The Supreme Court of Panama recently ruled that a subsidiary of Hong Kong’s Cheung Kong Holdings operating a concession at the Panama Canal ports was unconstitutional. This news has provoked the Chinese Communist Party (CCP), and Beijing has warned Panama that it will face severe consequences. Panamanian President Jose Raul Mulino responded on Thursday (February 5) by stating that his country will not allow itself to be threatened by any nation.
Mulino expressed his support for the Supreme Court’s verdict at a press conference on Thursday, emphasizing that this is the final ruling, and he anticipates that the situation will not escalate. He also declared that the concession rights for the two ports at the Panama Canal, operated and held by Cheung Kong Holdings’ subsidiary for nearly thirty years, will not be granted to any single company in the future.
Last week, the Panama Supreme Court ruled that the contracts held by Cheung Kong Ports through its subsidiary, Panama Ports Company, for operating the two ports in Panama were invalid. The court deemed these contracts granting exclusive privileges and tax exemptions to the company in violation of the Panamanian Constitution.
On Tuesday, the CCP warned Panama that there would be a “heavy price” to pay for the Supreme Court’s decision. The CCP’s Hong Kong and Macau Affairs Office described the ruling as “absurd.”
In response to the Chinese government’s condemnation, Mulino stated, “Panama is a dignified country and will absolutely not allow itself to be threatened by any nation.”
It is currently unclear when the Supreme Court’s ruling in Panama will be enforced. Mulino mentioned that before the court’s decision takes effect, the Panamanian Maritime Authority will collaborate with Cheung Kong Ports’ subsidiary, Panama Ports Company, to ensure the continued operation of the ports.
Mulino proposed that once the concession rights are officially terminated, a local subsidiary of the Danish logistics company A.P. Moller-Maersk will operate these ports during the transitional phase until new concession rights can be tendered and awarded.
He further stated, “The Panamanian government will decide on the concession plan at a later time.”
Cheung Kong Holdings expressed opposition to the Panamanian court’s ruling on Wednesday. Its subsidiary, Panama Ports Company, has initiated international arbitration proceedings against Panama, a case that may take several years to resolve.
The Supreme Court’s ruling in Panama is seen as a victory for U.S. President Trump, who has been striving to minimize China’s influence on this strategic waterway and has even suggested that the United States should reclaim the canal from Panama.
U.S. Secretary of State Mike Pompeo stated in February last year, “As President Trump has articulated, when we handed the canal over, we handed it to Panama, not to Communist China.” Pompeo highlighted, “We have treaty obligations to protect it if it’s attacked, but we have to pay our navy to get through there. So, I’m frustrated by those things.”
(This article references reports from the Associated Press and Reuters)