The Chinese company operating ports at the Panama Canal has filed for arbitration after the country’s Supreme Court voided its operating contract, claiming it was unfairly targeted by the country over the past year.
Panama Ports Company, a unit of Hong Kong-based CK Hutchison (0001.HK), said Wednesday that it has commenced arbitration proceedings against Panama over its concession contract at the International Chamber of Commerce in Paris.
“The commencement of arbitration by PPC follows a campaign by the Panamanian State specifically targeting PPC and its concession contract spanning a year that has been marked by a range of abrupt actions by the Panamanian State culminating in grave and imminent further damage to PPC, while similar port sector contracts have
not been targeted,” the company said in a statement. It did not provide details, or say why it was targeted.
Earlier this week Panama’s Supreme Court ruled that the ports contract was unconstitutional. The Panama Canal Authority has chosen APM Terminals, a unit of Maersk (MAERSK-B.CO) of Denmark, to operate the ports of Balboa and Cristobal until a contract can be re-bid. Published reports said the authority has held discussions with a number of global port operators. The ports process approximately 4 million twenty foot equivalent units TEUs) of cargo combined annually.
The conflict over port operations surrounding the waterway comes after President Donald Trump said that the United States should take back control of the Canal, and that China’s presence threatens U.S. security there. The canal is a critical route for merchant and military vessels moving between the Atlantic and Pacific oceans.
The arbitration filing follows what PPC described as extensive efforts spanning a year to avoid disputes.
“While diligently carrying out port operations and cooperating with
the Panamanian State in many ways, PPC also has consistently advised through diverse communications its concerns regarding the State campaign as it has unfolded and sought clarity and consultations to avoid the necessity of arbitration, to no avail.
“Instead, over the past year, since the start of the present year, and even through recent days, the Panamanian State routinely disregarded communications, efforts to consult, and requests for clarity.”
PPC claimed that Panama has breached existing contract law and it is seeking unspecified damages in the dispute. It added that Panama sought to “destroy” the concession contract, which was the result of a transparent international bidding process.
It said the decision by the Supreme Court, which has yet to be published, was itself unconstitutional, and “diametrically opposed to previous decisions” issued by the court regarding contracts similar to the PPC pact.
PPC also said that since the ruling, which has yet to take effect, Panamanian officials have made unexpected site visits and demanded access, “systematizing and executing” a port transition “plan” through “coordinated actions” of state authorities.
The company said it continues to manage port operations, and reiterated its invitation for clarity and consultations to resolve the matter.
FreightWaves has reached out to the Panama Canal Authority for comment.
Find more articles by Stuart Chirls here.
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