PANAMA: Panamanian authorities have taken control of two ports on the Panama Canal from CK Hutchison after the Hong Kong-based conglomerate’s concession was annulled amid a row between the United States and China.
CK Hutchison objected Tuesday to the takeover, which it called “unlawful” and said raises “serious risks to the operations, health and safety” at terminals.”
In January, the country’s supreme court declared as “unconstitutional” the contract which had allowed Hutchison’s subsidiary Panama Ports Company (PPC) to manage the ports of Balboa on the Pacific and Cristobal on the Atlantic since 1997.
“The Panama Maritime Authority has taken possession of its ports and guarantees the continuity of operations,” an official said Monday after the Panamanian Supreme Court annulled Hutchison’s contracts to operate the ports.
The court ruling was the latest legal move to ripple through the interoceanic waterway, which handles about 40 percent of US container traffic and five percent of world trade.
The Central American country has been swept up in broader tensions between Washington and Beijing, with US President Donald Trump claiming, without providing evidence, last year that China effectively runs the canal.
Panama has always denied Chinese control over the 80-kilometer (50-mile) waterway, which is used mainly by the United States and China.
Hutchison had asked the Panamanian government to enter into negotiations to allow it to continue operating the two terminals — to no avail.
Publication of the court ruling in the official gazette Monday effectively ended the legal process.
“This does not imply the expropriation of those assets, but rather their use to guarantee the operation of the ports until their real value is determined for the corresponding actions,” said Panamanian President Jose Raul Mulino.
Ports director Max Florez said an 18-month transition period now begins, with the ports being operated by two other companies before contracts are awarded under a new international tender.
PPC denounced the move as an “illegal takeover without transparency or coordination” and said Panama’s actions were “confiscatory.”
In its statement Tuesday, CK Hutchison said: “None of the actions by the Panama State were advised to or co-ordinated with PPC.”
It will continue to consult with legal advisers regarding the ruling and “all available recourse including... legal proceedings against the Republic of Panama and its agents and third parties colluding with them,” CK Hutchison added.
Hong Kong’s government lodged a “stern protest” on Tuesday, saying in a statement that the “heavy-handed action” had “seriously infringed upon the lawful rights and interests of Hong Kong enterprises.”
’No layoffs’
China’s Hong Kong and Macao Affairs Office had previously warned that Panama would pay a “heavy price, both politically and economically” for stripping Hutchison of its tender.
Panama said APM Terminals, a subsidiary of the Danish Maersk group, will operate the port of Balboa, and Terminal Investment Limited, owned by the logistics giant MSC, will operate the port of Cristobal.
Labor Minister Jackeline Munoz assured there would be “no layoffs” at the two terminals, which employ around 1,200 people.
Following the court’s January ruling, the Panama Maritime Authority had said a division of Maersk Group would temporarily take over operation of the facilities.
Last week, Hutchison warned of possible legal action against Maersk and others over the annulment of its contract.
The Hong Kong company has said it will challenge Panama’s decision before the International Chamber of Commerce.
US Ambassador to Panama Kevin Cabrera defended Panamanian authorities, saying they have the right “to have their judicial system make its own decisions” and that the Supreme Court ruling was “very good” for the people of Panama.
The Panama Canal was built by the United States, which operated it for a century before ceding control to Panama in 1999.
On his first day back in the White House last year, Trump threatened to seize the canal.
He cooled his threats after Panamanian authorities decided that the concession ran counter to Panama’s interests.