Negotiations have broken down between a consortium working to expand the Panama Canal and the Panama Canal Authority in a dispute over cost overruns of $1.6 billion.
The Miraflores locks at the Panama Canal. Photo: AFP
The GUPC consortium said the Panama Canal Authority had broken off the talks.
The consortium had threatened to halt work unless the ACP met the bill for the overrun, which the authority argues should be paid by GUPC.
There has so far been no official statement from the Panama Canal Authority.
Panama argues that the cost overruns are due to events that should be "normal" in such a project and should be paid by the consortium, which comprises Sacyr of Spain, Impregilo of Italy, Jan De Nul of Belgium and Constructora Urbana of Panama.
The contract involves building a new larger set of locks that can accommodate ships that can carry 12,000 containers.
At present, the biggest ships that can navigate the canal carry 5,000 containers.
The BBC reports work began on the expansion in 2009 and construction is due to be completed in June 2015.
The Panama Canal, which was inaugurated in 1914, is one of the world's most important shipping routes.