Panama’s top court has ruled against Hong Kong-based CK Hutchison, saying a concession held by a subsidiary of the firm to operate ports at either end of the Panama Canal was unconstitutional.
The outcome is widely seen as a victory for the Trump administration’s security ambitions in the Western Hemisphere, with the U.S. seeking to counter China’s strategic influence in the region.
In a brief statement published late Thursday, the Supreme Court of Panama said the terms under which Panama Ports Company (PPC), a subsidiary of CK Hutchison, runs the port of Balboa on the Pacific Coast and Cristóbal on the Atlantic violated the country’s constitution and were no longer valid.
The court said it came to its decision after “extensive deliberation” but did not provide further details on the next steps.
It also raises questions about the future ownership of some Panama Canal operations, including CK Hutchison’s proposed $23 billion sale of 43 ports across the globe to a consortium led by BlackRock and Mediterranean Shipping Company (MSC).
BlackRock declined to comment on the ruling. CK Hutchison and MSC did not immediately respond to a request for comment.
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The decision comes roughly one year after U.S. President Donald Trump threatened to seize control of the Panama Canal, saying the critically important waterway was “vital to our country” and claiming, “it’s being operated by China.”
The Trump administration has made blocking China’s influence over the Panama Canal one of its top priorities.
“The Monroe Doctrine is a big deal but we have superseded it by a lot, by a real lot. They now call it the Donroe Doctrine,” Trump said earlier this month, shortly after U.S. troops conducted an operation to capture Venezuela’s president Nicolás Maduro on Jan. 3.
“Under our new national security strategy, American dominance in the Western Hemisphere will never be questioned again,” Trump said.
China pledges to take necessary measures
PPC, which has held the contract to operate the ports of Balboa and Cristóbal since the 1990s, said on Friday that the decision was inconsistent with the relevant legal framework.
“The new ruling, based on available information, lacks legal basis and jeopardizes 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 but also the rule of law and legal certainty in the country,” PPC said in a statement.
Shares of CK Hutchison closed 4.6% lower on Friday as Hong Kong’s Hang Seng index slipped over 2% for the session.
China also swiftly responded to the ruling from Panama’s top court. A spokesperson for China’s Ministry of Foreign Affairs said on Friday that the decision was “contrary to the laws governing Panama’s approval of the relevant franchises, and that the companies will reserve all rights, including legal proceedings.”
The spokesperson added that Beijing would take all necessary measures to safeguard the legitimate rights and interests of Chinese companies.
— CNBC’s Anniek Bao contributed to this report.
Source: CNBC