Panama government slammed for forceful port takeovers

Officials and experts in the Hong Kong Special Administrative Region have condemned the Panamanian government's forceful takeover of two key ports on the Panama Canal operated by Hong Kong-based conglomerate CK Hutchison, stating that the move severely trampled upon the international trading order and rule of law.

On Monday, Panama took over control and operations of the Balboa and Cristobal ports from Panama Ports Co, a subsidiary of CK Hutchison. The move follows a January ruling by the Central American country's Supreme Court, which said the contract between PPC and the Panamanian government on operating the two ports was unconstitutional, effectively stripping the company of its legal standing to run the terminals.

Hong Kong Secretary for Commerce and Economic Development Algernon Yau Ying-wah lodged a protest on Tuesday with Panama's consul general in the city against the takeover.

The HKSAR government said in a statement that the takeover was "forceful" and "an act of undermining the spirit of the contract", and also expressed its "strong dissatisfaction" with and "condemnation" of Panama's move.

A government spokesperson reiterated that the Supreme Court's ruling "disregarded facts and breached faith". The statement reaffirmed that the affected Hong Kong firm had over the years invested heavily in Panama and generated a substantial number of local jobs. As the relevant company had initiated and commenced arbitration proceedings, the forceful takeover gravely damaged the legitimate rights and interests of the Hong Kong enterprise and undermined the spirit of contracts, the spokesperson said.

The spokesperson emphatically added that the HKSAR government will "firmly support and safeguard the lawful rights and interests of Hong Kong enterprises overseas".

On Tuesday, Chinese Foreign Ministry spokeswoman Mao Ning described the country's stance on the issue as "clear and explicit" at a news conference.

She added that China will "resolutely defend the legitimate rights and interests of its enterprises".

In a separate statement on Tuesday, CK Hutchison said that PPC had ceased operations at the two ports on Monday amid a takeover it considered "forceful" and "unlawful".

According to PPC, the Panamanian government's representatives arrived "uninvited" at the ports on Monday and told PPC personnel on site that the concession "no longer exists" and operations must halt immediately.

Earlier this month, CK Hutchison confirmed that PPC had decided to take Panama to arbitration proceedings. PPC and CK Hutchison will continue to consult with legal advisers regarding the ruling and forceful takeover, the purported termination of PPC's concession and all available avenues of recourse including additional national and international legal proceedings against the Republic of Panama to reserve all rights and recourse against them, the statement said.

Lau Siu-kai, a consultant to the Chinese Association of Hong Kong & Macao Studies, told China Daily that Panama's move amounted to "a blatant attempt to seize private property under the guise of law", which he believes was carried out under the "powerful intimidation and coercion" of the United States. He also expressed confidence that CK Hutchison would file a lawsuit against Panama with support from the central authorities.

The incidents will reinforce the understanding that "enterprises have nationality" and that enterprises must rely on the State to protect their own interests, Lau said, adding that the case will also encourage Hong Kong's enterprises to better align their interests with national interests.

Nicholas Chan Hiu-fung, a lawmaker representing the legal sector and also an HKSAR deputy to the National People's Congress, China's top legislature, described the Panamanian government's action as a blatant case of administrative power overriding legal norms. He said it would have far-reaching implications, compelling international shipping companies and traders to reassess the risks of overreliance on the shipping route.

Contact the writers at wanqing@chinadailyhk.com