Seatrade Maritime: Hutchison threatens Maersk over Panama ports operations

CK Hutchison has warned Maersk’s terminal operation arm APM Terminals against taking over operations at Balboa and Cristobal ports as the legal fallout of a Panama Supreme Court ruling continues.

At the end of January, Panama’s Supreme Court ruled unconstitutional the law establishing the port concessions for CK Hutchison subsidiary Panama Ports Company (PPC) covering the ports of Balboa and Cristóbal.

If the ruling is published and renders PPC’s operations at the ports illegal, operation of its terminals would be impossible, said CK Hutchison, and so the continued operation of the ports rests on the Republic of Panama and its Supreme Court.

Panama authorities said in the immediate aftermath of the court ruling that operations at the terminals would be temporarily taken over by APM Terminals, and APM Terminals has indicated its willingness to take over operations.

CK Hutchison said in an update on 12 February that it had notified Maersk Group that any assumption by APM Terminals of operations at the ports without the agreement of CK Hutchison would lead to damages to the company and its subsidiary, resulting in recourse against APM Terminals.

CK Hutchison warned third parties “against colluding in any unlawful action relating to the operation of the two terminals”.

The latest legal response from CK Hutchison — following its announcement that it had begun arbitration proceedings — has been to notify Panama of a dispute under an investment protection treaty in order to protect its rights and interests. The company said it considers the Supreme Court’s decision ruling the concessions unconstitutional as unlawful, and that it continues to invite consultations to resolve the situation.

“Although the determination is yet to be published or come into force, the Panamanian State has advanced steps toward a forced exit of PPC and transition of the port sector, with no clarity as to operational plans,” said CK Hutchison.

PPC has previously claimed it has been subject to a 12-month campaign by the Panamanian state targeting the company and its concessions. PPC has said that the Panamanian state had “declared and broadly deployed steps to take over the operations of PPC.”

“The Panamanian State has given PPC no assurances or clarity regarding PPC’s operations at the ports of Balboa and Cristobal and continues to push toward a forced stoppage or takeover of PPC’s operations, causing further disruption and damage,” said CK Hutchison.

“If the publication of the Ruling results in the termination of PPC’s concession, the immediate result would be to render PPC’s operation of its terminals at the ports of Balboa and Cristobal impossible. Accordingly, at this stage, continued operation of the ports depends solely on actions of the Panama Supreme Court and the Panamanian State, which actions are of course wholly outside the control of CKHH, HPH and PPC,” said CK Hutchison.