Panama Forces CK Hutchison Staff Out Of Key Panama Canal Terminals After Supreme Court Ruling

Panama has formally cancelled long-standing port concessions held by Hong Kong-based CK Hutchison at two major Panama Canal terminals and transferred temporary control to subsidiaries of Maersk and MSC.

The move affects the Balboa and Cristobal terminals, located at opposite ends of the Panama Canal, a waterway that carries about 5% of global maritime trade.

CK Hutchison has called the action unlawful and is considering national and international legal steps.

Panama published the Supreme Court ruling in its official gazette on Monday, finalising the annulment of key concession contracts held by Panama Ports Company (PPC), a subsidiary of CK Hutchison.

PPC had operated the Balboa and Cristobal terminals for nearly three decades. The ruling, issued in late January, legally terminated the concessions once it was officially published.

Panamanian authorities entered both ports on Monday to enforce the decision. According to CK Hutchison, its employees were told to leave and were threatened with criminal prosecution if they refused to comply. The company stated that workers were instructed not to contact the firm.

In a filing to the Hong Kong Stock Exchange, CK Hutchison said the court ruling, executive decree, termination of PPC’s concession and takeover of the terminals were unlawful. It also warned that the actions posed risks to operational continuity, health and safety at both terminals.

The Panamanian government approved two temporary concession contracts lasting up to 18 months to ensure uninterrupted port operations.

• APM Terminals Panama, a subsidiary of Maersk, has begun operating the Balboa terminal.
• TIL Panama, part of Mediterranean Shipping Company, has taken over operations at Cristobal.
• APM Terminals confirmed it started temporary operations at Balboa for up to 18 months.

The Panama Maritime Authority (AMP) took possession of the ports by decree. Alberto Aleman Zubieta, who heads the technical team overseeing the transition, said the move was aimed at maintaining uninterrupted operations.

The canal handles around 5% of global maritime trade, making control of its port terminals strategically important.

The Balboa terminal lies on the Pacific side of the canal, while Cristobal serves the Atlantic entrance. Both are key transshipment hubs in the Americas.

Hong Kong’s government expressed strong dissatisfaction with Panama’s decision and urged authorities to respect contractual commitments and maintain a fair business environment.

CK Hutchison’s Hong Kong-listed shares fell 1.9% on Tuesday, matching the 1.9% decline in the Hang Seng Index.

On February 12, CK Hutchison said it had notified Panama of an investment-protection treaty dispute. The company said it would take action after Maersk showed interest in operating the terminals.

It warned that any takeover not agreed upon could result in legal action against APM Terminals Panama and other third parties.

The company also stated it is consulting legal advisers regarding potential national and international proceedings against Panama and involved entities.

Panamanian President Jose Raul Mulino said the temporary contracts were a legitimate tool to ensure port operations continue while asset value is determined for future actions.

He stated the arrangement does not amount to expropriation. According to Mulino, the state is using the assets temporarily to maintain port activity while developing a new competitive concession framework.

Mulino said port operations and employment would not be affected during the transition period. The temporary setup will remain in place while Panama prepares to award new concessions in the future.

The takeover could complicate CK Hutchison’s proposed $23 billion sale of dozens of ports worldwide, including the Panamanian terminals, to a consortium led by BlackRock and MSC.

Reference: Reuters

Source: Maritime Shipping News