Allow THE COMPANY and its foreign employees to freely convert their
income at any time to any foreign denomination and to transfer abroad
said income without any restrictions, taxes or fees. THE COMPANY may
also maintain bank accounts in Panama or abroad in foreign denominations
for the purpose of meeting its obligations.
l. THE STATE shall be the only one responsible for the payment to thrd
parties of those compensations and/or charges resulting from the
termination of any concession that THE COMPANY receives from the
national Port Authority within
The Ports and/or for the
relocation or vacating of buildings and lands as a result of said
termination. The parties to this contract agree that THE COMPANY shall
advance the payment of any compensation or indemnity and/or charges to
said third parties, in consultation with THE STATE. THE STATE shall
reimburse THE COMPANY the corresponding amount for referenced payment.
In that regard, THE COMPANY shall submit to the National Port Authority
a written request for payment. If THE STATE does not pay THE COMPANY
the corresponding amount within ninety (90) calendar days from the date
of receipt by the National Port Authority of the referenced request for
payment, THE COMPANY shall have the right to deduct the amount for said
payment from the variable annual fee payable to THE STATE in accordance
with clause 2.3.2 of this contract and any remaining balance after said
deduction shall be deducted by THE COMPANY from the fixed annual fee
payable to THE STATE in accordance with clause 2.3.1 of this contract.
m. On the assumption that THE STATE does not arrive at an agreement
with The Workers regarding the payment of compensation to be canceled
prior to the effective date of this contract, according to clause 2.6.1,
THE STATE shall guarantee THE COMPANY the possession and peaceful use of
The Ports beginning on the effective date of this contract, in order to
permit the effective and competitive operation of The Ports. On this
assumption, and not withstanding the provision of clause 2.6.2, the loan
referred to in said clause 2.6.2 shall be maintained in the escrow
account for a maximum
period of one year from the effective date of this contract. If after
that time has elapsed THE STATE has not arrived at an agreement with The
Workers and, therefore, has not utilized the loan to pay the
compensations, THE COMPANY shall have the right to withdraw the loan
from the escrow account and thereby receive the entire amount of the
loan in addition to all of the interests generated in the referenced
account.
n. Issue the pertinent documents THE COMPANY that allow the
exploitation of the concessions, rights and privileges granted by virtue
of this contract, complying at all times with the applicable legal and
administrative regulations, in order that THE COMPANY may properly
conduct its activities and exercise its rights without interference or
impediment that could affect the full enjoyment of its rights.
Carry out the necessary administrative and legal procedures in order to
transfer THE COMPANY, prior to the effective date of this contract, all
the concessions to be retained by the latter in accordance with clause
2.2 of this contract.
o. Respond within thirty (30) calendar days to any consultation or
request for approval by THE COMPANY. Failure to receive a response
within this time period will be understood to mean that THE STATE has
granted its approval as requested.
2.13 Matters Related to the Environment
THE COMPANY agrees to ensure the adequate protection of the
environment in the activities of THE COMPANY in The Ports, complying
with the current legal and regulatory provisions in the Republic of
Panama, or with those provisions that may be promulgated in the future
regarding the environment, and in accordance with the approved
international standards on this subject. This obligation includes the
contractors that work for THE COMPANY, but not to third parties.
With the exception of those damages already caused and the existing
contamination, that includes but is not limited to those determined in
the study on the environmental contamination contracted by THE COMPANY,
included in Annex VI of this contract, and the study on the environment
provided by THE STATE, included in
Annex VII, THE COMPANY shall be responsible and will establish a bond in
favor of THE STATE in the amount of five hundred thousand Balboas
(B/.500,000.00) to cover the costs for damages to the environment and
contamination caused by THE COMPANY. This amount does not imply a limit
in the responsibility for the damages caused by THE COMPANY. This bond
shall be established prior to the effective date of this contract.
2.14 Termination of this Contract
All the installations and facilities existing within the Existing Port
are for the exclusive use of THE COMPANY and all the new
infrastructures, improvements and restorations in The Existing Port, as
well as the future piers, buildings, parks, and
other
infrastructures constructed in The Ports in accordance with this
contract (herein after referred to "Civil Installations"), shall be the
property of and for the exclusive use by THE COMPANY, as stipulated in
this contract.
The termination of this contract for any reasons shall not affect any
rights or responsibilities of the contracting parties originating or
established prior to the termination date of this contract.
2.14.1 Termination as a Result of Expiration
Upon expiration of the life of this contract, including its extension in
accordance with clause 2.9 of this contract, all of the Civil
Installations shall become the property of THE STATE. THE COMPANY shall
have the right to remove from The Ports the equipment, machinery and
other goods and chattels that are its property, in the areas controlled
or acquired by THE STATE. Said removal shall be subject to the option
of THE STATE to acquire this property through purchase for a fair market
value in accordance with the appraisal by an independent international
accounting firm.
Nine months prior to the expiration date of this contract, THE COMPANY
shall provide THE STATE with a list of all of the commercial and labor
related obligations in effect up to that date. THE STATE shall notify
THE COMPANY within the following three months, which obligations it will
assume and will continue after termination of the concession. Those
obligations that THE STATE will not assume shall be terminated by THE
COMPANY on the last day of the concession or of an extension thereof.
2.14.2 Termination of the Contract by THE COMPANY
a. This contract may be terminated by THE COMPANY as a result of
failure by THE STATE to comply with any of its substantial obligations
acquired through this Contract.
b. This Contract may be terminated by THE COMPANY without incurring in
any responsibility or sanction by means of notification to THE STATE
with sixty (60) calendar days of advance notice, whenever any social
and/or economic change occurs in Panama as a result of direct or
indirect actions or omissions by the government of Panama that THE
COMPANY can justify as having materially affected the continuous and
successful development, construction, operation, administration or
management of The Ports, or when any of the accidental situations or
acts of force majeure indicated further on, persist for at least thirty
(30) calendar days. Upon termination of this contract by THE COMPANY in
accordance with parts a. or b. of this clause 2.14.2, THE STATE shall
assume the control, operation and administration of The Ports and shall
have the following obligations.
(i) To pay THE COMPANY the value of the Civil Installations in
accordance with their fair market value, in accordance with the
appraisal by an independent international accounting firm. This will
not apply in the event the termination of the contract is due to a force
majeure or accident beyond the control of THE STATE.
(ii) To pay THE COMPANY the fair market value, in accordance with the
appraisal by an independent international accounting firm, for the
machinery, equipment and other goods and chattels located in The Ports,
minus any debts for pending loans obtained for financing; or allow THE
COMPANY, at its discretion, to remove the machinery, equipment and other
goods and chattels. It is understood that for purposes of this
termination, THE STATE shall assume any obligations arising from this
concession, except those obligations resulting from any outside
financing obtained by THE COMPANY to finance its requirements for
working capital.
2.14.3 Termination of the Contract by THE STATE
THE STATE may terminate this contract if THE COMPANY fails to comply
with the substantial obligations acquired through this contract, or in
the event that any of the following administrative causes for
termination occur, as specified in article 104 of Law 56 of 1995
currently in effect:
a. The bankruptcy or meeting of creditors of THE COMPANY, or because
THE COMPANY is in a status of suspension or discontinuation of payments
without the formal declaration of bankruptcy;
b. The dissolution of THE COMPANY by an individual, or by any of the
corporations that comprise a consortium or temporary association, unless
the other members of the consortium or association can comply with the
contract.
Under these assumptions, then, THE STATE through the Executive Branch
may administratively declare that THE COMPANY has lost all of its
privileges and concession that have been granted under this contract,
unless THE COMPANY can prove that the non-compliance resulted from a
force majeure, accident or non-compliance by THE STATE.
In the case of a justifiable excuse, THE STATE shall so declare and
shall grant THE COMPANY new time periods that are reasonable. In the
case of an unjustifiable default or substantial non-compliance by THE
COMPANY, THE STATE, through the
Executive Branch shall issue a written notice. Should that occur, THE
COMPANY shall have sixty (60) calendar days from the date of receipt of
the notification to remedy the non-compliance or default, without
prejudice of the right to defend itself against charges brought against
it, through the arbitration process.
Upon termination of this contract by THE STATE based on clause 2.14.3,
THE STATE shall assume the control, operation and administration of The
Ports, subject to the following:
(i) THE COMPANY shall have the right to remove from The Ports, the
machinery, equipment and other goods and chattels located in The Ports,
minus any debts resulting from pending loans obtained for its
financing. This removal is subject to the option by THE STATE to
acquire the property through purchase at a fair market value in
accordance with an appraisal by an independent international accounting
firm.
It is understood that for purposes of this termination, THE STATE
shall assume any obligations arising from this concession, except those
obligations resulting from any outside financing obtained by THE COMPANY
to finance its requirements for working capital.
2.14.4 Termination for Reasons of Force Majeure or Accident
For purposes of this contract, force majeure or accidental situations
shall be those events or conditions over which THE COMPANY has not been
able to exercise a reasonable control and because of its nature,
delays, restricts or impedes the appropriate compliance by THE COMPANY
of the obligations it has contracted by virtue of this contract.
For purposes of this contract, accidental situations shall include the
following events, among others: epidemics, earthquakes, land slides or
displacements of other materials, storms, flooding, other adverse
climatic conditions or any other event or act, whether or not of the
type indicated, over which THE COMPANY is not able to exercise a
reasonable control, and because of its nature, delays, restricts or
impedes THE COMPANY in the proper compliance of its obligations.
For purposes of this contract, cases of force majeure shall include,
among others, the following events: wars, revolutions, insurrections,
civil disturbances, blockades, embargoes, strikes, restrictions or
limitations of materials necessary for the construction and operation of
The Ports, closures, riots, explosings, orders or instructions by any
legal or de facto government, and any other causes, whether or not of
the type indicated, over which THE COMPANY is not able to exercise
reasonable control and because of its nature, delays, restricts or
impedes THE COMPANY in the proper compliance of its obligations.
It is understood that neither of the parties may claim as a force
majeure, its own actions or omissions, or those of its agencies or
branches.
If the execution of any activity that should be carried out by virtue of
this contract, is delayed or impeded because of an accidental situation
or force majeure, then the stipulated time frame for its execution, as
well as the duration of this contract, shall be extended by the same
amount of time as the delay, and THE COMPANY shall have the right to
suspend all the payments to THE STATE until the delay is over, without
prejudice to THE COMPANY exercising its right to terminate the contract
in accordance with clause 2.142b.
The party that is unable to comply with its obligations because of an
accidental situation or force majeure, shall notify the other party in
writing as soon as possible, specifying the causes, and both parties
agree to do everything that is reasonably possible to end the causes;
without this meaning, however, that either of the parties shall be
obligated to resolve any controversies with third parties, except under
conditions that are acceptable to the affected party or in accordance
with a final decision by an arbitration, judicial or administrative
authority with jurisdiction to resolve said controversies.
2.14.5 Recovery of the Loan in the Event of an Early Termination
THE STATE is obligated to pay THE COMPANY the pending balance of the
loan referred to in clause 2.6.2 within thirty (30) calendar days
following the date of termination of this contract, in the event the
contract is terminated for any reason before the seventh (7th) year of
the reimbursement period referred to in said clause.
3. ADDITIONAL CLAUSES
3.1 Fiscal Exonerations
THE STATE grants THE COMPANY, its subisdiaries, affiliates and
concessionaires, during the life of this contract and its extension, the
following exonerations, rights and privileges.
a. Exoneration from all importation taxes, contributions, fees or
duties on all equipment,
including but not limited to: machinery, raw materials, fuel and
lubricants, cranes, vehicles, appliances, supplies, parts, boats, and
containers, to be used in the development, construction, operation,
management and maintenance of The Ports. It is understood by THE
COMPANY that the items exonerated shall remain within The Ports, except
for those used for transportation, and they may not be sold or
transferred within the Republic of Panama, without prior written
authorization by THE STATE, unless the respective tax is paid,
calculated based on the net book value of the item at the time of the
sale or transfer. However, except for the fuel and lubricants, said
items may be exported without any kind of tax and without the need for
prior approval.
b. Exonertion from income tax on income THE COMPANY, its subsidiaries,
affiliates and concessionaires earn from all the activities carried out,
such as storage and handling, handling of loose cargo resulting from the
transshipment or international transit of such cargo and containers, as
well as from industrial and manufacturing activitues that may be
established in The Ports for purposes of exporting its products. (These
last two activities should not impede the principal objective of this
contract, which is to provide an efficient port service.) These
examples are only illustrative and in no way imply a limitation to this
exoneration.
c. Exoneration from taxes on the transfer of goods. (ITBM) on
equipment, machinery, materials, raw materials, cranes, vehicles,
appliances, parts, boats and containers to be used in the construction,
operation and maintenance of The Ports, and on those items that THE
COMPANY needs for the development of its activities within The Ports in
accordance with the provisions of this contract. This exonertion
includes the financial leasing by THE COMPANY of any equipment or other
movable equipment.
d. Exoneration from all taxes on dividends resulting from the
activities provided for in the contract.
e. Exoneration, within The Ports, from the payment of the fee for
containers, stowage, unloading, handling, manipulation and
demorrage.
f. Exonertion from property tax.
g. Exoneration from the tax on commercial or industrial license.
h. Exoneration from the tax of shipments or transfers abroad by reason
of payment of commissions, royalties or for any other reason related to
the activities covered by this contract.
i. Exoneration from the payment of the tax on fiscal stamps to be paid
by this contract for the amount in excess of one hundred thousand
Balboas (B/.1000,000.00)
j. Exoneration from tax, fee and duties for the so called "Servicio de
Vigilancia Especial".
k. Exoneration from all taxes, fees, duties, payments, withholding or
other charges of a similar nature made to foreign persons or
entities that grant financing for the development, administration
and construction of The Ports, the supply and installation of equipment,
the financial leasing of equipment necessary for the development of the
activities of The Ports, with respect to interests, commissions,
royalties and other financial charges paid by THE COMPANY, its
subsidiaries, affiliates, concessionaires and subcontractors. Such
financing will not be subject to
the provision of article 2
of Law 4 of 1935.
It is understood that THE COMPANY, its affiliates, subsidiaries,
concessionaires, subcontractors or stockholders shall not be subject to
any tax, charge, fee, duty or contribution on the income or profits
generated outside of the Republic of Panama, or on property located
outside of the Republic of Panama. In addition, THE STATE guarantees
THE COMPANY, its subsidiaries, affiliates and concessionaires that it
will not impose any taxes that may apply exclusively to activities
related with The Ports.
l. Representation
For purposes of this contract, THE STATE shall be represented by the
Ministry of Commerce and Industries, through the National Port
Authority, as the executing entity, which shall also be responsible for
granting permits and authorizations required by this contract, and
exercising the oversight and compliance by THE COMPANY.
All notifications to be made concerning this contract, unless the
parties agree otherwise, shall be in writing and made through personal
delivery or forwarded by telex or telefax, to the addresses of the
parties, as follows:
EXECUTING
UNIT NATIONAL PORT AUTHORITY
Address: Via Espana, Dorchester Bldg. 3rd floor
Panama City, Republic of Panama
Telex: 2765 PG
Telefax: (507) 269-6992
Attention: Director General
Legal Counsel
THE COMPANY: PANAMA PORTS COMPANY, S.A.
Address: 47st Bella Vista, House No. 27
Panama City, Republic of Panama
c.c. HUTCHISON INTERNATIONAL PORT
HOLDINGS LIMITED
Address: Container Port Road South Kwai Cung
New Territories, Hong Kong
Telephone: (852) 8125-7888
Telefax: (852) 8121-0555
Attention: Administrative Director
Company Secretary
c.c. CONSOLIDATED PORTS (UK)
Address: Tomline House
Port of Felixstowe
Suffolk IP 118SY
United Kingdom
Attention: Secretary of the Company
c.c. HUTCHISON INTERNATIONAL PORT
HOLDINGS LTD
Address: Hutchison House
22/F, Harcourt Road
Hong King
Telephone: (852) 2523-0161
Telefax: (852) 2810-0705
Attention: Managing Director
Secretary of the Company
3.3 Applicable Law
This contract shall be the law between the parties. The contract shall
also be
governed by the laws currently in effect or that may govern in the
future, this subject matter in the Republic of Panama, except to the
extent that such laws or legal provisions are contradictory,
inconsistent or incompatible with this contract, or are not for general
application. It is understood that those laws or standards applicable
to one type of industry or specific activity shall not considered to be
for general application.
3.4 Arbitration
The Parties declare their firm commitment to examine in the most
objective and friendly spirit, all of the differences that may arise
between them regarding this contract, with a view towards resolving
them.
In the event of any conflict between THE STATE and THE COMPANY that may
arise regarding this contract that cannot be resolved in the manner
indicated above, it shall be submitted for arbitration in accordance
with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce (ICC) within 20 calendar days from the first written
communication concerning the conflict submitted by fax or either of The
Parties.
There should be three (3) arbitrators that shall be named in accordance
with the rules of procedure. If one of The Parties abstains from
designating its arbitrator, the same shall be designated by the ICC. If
the two arbitrators designated fail to name the third arbitrator within
thirty (30) calendar days from the designation of the two arbitrators,
ICC, at the request of either of The Parties, shall designate the third
arbitrator.
The death, resignation or removal of any arbitrator shall not be cause
for the termination of the arbitration process nor shall its effect
cease, it being understood that in these cases, the Rules of procedure
shall be followed for the election of the missing arbitrator.
The arbitration board shall have its headquarters in New York City and
the arbitration process shall take place in the English language.
If either of the parties, having been duly notified, should abstain from
appearing or obtaining a postponement, the arbitration may continue in
the absence of said party and the decision handed down in that
proceeding shall be entirely valid.
The decisions by the board of arbitration shall be by simple majority.
The decisions of the Board shall
be final, definitive and of mandatory compliance by the parties.
The parties hereby expressly and irrevocably renounce claims to immunity
regarding the arbitration.
It is understood that the parties shall accept that the orders of
judgments of the arbitrator's awards be dictated by courts of justice of
the Republic of Panama; for this purpose, said arbitrator awards shall
be considered as if they had been given by Panamanian arbitration
boards, in accordance with the legal provisions currently in effect.
3.5 Good Faith
THE STATE shall provide its cooperation and assistance to THE COMPANY to
obtain the proper compliance with its obligations under this contract,
including, but not limited to the granting of the necessary licenses.
3.6 Modification
It is understood that during the life of this contract and its
extension, but not until three (3) years have passed from the effective
date of this contract, THE COMPANY and THE STATE may initiate
renegotiations of the terms of this contract in order to guarantee the
effective operations of The Ports.
This contract may be modified by mutual agreement between the parties,
subject to compliance with the legal requirements.
3.7 Language
This contract is signed in two (2) identical and equally valid originals
in Spanish.
3.8
Translation
Annex X includes an English translation of this contract.
4. EFFECTIVE DATE
This contract shall become effective the first day of the month that is
at least one month, but not more than two months, immediately following
the publication of this contract in the Official Gazette, after its
approval by the Legislative Assembly, provided, however, that if the day
of said publication does not coincide with the first day of a month, the
effective date of this contract shall be the first day of the month
immediately following.
5. TITLES
The headings in this contract are only for descriptive purposes.
IN WITNESS OF WHICH the parties sign this contract, on the 12th day of
December, 1966.
FOR THE STATE FOR THE COMPANY
Raul Arango Gasteazoro Paul R. C. Rickmers
Minister of Commerce & Industries General Manager
Panama Ports Company, S.A.
Enrique A. Jimenez, Jr.
Representative
ENDORSED:COMPTROLLER GENERAL OF THE REPUBLIC
ANNEX I
"The Existing Port, the Future Extension and Dredging
Jurisdiction" Maps and detailed description of the ports of Balboa and
Cristobal (The Existing Port), The Future Extension and detailing the
future expansion for the operation of the ports of Cristobal and Balboa
and the Dredging Jurisdiction.
ANNEX II
List of Equipment to be acquired by THE COMPANY in The
Existing Port.
ANNEX III
List of Concessions retained by the National Port
Authority and others retained by THE COMPANY within The Existing Port.
ANNEX IV
Income sources to be billed by THE COMPANY within The
Ports.
A. SERVICE TO VESSELS
1. Anchorage fees
2. Docking fees
3. Tying/Untying mooring lines
4. Providing such services as:
Supplying fresh water
Electrical lines
Elimination of oil residues
Elimination of other residues
Storage and supply of spare parts (through a charge for admission
to the port
For vehicles of third parties who provide said
service).
Providing health services and quarantine, customs,
immigration and other
Services.
B. CARGO
SERVICES
1. Cargo handling/stowage - includes container cargo, general
cargo, bulk cargo
and vehicles.
2. Passenger fees.
3. Cargo storage (after an appropriate period free of charge).
4. Changes in instructions (e.g. modification of exportation
details or transshipment/
forwarding requiring cargo movement).
5, Special Services Required (e.g. request for weighing, for
inspection, for
fumigation, etc.)
6. Special handling and tie-ups required (such as chocks, nets and
slings).
7. Delay charges due to late documentation, late arrival of the
vessel or inability of the vessel to operate.
C. OTHER INCOME
1. Concession fees
2. Permits
3. Sale of abandoned property
ANNEX V
Concession Contracts and
Resolutions provided by the National Port Authority
ANNEX VI
Environmental Study
regarding Contamination in The Existing Port.
ANNEX VII
Agreements for Technical
Assistance and Cooperation
ANNEX VIII
History of the Condition of
the Environment
ANNEX IX
Buildings required by THE
COMPANY in order to develop its operation within The Existing Port.
ANNEX X
Translation
Article 2.
By virtue of the provision of article 310 of the Political Constitution
creating the Panama Canal Authority, and granting attributions and
responsibilities, and also by virtue of the close relationship existing
between the activities of the Authority and the operation of the ports
adjacent to the Panama Canal, the
contract contained in this Law is approved on condition that none of its
clauses may be interpreted in such a way as to be in conflict with the
authority, rights and responsibilities granted to the Canal Authority in
the constitutional provision cited or in the law that establishes it,
especially with regards to the utilization of areas and
installations, marine traffic control and piloting of the vessels that
transit the canal and the ports adjacent to the canal, including its
achorages and shipyards. In any event, when a conflict occurs between a
provision of this Contract and the Law establishing the Canal Authority
or with the regulations resulting therefrom, the latter shall take
precedence over the former.
Article J. Beginning with the promulgation of this Law, all companies
involved in the construction, development, administration and operation
of port terminals for the handling of containers and loose cargo, shall
submit for the approval by THE STATE their tariffs for port and marine
services established for articles considered as sensitive to the
national economy as a direct or indirect part of the family food basket.
Included in the list of sensitive articles are the following:
a. Refrigerated or frozen fresh meats (beef, port, goat and fowl)
b. All dairy products or products derived from milk (fresh, powdered or
evaporated milk, cheeses in general, ice creams, cottage cheese or
whey).
c. Vegetable
products (corn grain for human or animal consumption, rice grain or
unshelled rice, flour and wheat) ch. Any material that is utilized for
propagation or seeding
d. Fresh potatoes and onions.
The provisions of this article are not applicable for in transit cargo.
Article 4. All companies involved in the construction, development,
administration and operation of port terminals for handling containers
and loose cargo, shall comply with the provisions in Law 29 of February
1, 1996 whereby rules governing the protection of competition and other
measures are established.
Article 5. For reasons of public utility or social interest, the
concession contracts for areas located in the Piers of the Ports of
Balboa and Cristobal are terminated, inasmuch as they interefere with
the development and modernization plans of THE STATE for the ports of
Balboa and Cristobal.
Article 6. THE STATE expressly recognizes that the operation of the
ports in Panama constitutes a public service. The economic conflicts or
interests that arise as a result of the labor relations of THE COMPANIES
operating the Ports and their workers shall e governed by the provisions
of the Labor Code. However, regarding the right of these workers to
strike, because of the strategic nature and public service of the port
worker, these companies may, at any time request the Ministry of Labor
and Social Welfare to resolve the conflict by means of arbitration.
Article 7. This Law repeals Decree 20 of 1980, Law 39 of 1979, Law 40
of 1979, as well as any provision that contradicts it, and shall enter
into effect upon promulgation.
PUBLISH AND COMPLY
Approved in third debate, in the Justo Arosemena Palance, Panama City on
December 28, 1996.
CESAR A PARDO R VICTOR M. DE GRACIA M
President Secretary
NATIONAL EXECUTIVE BRANCH PRESIDENCY OF THE REPUBLIC
PANAMA, REPUBLIC OF PANAMA JANUARY 16, 1997
ERNESTO PEREZ BALLADARES RAUL ARANGO GASTEAZORO
President of the Republic Minister of Commerce & Industries
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