Panama Occupies Hutchison’s Terminals After Court Publishes Decision
The Supreme Court of Panama published its decision annuling the concession for the port terminals in Balboa and Cristobal to CK Hutchison, and immediately afterward, the Government of Panama moved to “occupy” both operations and take control of all of the equipment required to run the operations. The Government said in its statement that it will guarantee the operations of the ports until a new tender can be completed.
The publication of the decision in the court’s Official Gazette finalized its ruling that the law establishing the concession to the Panama Ports Company in January 1997 was unconstitutional. The court combined two suits into a single case and also declared the June 2021 25-year extension to be unconstitutional. It annulled the concession in a decision related to the management of national resources.
The government’s decree said the Panama Maritime Authority (AMP) would temporarily occupy the operations due to “urgent social interests.” The decree said AMP would determine the equipment required to maintain the operations, including cranes, vehicles, computers, programs, software, and other property, and take control of the property. It notes that it was not a definitive loss of ownership of the movable property. The government said it would also provide stability for the workers at the two ports.
Hutchison’s Panama Ports Company had predicted that the operations would be halted. It said Panama owned the land, but that all the equipment was its property. It had previously said that the government did not have a plan for the transition.
The government reported that a presidential advisor had met with the Panama Ports Company and notified them of the takeover of the facilities. It said the process would include the steps toward establishing two new concessions, which would take up to 18 months, and that there would be a different operator for each port.
Previously, it had been reported that Maersk’s AMP Terminals would operate the two port terminals located at each terminus of the Panama Canal, and the company confirmed its willingness to assist the government. Media reports today indicate that AMP will operate one terminal in the interim and that possibly MSC’s Terminal Investments Ltd. (TiL) would operate the other terminal.
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Hutchison had previously threatened to sue AMP if it attempted to take over the operations. Separately, it also said it would start arbitration with the International Chamber of Commerce. It did not publicly specify the amount of damages, but media reports in Panama are saying the company is seeking $2 billion. Late last week, a spokesperson for the Panama Ports Company said it had proposed negotiations with the Panama government.
Maintaining the operations at Balboa and Cristobal is critical to Panama. The two terminals handle nearly 4 million TEU annually, representing more than a third of the containers moved in Panama. The terminals also provide important services to vessels transiting the Panama Canal.
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