CK Hutchison says Panama Canal port workers removed after court-ordered takeover

[HONG KONG] Hong Kong conglomerate CK Hutchison said on Tuesday (Feb 24) Panama authorities had threatened its employees with criminal prosecution if they defied orders to leave two strategic canal ports at the centre of a legal battle that has embroiled Beijing and Washington.

CK Hutchison said Panama’s decision to cancel key port contracts and grant temporary licences to Maersk and the Mediterranean Shipping Company (MSC) was “unlawful” as it considers national and international legal action against the country.

Panama on Monday published in its official gazette a Supreme Court ruling cancelling key port contracts held by a subsidiary of CK Hutchison, known as Panama Ports Company (PPC). The publication finalises the legal annulment of concessions for the Balboa and Cristobal terminals near the Panama Canal, which Panama Ports Company, a subsidiary of CK Hutchison, had operated for nearly three decades.

The ruling, issued in late January, came amid growing US-China rivalry over global trade routes and marks a win for Washington. US President Donald Trump has pushed to curb Chinese influence over the Panama Canal, which carries about 5 per cent of global maritime trade.

CK Hutchison said Panamanian authorities made “direct physical entrance” to the Balboa and Cristobal ports on Monday to remove PPC employees who were threatened with criminal prosecution if they defied orders. CK Hutchison said PPC staff were told not to make contact with the company.

“CKH considers the ruling, the executive decree, the purported termination of PPC’s concession, and the takeover of the terminals to be unlawful,” CK Hutchison said in a statement to the Hong Kong Stock Exchange.

“The actions by the Panama State also raise serious risks to the operations, health and safety at the Balboa and Cristobal terminals.”

CK Hutchison said it was liaising with its legal counsel on pursuing national and international legal action against Panama and third parties. Hong Kong’s government expressed strong dissatisfaction and opposition to Panama’s takeover in a separate statement on Tuesday, urging Panama authorities to respect the spirit of contracts and provide a fair and just business environment.

The company’s Hong Kong-listed shares were down 1.9 per cent on Tuesday as Hong Kong’s broader Hang Seng Index was also off 1.9 per cent.

SEE ALSO

Li Ka-Shing’s port unit starts arbitration against Panama

Hong Kong port operator violated Panama’s constitution, failed to serve public interest, Panama court ruled

Beijing slams ‘forced demolition’ of Chinese monument at Panama Canal

Li Ka-shing’s US$19 billion ports sale slows due to complex talks

China likely to bid on building new Panama Canal ports

More

The Hong Kong conglomerate said on Feb 12 it had notified Panama of an investment-protection treaty dispute that it would pursue after Maersk signalled its interest in running the ports. It said that such a takeover would result in legal recourse against APM Terminals Panama, a Maersk subsidiary, unless it is done in agreement with the firm.

The Panama Maritime Authority (AMP) has taken possession of both ports by decree to ensure uninterrupted operations, said Alberto Aleman Zubieta, head of the technical team overseeing the transition, after the ruling became final upon publication.

The government said it approved two temporary concession contracts with AMP, lasting up to 18 months, for the operation of the Balboa and Cristobal terminals. APM Terminals Panama will operate the Balboa port, while TIL Panama, part of MSC, will run operations at Cristobal.

APM Terminals confirmed on Tuesday that it has begun temporary operations at the Balboa port for up to 18 months.

Maersk and MSC did not immediately have a comment on the matter. REUTERS