Panama City/Hong Kong: Panama’s Supreme Court has annulled key port contracts held by a subsidiary of Hong Kong-based CK Hutchison, leaving the future ownership of some Panama Canal operations unclear and possibly upsetting its plans to sell some terminals.
Panama Ports Company (PPC), a CK Hutchison subsidiary, has held contracts since the 1990s to operate container terminals at the canal’s Pacific and Atlantic entrances, separate from the waterway’s operations. The decision could disrupt CK Hutchison’s proposed $23 billion sale of dozens of ports worldwide, including the Panamanian terminals, to a consortium led by BlackRock and Mediterranean Shipping Company (MSC).
PPC said on Friday it had not been notified of the court’s decision but considered the ruling inconsistent with the legal framework and laws that had allowed it to operate the ports. “The new 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 in a statement. PPC said it had invested $1.8 billion in infrastructure and technology in nearly three decades operating the Panamanian ports, and it “permanently” reserves all rights including recourse to national and international legal proceedings.
Chinese foreign ministry spokesperson Guo Jiakun said at a regular news briefing on Friday the country “will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.” The Hong Kong government said in a statement it strongly disapproved of the ruling. “(The) government 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,” it said. The conglomerate’s Hong Kong-listed shares closed down 4.6% following the ruling. Hong Kong’s Hang Seng Index declined 2.1%.
