Panama’s Supreme Court on Thursday ruled that the concession held by a subsidiary of Hong Kong’s CK Hutchison Holdings to operate ports at either end of the Panama Canal is unconstitutional, an outcome that advanced a US aim to block any influence by China over the strategic waterway.
The court’s ruling followed an audit by Panama’s comptroller, which alleged irregularities in the 25-year extension of the concession granted in 2021.
The administration of US President Donald Trump made blocking China’s influence over the Panama Canal one of its priorities in the hemisphere.
Photo: AP
Despite the insistence by the Panamanian government and the canal authority that China has no influence over its operations, US Secretary of State Marco Rubio made clear that the US viewed the operation of the ports as a national security issue, with Trump going as far as to say Panama should return the canal to US control.
Panamanian President Jose Raul Mulino said that despite the significance of the court’s decision to annul key port contracts held by CK Hutchison’s subsidiary, ports in the country would operate without disruption.
APM Terminals Panama, a Maersk subsidiary, has shown willingness to temporarily take over the operations of the terminals and assured that there would be no layoffs, he said.
Hong Kong said it “firmly rejects” the ruling, adding that it “strongly opposes any foreign government using coercive, repressive or other unreasonable means in international economic and trade relations to seriously harm the legitimate business interests of Hong Kong enterprises.”
CK Hutchison’s subsidiary, Panama Ports Co (PPC), said its concession was the result of transparent international bidding.
The ruling “lacks legal basis and jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal certainty in the country,” it said.
It said that it reserves all rights to proceed legally in Panama or elsewhere, but gave no more details.
Chinese Ministry of Foreign Affairs spokesman Guo Jiakun (郭嘉昆) said China would take all necessary measures to safeguard the legitimate rights and interests of “the Chinese company,” without elaborating on the potential steps.
Panama’s comptroller audited the concession to PPC, which had held the contract to operate the ports since 1997.
The concession was renewed in 2021 for 25 years, during the prior Panamanian administration.
Comptroller Anel Flores said the audit found payments that were not made, accounting errors and the apparent existence of “ghost” concessions operating within the ports since 2015.
PPC denied the allegations.
The audit determined that the irregularities had cost the government about US$300 million since the concession was extended and an estimated US$1.2 billion during the original 25-year contract.
Flores also said the extension was granted without the required endorsement of his office.
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