A cargo ship leaves a lock on the Panama Canal in Panama City, Panama, on Jan. 19. The Supreme Court of Panama invalidated the contract of a Hong Kong subsidiary to operate ports on the Panama Canal, ruling it is unconstitutional. Photo by Carlos Lemos/EPA
Jan. 30 (UPI) — The Supreme Court of Panama invalidated the contract of a Hong Kong subsidiary to operate ports on the Panama Canal, ruling it is unconstitutional.
In a Thursday ruling the high court said the terms of Panama Ports Company’s contract that allowed it to operate the ports of Balboa and Cristobal violated the country’s constitution. Panama Ports Company is a subsidiary of CK Hutchinson Holding, a company based in Hong Kong.
The court said the ruling was made after “extensive deliberation.”
Panama Ports Company has been operating two of Panama’s five ports since 1997. It was founded in Hong Kong and is not owned by the Chinese government.
The company argues that the court’s ruling lacks a legal basis and “jeopardises 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.” It said that it has invested more than $1.8 billion in the ports’ infrastructure in the nearly 30 years it has operated there.
Panama’s President Jose Raul Mulino said ports will continue to operate without interruption following Thursday’s ruling. APM Terminals Panama will operate the Balboa and Cristobal ports in the interim.
President Donald Trump has long sought control over the Panama Canal and voiced his desire to block China from operating there. Last year he threatened to seize control of the canal.
After the ruling, shares in CK Hutchinson fell by 4.6%.
China’s Ministry of Foreign Affairs said Chinese companies will pursue legal action to maintain their rights to operate on the Panama Canal, calling the decision “contrary to the laws governing Panama’s approval of the relevant franchises.”
CK Hutchinson has pursued a sale of its interest in the Balboa and Cristobal ports to a group of U.S. investment firms, including BlackRock. The proposed deal is estimated to be worth more than $22 billion.
Thursday’s decision may impact those plans.
