PANAMA CITY: Hong Kong-based conglomerate CK Hutchison warned Thursday of possible legal action against Danish firm Maersk and others over the annulment of its contract to operate two ports on the Panama Canal.
Panama’s Supreme Court last month invalidated Hutchison’s contract following repeated threats from President Donald Trump that the US would seek to reclaim the waterway, which he said was in effect controlled by China.
The Panama Maritime Authority (AMP) then said port operator APM Terminals, part of the Danish Maersk Group, would temporarily take over operation of the Balbao and Cristobal ports on either side of the canal from the Panama Ports Company (PPC) – a subsidiary of CK Hutchison.
The canal, which handles about 40% of US container traffic and 5% of world trade, was built by the US, which operated it for a century before ceding control to Panama in 1999.
The PPC has initiated arbitration proceedings, and in a statement Thursday, CK Hutchison warned that handing control of the ports to Maersk “will cause damages… and will result in recourse against APMT”.
Since 1997, Hutchison had managed the ports of Cristobal on the interoceanic canal’s Atlantic side and Balboa on the Pacific side.
The concession was extended for 25 years in 2021.
‘A heavy price’
Last month, the Supreme Court ended the contract on grounds that laws that allowed CK Hutchison Holdings to operate two of the five ports of the canal were “unconstitutional”.
Panama has always denied Chinese control over the 50-mile waterway, which connects the Atlantic and Pacific oceans and is used mainly by the US and China.
However, President Jose Raul Mulino has called the contract “unfair”, and the office of the comptroller general – an autonomous body that examines how government money is spent – subsequently recommended it be annulled.
It argued the concession was “unconstitutional” and said Hutchison had failed to pay the Panamanian state US$1.2 billion due.
The Supreme Court agreed, but Hutchison considers the ruling to be unlawful.
In its statement Thursday, the company said it would “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.”
Approached for comment, Maersk referred AFP to a recent statement from APMT, in which it expressed willingness to operate the ports, but underlined it was “not involved in the ongoing legal proceedings and bears no role in decisions” regarding the terminals.
Earlier this month, China accused Panama of buckling under outside pressure and warned of “a heavy price, both politically and economically” if it did not change course, according to Bloomberg.
Mulino “strongly” rejected the threat, and stressed his government “respects the decisions of the judiciary, which is independent of the central government”.
