China COSCO May Seek Arbitration Over Exclusivity Rights to Peru Mega-Port

LIMA, April 29 (Reuters) – The Peruvian government is looking to avoid an international arbitration process which could be filed by Chinese port operator Cosco Shipping over a legal dispute regarding exclusivity rights to a massive facility being built by the firm, an official said on Monday.

Cosco sent a letter to Peru’s economy ministry in mid-April to start a six-month negotiation process in order to reach an amicable resolution without having to resort to international arbitration, local media first reported on Monday. 

Economy Minister Jose Arista said in an interview with local radio station RPP that he had received the letter but not yet replied.

In March, Peru’s port authority said an “administrative error” had given Cosco Shipping exclusivity over operations at the Chancay megaport and asked a judge to annul the decision. Cosco is expected to spend $1.3 billion on the first stage of the site.

Since then, the government has pushed measures to allow private port operators to exclusively provide services.

Arista said he was “sure” that Peru and Cosco would not have to go through arbitration proceedings.

“We will reach an agreement before,” he said.

Cosco’s office in Peru did not immediately respond to a request for comment.

A free-trade agreement between Peru and China, which has been in effect since 2009, protects investments and has allowed increased trade between the countries.

“Our thinking is that (the proposition) will soon be up for a second vote in Congress, which will calm the mood,” Arista said. 

In Peru, measures must be voted on twice to become binding. Lawmakers passed the motion in a first vote earlier this month, though the second vote is still pending.

This month, Cosco Shipping confirmed that its investment in the Chancay port was ongoing and that it still expected to inaugurate the first part of the port in November for the Asia-Pacific Economic Cooperation (APEC) leaders’ summit.

(Reporting by Marco Aquino; Writing by Kylie Madry; Editing by Sandra Maler)

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