Panama voids Hong Kong-based firm's canal port contracts

52 minutes agoAmy WalkerandSuranjana Tewari,Asia Business CorrespondentReutersPanama's Supreme Court has annulled contracts allowing a Hong Kong-based company to operate container ports on the Panama-canal" class="entity-link entity-location" data-entity-id="8414" data-entity-type="location">Panama Canal.The ruling comes a year after US President Donald Trump claimed China was "operating the Panama-canal" class="entity-link entity-location" data-entity-id="8414" data-entity-type="location">Panama Canal" - the main shipping link between the Atlantic and Pacific oceans - in his inaugural speech.The court found that laws allowing the firm to operate the ports were "unconstitutional", but PPC said the ruling "lacks legal basis".Trump has made repeated claims that the central American canal is under Chinese control. During his address last January, he said: "China is operating the Panama-canal" class="entity-link entity-location" data-entity-id="8414" data-entity-type="location">Panama Canal and we didn't give it to China. We gave it to Panama and we're taking it back".The following month, US Secretary of State Marco Rubio also demanded that Panama make "immediate changes" to what he called the "influence and control" of China over the canal.Panama has previously rejected the US government claims and President Jose Raul Mulino has said the canal "is and will remain" in his country's hands.There is no public evidence to suggest China exercises control over the canal, although Chinese companies have a significant presence there.But Beijing's tighter political control over Hong Kong in recent years has changed how the company is viewed internationally. Its global assets - which include ports and logistics hubs - are now often seen through the lens of wider concerns about China's influence.Against a backdrop of rivalry between the US and China over global trade routes, as well as the Trump administration's focus on US dominance over the western hemisphere, the ruling on Thursday is likely to be seen as a victory for Washington.In a statement published on its website, Panama's Supreme Court said that after "extensive deliberation", it had found laws which underpin a concession contract between the state and PPC at the ports of Balbao and Cristobal were unconstitutional.In response, PPC said the new ruling lacks legal basis, and "jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity".Its statement added that it had invested more than $1.8bn (£1.3bn) in infrastructure and technology since it began operating the ports in 1997.On Friday, Chinese foreign ministry spokesperson Guo Jiakun said that the country would take "all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies".Hong Kong's government also said it firmly rejected the ruling on Panama ports.The Panamanian court's decision could disrupt plans by CK Hutchison to sell its interests in ports worldwide to a consortium led by US investment firm BlackRock and shipping group MSC under a deal worth $22.8bn. Both firms have been contacted for comment by the BBC.The sale was widely seen as an attempt by CK Hutchison to reduce political risk in sensitive locations while raising money from valuable assets.Trump had previously hailed the plans, that would place key assets under majority US ownership, while the Chinese government had criticised them for not being in the national interest.Markets reacted quickly to the court decision.CK Hutchison's shares fell 4.6% in Hong Kong trading, pushing down the Hang Seng Index down by more than 2% - a sign of both the company's importance to the market and growing investor concern about political risk.Up to 14,000 ships use the 51-mile (82km) Panama-canal" class="entity-link entity-location" data-entity-id="8414" data-entity-type="location">Panama Canal each year as a shortcut between the Atlantic and Pacific oceans.The waterway, which handles about 5% of global maritime trade volume, is operated by the Panama-canal" class="entity-link entity-location" data-entity-id="8414" data-entity-type="location">Panama Canal Authority, an agency of the Panamanian government.From October 2023 to September 2024, China accounted for 21.4% of the cargo volume transiting the canal, making it the second-largest user after the US.