Panama

Danish company will replace Hong Kong-based firm, CK Hutchison, after Trump claimed strategic waterway was controlled by China.

Danish firm Maersk will temporarily operate two ports on the Panama Canal after a court ruled that contracts given to a Hong Kong firm were unconstitutional.

The Panama Maritime Authority (AMP) announced the changes on Friday, a day after the Central American country’s Supreme Court invalidated port contracts held by Hong Kong-based firm CK Hutchison.

The court ruling followed repeated threats from United States President Donald Trump that his country would seek to take over the waterway he claimed was effectively being controlled by China.

According to the court ruling that annulled the deal, CK Hutchison’s contract to operate the ports had “disproportionate bias” towards the Hong Kong-based company.

On Friday, the AMP said port operator APM Terminals, part of the Maersk Group, would take over as the “temporary administrator” of the Balboa and Cristobal ports on either end of the canal.

Maersk takes over from the Panama Ports Company (PPC) – a subsidiary of CK Hutchison Holdings – which has managed the ports since 1997 under a concession renewed in 2021 for 25 years.

The canal, an artificial waterway, handles about 40 percent of US container shipping traffic and 5 percent of world trade. It has been controlled by Panama since 1999, when the US, which funded the building of the canal between 1904 and 1914, ceded control.

Washington on Friday welcomed the decision, but China’s Foreign Ministry spokesman Guo Jiakun said Beijing “will take all measures necessary to firmly protect the legitimate and lawful rights and interests of Chinese companies”.

For its part, PPC said the ruling “lacks legal basis and endangers … the welfare and stability of thousands of Panamanian families” who depend on its operations.

Tens of thousands of workers dug the 82km- (51-mile-) passageway that became the Panama Canal, allowing ships to pass from the Pacific Ocean to the Atlantic without having to travel around the northernmost or southernmost ends of the Americas.

Panama has always denied Chinese control of the canal, which is used mainly by the US and China.

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.