In a dramatic move, the Panamanian government has issued a decree ordering the occupation of two key ports at the entrances of the Panama Canal. This action was triggered by a final Supreme Court ruling that declared the operating concession held by Hong Kong-based company CK Hutchison unconstitutional.
Decree and Occupation Details
The decree, announced on Monday, authorizes the Panama Maritime Authority to occupy the ports for "reasons of urgent social interest." The occupation encompasses all movable property within or outside the Balboa and Cristóbal terminals, including cranes, vehicles, computer systems, and software.
Background of the Ports Saga
The ports have been operated by Panama Ports Company (PPC), a subsidiary of CK Hutchison, since 1997, when the state awarded it the concession to manage these strategic locations at the Pacific and Atlantic entrances to the canal. However, in January, Panama's Supreme Court struck down the law approving the concession contract and invalidated an extension granted in 2021, leaving the port operations without legal basis.
Geopolitical Tensions
This situation is part of a broader rivalry between the United States and China, with Panama caught in the middle. Last year, U.S. President Donald Trump accused China of "running the Panama Canal," highlighting the strategic importance of these ports. CK Hutchison was slated to sell the ports to a consortium including U.S. investment firm BlackRock, but the Chinese government intervened to halt the deal.
Transition and Legal Proceedings
Panama's government has assured continuity of port operations and job stability, announcing that APM Terminals, a subsidiary of the Danish group A.P. Moller-Maersk, will temporarily assume administration while a new contract is awarded. Meanwhile, CK Hutchison Holdings has initiated arbitration proceedings against Panama under the International Chamber of Commerce rules and threatened to sue APM Terminals if it operates the concession. APM Terminals responded that it is not a party to the legal proceedings.
A PPC spokesperson indicated last week that the company is seeking an agreement with the Panamanian government to continue operating, but the outcome remains uncertain as tensions escalate.
