Hutchison Intensifies Criticism of Panama in Port Terminal Dispute

Panama Ports Company, the operating subsidiary of CK Hutchison for the terminals in Balboa and Cristobal, increased its criticism of Panama for what it calls “its improper takeover” of the terminals. In a new statement issued on March 16, it repeatedly asserts, “the Republic of Panama continues to downgrade its reliability as a destination for foreign investment through its latest and ongoing conduct.”

The company has repeatedly made accusations against Panama, saying it “disregarded the rule of law,” after the country’s Supreme Court ruled the concession for the operation of the port terminals unconstitutional. It also asserts that Panama had conducted a “radical occupation, raid and seizure of the facilities and property” of the company.

Panama Ports Company reports that Panama did not file a response by the original deadline for the international arbitration it started against the country. The company has said it is seeking at least $2 billion in damages for the termination of its concession and seizure of the operations. It says the International Chamber of Commerce Court of Arbitration had set Friday, March 13, as the original deadline for a response. It says Panama is seeking a partial extension by saying it was not prepared, had not hired lawyers, and needed time to review and prepare a plan for the arbitration. They accuse Panama of trying to slow down the arbitration.

The company asserts that the seizure was the culmination of a year-long effort by Panama. It asserts that Panama ignored its requests for discussions to find a solution. It claims that the state “signaled to the domestic press to muffle the communications” of the company. Furthermore, it now asserts, “Panama may eventually simply invent and announce more unfounded attacks in the arbitration.”

It also writes that the state carried out “radical executive actions.” It claims Panama improperly seized investor documents, including raiding a private document storage facility. The company is demanding access to its archives, computers, and proprietary and legally protected documents. It claims Panama has said the company can ask for the return of the documents in the international arbitration.

The written accusations from the company came after there were reports that the Chinese government had also begun retaliatory actions. The state-owned shipping company COSCO announced it was suspending operations at the Port of Balboa. The Chinese government has also repeatedly questioned future foreign investment in Panama and reportedly cautioned Chinese companies from doing business in Panama.

There are also reports that China has launched an increased Port State inspection program against Panama-flagged ships arriving at Chinese ports. The South China Morning Post writes that sources in the shipping industry told it that China started the effort in March, which the paper says is to “ramp up pressure on the country.”

“Panama has caused drastic and mounting damages,” writes the Panama Ports Company. It asserts that it reserves the rights for further recourse. Previously, it had stated it could also seek damages from Maersk’s APM Terminals or any other companies that interfered with its operations.

Panama has responded, saying that the port terminals are fully operational after it awarded temporary agreements. APM Terminals and MSC Mediterranean Shipping Company’s Terminal Investment Limited each agreed to operate one of the ports at the terminus of the Panama Canal.