Tensions Flare at Panama Canal: CK Hutchison Alleges Forced Evictions and Threatens Legal Action

The Hong Kong-based CK Hutchison Group has accused the Panamanian government of threatening its employees with criminal prosecution if they failed to vacate two strategic ports along the Panama Canal. This incident sits at the heart of a convoluted legal battle, deeply intertwined with the geopolitical maneuvers between Beijing and Washington.

Allegations of Forced Eviction and Legal Warnings

On Monday, the Panamanian government published a Supreme Court ruling in the Official Gazette annulling the core port concessions held by Panama Ports Company (PPC) - a subsidiary of CK Hutchison. The ruling effectively terminates nearly three decades of operations by PPC at the Balboa and Cristobal terminals.

CK Hutchison stated that Panamanian government forces carried out a "direct physical entrance" to evict PPC staff, while simultaneously prohibiting them from contacting their parent company. In response, CK Hutchison declared that Panama’s cancellation of the contracts and the issuance of temporary operating licenses to Maersk and Mediterranean Shipping Company (MSC) are unlawful acts. The group is currently preparing for international litigation.

In a formal disclosure to the Hong Kong Stock Exchange, the conglomerate emphasized:

"CKH considers the ruling, the executive decree, the purported termination of PPC’s concession, and the takeover of the terminals to be unlawful."

The group also issued a stern warning regarding the transition process:

"The actions by the Panama State also raise serious risks to the operations, health and safety at the Balboa and Cristobal terminals."

Following the announcement, the Hong Kong government expressed deep dissatisfaction in a separate statement on Tuesday, urging Panamanian authorities to respect the spirit of the contracts and ensure a fair business environment.

Interim Management by Maersk and MSC

From the Panamanian side, the Panama Maritime Authority (AMP) issued a decree to take control of both ports to ensure supply chain continuity. The government has approved two temporary concessions, lasting up to 18 months, with the AMP:

●    APM Terminals Panama (a Maersk subsidiary) will take over operations at the Port of Balboa.

●    TIL Panama (under the MSC Group) will manage operations at the Port of Cristobal.

Rebutting the allegations from CK Hutchison, Panamanian President Jose Raul Mulino asserted that these temporary contracts are a legal instrument and fully respect property rights. In a televised address on Monday afternoon, he stated:

"Let me be clear, this does not imply an expropriation of those assets, but rather their use to ensure the operation of the ports until their real value is determined for the corresponding actions. I repeat, this is not an expropriation."

Mulino added that this interim arrangement would remain in place while the state develops a new "competitive" concession framework for a future tender, " with the humility not to repeat the mistakes of the past." The President pledged that neither port operations nor the jobs of the workers would be affected during this transition.

Geopolitical Fallout and a $23 Billion Deal at Risk

The ruling, which originated in late January, comes amid an intensifying race for geopolitical influence between the United States and China over global trade routes. Observers view the move as a strategic victory for Washington, especially given President Donald Trump’s consistent policies aimed at curbing Chinese presence at the Panama Canal - a vital maritime chokepoint that handles approximately 5% of global maritime trade.

Beyond the political sphere, this disruption carries immense financial risks. It threatens to severely disrupt a $23 billion deal that CK Hutchison has been negotiating to sell a global portfolio of ports (including the Panama terminals) to a consortium led by BlackRock and MSC itself.

As of now, the Panamanian President’s office, as well as representatives from Maersk and MSC, have declined to offer official comments on the matter.

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Source: Phaata.com (According to Reuters)

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