The Panamanian government issued a significant decree on Monday, authorizing the occupation of two key ports at the entrances of the Panama Canal, following a landmark ruling by the nation’s Supreme Court. The court deemed the operating concession held by CK Hutchison, a Hong Kong-based company, unconstitutional. This development underscores the escalating geopolitical tensions surrounding the Panama Canal, particularly between the United States and China.
According to the decree, the Panama Maritime Authority is now empowered to take control of the ports, which include the Balboa and Cristóbal terminals. The occupation extends to all movable assets associated with the ports, such as cranes, vehicles, computer systems, and relevant software, indicating a broad scope of government intervention.
The controversy surrounding these ports is influenced by wider geopolitical factors. The Central American nation has found itself in the midst of a rivalry between the United States and China, particularly after former U.S. President Donald Trump accused China of "running the Panama Canal" last year. CK Hutchison had plans to sell the ports to a consortium that included U.S. investment firm BlackRock, but this transaction was swiftly interrupted by intervention from the Chinese government, effectively halting the deal.
In January, Panama's Supreme Court ruled against the concession contract for Panama Ports Company (PPC), a subsidiary of CK Hutchison. This ruling invalidated the contract’s approval law, including an extension granted in 2021, stripping the port operations of any legal standing. PPC has been managing these terminals since 1997 under the concession arrangement made by the Panamanian state.
The Panamanian government has assured the public of its commitment to maintaining continuity in port operations and job stability. APM Terminals, part of the Danish group A.P. Moller-Maersk, is expected to temporarily manage the terminals while a new contract is negotiated, further emphasizing the government’s intent to keep operations running smoothly during this transition.
In reaction to these developments, CK Hutchison Holdings has initiated arbitration proceedings against the Panamanian government through the International Chamber of Commerce. The potential impact and duration of these proceedings remain uncertain. The company has also threatened legal action against APM Terminals if it continues operating the concession. However, APM Terminals has clarified that it is not involved in the ongoing legal disputes.
A spokesperson for PPC indicated that the company is actively seeking a resolution with the Panamanian government to continue its operations. The situation remains fluid as the government works to stabilize port management amidst escalating tensions in the region.
