Panama’s Supreme Court has struck down port concession contracts held by a CK Hutchison subsidiary, creating uncertainty over key Panama Canal terminals and putting the company’s planned $23 billion global ports sale at risk.
Panama’s Supreme Court has annulled key port concession contracts held by a subsidiary of Hong Kong-based CK Hutchison, throwing the future ownership of major Panama Canal terminals into uncertainty and potentially derailing the company’s plans to sell several port assets, according to a Reuters report.
Panama Ports Company (PPC), a CK Hutchison subsidiary, has operated container terminals at the Pacific and Atlantic entrances of the Panama Canal since the 1990s. The terminals operate separately from the canal’s waterway operations.
Threat to $23 billion global ports sale
The ruling puts at risk 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 formally notified of the court’s decision and described the ruling as inconsistent with the legal framework under which it had operated for nearly three decades.
“The new ruling lacks legal basis and jeopardises not only PPC and its contract, but also the livelihoods of thousands of Panamanian families who depend directly and indirectly on port activity, as well as the rule of law and legal certainty in the country,” the company said.
PPC added that it has invested $1.8 billion in infrastructure and technology over its years of operation and said it reserves all rights, including recourse to national and international legal proceedings.
China reacts, markets slide
China’s foreign ministry spokesperson Guo Jiakun said Beijing would take “all necessary measures” to safeguard the legitimate rights and interests of Chinese enterprises.
Following the ruling, CK Hutchison’s Hong Kong-listed shares fell 4.6 per cent, while the Hang Seng Index declined 2.1 per cent.
“I would expect near-term weakness in CK Hutchison until a new sale structure is clarified,” said David Blennerhassett, a strategist at Ballingal Investment Advisors. “That process could be substantially delayed depending on how the company weighs its options after this court decision.”
Contracts ruled unconstitutional
The Supreme Court said that after “extensive deliberation” it found the laws and actions underpinning the concession contract between the Panamanian state and PPC — covering the development, construction, operation and management of the Balboa and Cristobal terminals — to be unconstitutional.
CK Hutchison had been awaiting the final ruling after Panama’s attorney general earlier declared the contracts unconstitutional.
US–China rivalry in the background
The decision comes amid intensifying US–China rivalry over global trade routes and is widely seen as a win for Washington. US President Donald Trump has sought to curb Chinese influence over the Panama Canal, which handles about 5 percent of global maritime trade.
Trump had earlier welcomed the proposed sale of the ports, particularly the Panamanian assets, saying it would place the terminals under majority US ownership. China, however, had threatened to block the deal on national interest grounds and pushed for state-owned shipping company COSCO to take a controlling stake, sources previously told Reuters.
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