Panama occupies two key canal ports following Supreme Court ruling.
The Panamanian government has taken significant measures regarding the operations of two crucial ports at the entrances of the Panama Canal. On Monday, a decree was issued that allows for the government-sanctioned occupation of these ports, a decision prompted by a final ruling from the Supreme Court of Panama. The court declared the concession agreement held by the Hong Kong-based CK Hutchison as unconstitutional. This ruling has marked a pivotal moment in the ongoing management of these vital logistical hubs.
The decree empowers the Panama Maritime Authority to take possession of the ports in the interest of urgent social need, which encompasses all movable assets located within or outside the Balboa and Cristóbal terminals, including cranes, vehicles, computer systems, and software. This move reflects the government’s attempts to navigate a complex landscape of international relations and domestic interests.
The conflict over the ports is emblematic of a broader geopolitical rivalry, particularly between the United States and China. Panama has found itself caught in the crossfire, notably after former U.S. President Donald Trump alleged that China was exerting disproportionate influence over the Panama Canal.
CK Hutchison had plans to sell the two ports to a consortium that included the prominent U.S. investment firm BlackRock. However, the Chinese government intervened swiftly to block this transaction, sparking further tensions in an already fraught arena. In January, Panama’s Supreme Court nullified the law that authorized CK Hutchison’s concession through its subsidiary, Panama Ports Company (PPC), overturning an extension granted in 2021, which effectively eliminated any legal standing for the concession.
PPC has managed these terminals since 1997, following the concession awarded by the state to operate the critical gateways to the Pacific and Atlantic sides of the canal. In a recent announcement, the Panamanian government indicated that it would ensure the continuity of port operations and job stability. To facilitate the transition, APM Terminals, a subsidiary of the Danish conglomerate A.P. Moller-Maersk, will temporarily oversee the terminals until a new contract is established.
In response to the ruling and subsequent government actions, CK Hutchison has initiated arbitration proceedings against Panama under the International Chamber of Commerce’s guidelines. The potential implications of this legal pursuit remain uncertain, particularly regarding its duration and impact. The company has expressed intentions to negotiate with the Panamanian government for a resolution that would allow it to continue its operational role, signifying the complexity of business relationships in this international context. Media News Source
