Foley Hoag Helps Dominican Republic and State-owned Entity CDEEE Reach Agreement in ICC Mediation concerning Central Termoeléctrica Punta Catalina Project
March 20, 2020
The Dominican Republic and its State-owned electricity company, Corporación de Empresas Eléctricas Estatales (CDEEE), have settled a longstanding dispute with the Odebrecht-Tecnimont-Estrella Consortium regarding the construction of a 752 megawatt thermoelectric generation plant at Punta Catalina on the country’s southern coast.
The dispute was settled by a formal mediation process in New York, under the auspices of the International Chamber of Commerce. Foley Hoag was lead counsel to the Dominican Republic and CDEEE. The Foley Hoag team was led by partner Kenneth Figueroa, who said “the new agreement is a very positive outcome for the Dominican Republic and the CDEEE, which will ensure the prompt finalization and handover of the Punta Catalina plant, providing much needed electricity to the people of the Dominican Republic and significant revenue for the CDEEE.”
The Punta Catalina power plant is the main infrastructure project undertaken by the Dominican Government and constitutes the largest power generation facility in the country, capable of producing up to 35% of the demand supplied through the national electric system. The construction Consortium led by Brazilian company Odebrecht commenced work on the project in April 2014, pursuant to a US$ 1.95 billion EPC Contract.
The project was originally scheduled to be completed in the first quarter of 2017, but construction delays pushed the completion into this year. The parties disputed responsibility for the delays and temporary suspensions of works. The Consortium asserted claims worth US$ 708 million. The CDEEE planned to file counterclaims.
In June 2018, Foley Hoag assisted the CDEEE in negotiating a Framework Agreement with the Consortium, whereby a Contingency Fund of US$ 336 million was established to provide further funds to complete the project in accordance with a new schedule. As part of that agreement, the parties agreed to reserve their respective claims and counterclaims until August 2019, at which point either party could commence arbitration proceedings. However, by August 2019, while 90% of the project had been completed, there had already been significant delays under the new schedule, and the Consortium’s claims had risen to US$ 973.2 million.
The parties agreed that before either commenced an arbitration they would attempt to resolve their dispute through a mediation process, which was held at Foley Hoag’s New York offices under the supervision of mediator Mercedes Tarrazón. The mediation resulted in a complete and final agreement, pursuant to which the parties resolved all existing disputes. Under its terms, CDEEE will pay the Consortium $59.5 million, in addition to the US$ 336 million in the Contingency Fund established in June 2018 and already utilized by the Consortium to carry out the project.
The US$ 59.5 million payment will be contingent on the successful completion of tests necessary to bring the final turbine unit at Punta Catalina into operation.
Foley Hoag specializes in representing States in disputes with foreign companies and investors, and with other States in litigation, arbitration and mediation before the world’s principal dispute resolution bodies. It was chosen in 2018 by the Dominican Government to represent it and the CDEEE in their dispute with the Consortium.
In addition to Mr. Figueroa, Foley Hoag’s team of lawyers included partners Paul Reichler, Daniel Schimmel, and Diana Paraguacuto-Mahéo, and associates Alejandra Torres Camprubí, Gisela Paris, Ana Toubiana (no longer with the firm), José Rebolledo, Darío Maestro, Rika López, and Eva Treves. The Dominican Republic was also represented by co-counsel Cristián L. Vallejo of Manatt, Phelps & Phillips, LLP, and Dominican counsel Luis Miguel Pereyra of Pereyra & Asociados.
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