Panama Seeks To Terminate Hutchison Port Contract Over Unconstitutionality

Panama’s Attorney General Luis Carlos Gomez has called for the termination of a concession granted to China’s Hutchison Port Holdings, stating that the contract is unconstitutional.

In a formal submission to the country’s Supreme Court, Gomez argued that the agreement improperly transferred the rights of the Panamanian state, affecting public welfare, competition, and economic interests.

He has asked the court to confirm its unconstitutionality as a step toward nullifying the agreement.

The legal challenge centers around Panama Ports Company (PPC), a subsidiary of CK Hutchison Holdings, owned by Hong Kong billionaire Li Ka-shing. The company has operated two key ports, Balboa on the Pacific side and Cristobal on the Atlantic side, since 1997.

The controversy intensified after the Panamanian government granted an automatic 25-year contract extension in 2021 without a competitive bidding process.

Critics claim the deal provided unjustified tax benefits and monopolistic control over port operations.

Two separate lawsuits have been filed in Panama’s Supreme Court challenging the validity of the 2021 contract. Attorney General Gomez submitted his opinion on February 19 in support of these cases, asserting that the agreement was against Panama’s national interests.

The Supreme Court has agreed to review the matter.

The scrutiny over the contract follows repeated claims by former U.S. President Donald Trump that China is running the Panama Canal. Trump has suggested that the United States could reclaim control of the waterway, which it built and handed over to Panama in 1999.

In response, Panamanian President Jose Raul Mulino has taken a dual approach, denouncing what he called “lies and falsehoods” while also taking necessary steps to review Chinese investments in the country.

In early February, U.S. Secretary of State Marco visited Panama on his first official trip in the role. He met with officials from the Panama Canal Authority (ACP), including Canal Administrator Ricaurte Vasquez Morales, at the Miraflores locks.

During the visit, the ACP initially announced plans to coordinate with the U.S. Navy to prioritise naval vessel transits through the canal.

However, the U.S. later backtracked on this statement after Panama denied making such a commitment.

As tensions escalated, the Panamanian government formally withdrew from China’s Belt and Road Initiative. The move was seen as a direct response to pressure from the United States.

China reacted strongly, accusing the Trump administration of using “pressure and coercion” to influence Panama’s foreign policy.

In January, Panama’s Comptroller General, Anel Bolo Flores, announced that an audit of the 2021 contract with Hutchison was in progress. The review aims to examine whether the contract extension was lawfully granted and if the company has been receiving undue benefits.

References: hongkongfp, channelnewsasia

Source: Maritime Shipping News