CK Hutchison Holdings of Hong Kong Threatens Legal Action Against Panama
The former Chinese operator of container terminals at the Panama Canal has threatened legal action after its contracts were voided by the country’s Supreme Court.
The former Chinese operator of container terminals at the Panama Canal has threatened legal action after its contracts were voided by the country’s Supreme Court, reported on 12 February. In a press release on the same date, CK Hutchison Holdings (CKHH) of Hong Kong said it was reviewing its options after its Panama Ports Company (PPC) logo pictured below, subsidiary was removed as the operator of terminals at Cristobal and Balboa ports, at each end of the Canal. The company had operated the terminals since 1997. The Panama Canal is a critical route for merchant and military vessels moving between the Atlantic and Pacific oceans and has become highly politicized, with US President Donald Trump saying the USA should take back control of the canal, and that China’s presence threatened US security there.
In its decision – not yet published – the Supreme Court found that CKHH’s concession was unconstitutional under Panamanian law. The Panama Maritime Authority then selected Maersk’s APM Terminals unit as operator of the two ports until a new concession could be bid, the report said. CKHH said it was asserting its rights under an investment protection treaty and seeking discussions to resolve the dispute involving PPC, which it described as an “indirect subsidiary”. It said the court’s decision was itself unconstitutional and it had filed for arbitration with the International Chamber of Commerce. “CKHH will continue to consult with its legal counsel regarding all available recourse including additional national and international legal proceedings against the Republic of Panama and its agents and third parties colluding with them in this matter,” the company said.
It had also threatened Maersk, pictured above, with legal action, saying a forced takeover would cause “disruption and damage”. Last year, CKHH announced that a consortium – including US investment firm BlackRock and the Mediterranean Shipping Company – was buying a 90% stake in PCC and an 80% interest in its other subsidiaries and associated companies owning and operating 43 ports in 23 countries. The US $22.8 billion sale had stalled due to China’s State Administration for Market Regulation (SAMR) conducting a review into the deal “to protect fair market competition and public interest”. The Panama Canal was built and administered by the USA until 1999, when control was given to Panama. About 5% of world trade is transported via the waterway and the USA is the largest user of the canal, which is vital for US grain and soya bean exports to Asia.
