Panamanian President Jose Raul Mulino on Monday ordered the temporary occupation of two ports run by a unit of CK Hutchison Holdings Ltd following the Supreme Court’s ruling against the firm’s concession, escalating a dispute that has become a proxy battle between the US and China in Latin America.
Mulino said in a speech that the administration and operation of the two ports on the strategic Panama Canal is to revert to the country’s National Maritime Authority to ensure their uninterrupted, safe and efficient operation.
The occupation covers movable equipment at the ports and does not mean a definitive loss of ownership rights, he said, adding that the state would return the property, including cranes, “when the determining reason for the occupation ceases.”
Photo: AP
Panama will pay corresponding compensation unless the equipment is sold to a new party.
Panama’s maritime authority has signed contracts with APM Terminals, a division of AP Moller-Maersk, and Switzerland-based MSC Mediterranean Shipping Co, to operate the ports in the interim, Mulino said.
APM Terminals, which started operations, said it would focus on maintaining “continuity” at the logistics hub while installing a new operating system to restore container movements at Balboa “with the least possible disruption.”
Acknowledging the challenge of the task, APM Terminals Panama CEO Marliz Bermudez emphasized the firm’s commitment to Panama.
MSC did not immediately respond to an e-mailed request for comments.
The government is to begin an open tender process and award concessions to operate the ports to two separate firms, Mulino said.
The equipment at the ports would be valued in order to determine next steps, he said.
Earlier this month, CK Hutchison warned Maersk of legal action should the Nordic company’s terminal unit try to take over operations at the two ports.
CK Hutchison yesterday said that it considers Panama’s takeover of the two ports, and the court’s earlier ruling, unlawful.
The country “is responsible for harm and damage caused by the confiscatory actions it has taken,” it said in an e-mailed statement.
Its subsidiary Panama Ports Co ceased all operations at the Balboa and Cristobal terminals on Monday, as Panamanian representatives “arrived without invitation” and informed the company’s employees the concessions granted to the unit no longer existed, the statement said.
Hong Kong’s Commerce and Economic Development Bureau said in a statement it had lodged “stern protests” with Panama’s consulate, adding that it had expressed strong opposition and dissatisfaction and would “staunchly support the legitimate rights and interests of Hong Kong corporations overseas.”
The conglomerate founded by Hong Kong billionaire Li Ka-shing (李嘉誠) has resisted Panamanian authorities’ attempt to revoke its right to operate the two ports. Panama’s latest decision adds fresh uncertainty into long-gestating talks over Li’s deal to sell 43 global facilities to a consortium backed by US investment firm BlackRock Inc.
The deal has become a proxy for the US-China rivalry, and is one of the company’s most geopolitically complex yet. Announced in March last year, it could net CK Hutchison more than US$19 billion in cash if completed. As talks drag on, parties involved have been considering ways to move the discussions forward — including splitting the assets into separate parcels with different ownership structures — Bloomberg has reported.
To win Beijing’s approval, CK Hutchison also earlier invited state-owned China Cosco Shipping Corp to join the buyer consortium.
Carving the Panama ports from the deal would reduce its scope and value, said Shahla Ali, a professor and associate dean at The University of Hong Kong’s Faculty of Law and director of the Arbitration and Dispute Resolution Programme.
“To go forward, some type of restructuring is inevitable — whether through price adjustments or enhanced warranty arrangements,” Ali said.
The Panamanian Supreme Court last month struck down CK Hutchison’s concession to operate the ports, a decision that was praised by Washington, but angered China — which retaliated by halting talks over new projects in Panama.
The Panamanian Comptroller General had announced an audit of the concession in January last year, a week before US President Donald Trump’s inauguration.
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