The transaction in which Hong Kong’s richest man Li Ka-shing’s CK Hutchison Holdings plans to sell its overseas port operations to an international consortium has encountered new uncertainty, as the Panama Supreme Court has ruled Hutchison’s operation contracts for two strategic ports unconstitutional.
According to Bloomberg and AFP, the Panama Supreme Court announced the ruling on its Instagram account on the 29th local time. The contracts granting CK Hutchison operating rights to two ports on the Panama Canal were deemed unconstitutional, delivering a blow to the group’s ongoing plan to sell its port business.
CK Hutchison may apply for clarification of the Panama Supreme Court’s decision but cannot appeal. The company can also seek international arbitration.
These two ports are currently at the center of the US-China power struggle. Early last year, US President Trump claimed the Panama Canal had fallen under Chinese control and vowed to reclaim all US assets. In March, CK Hutchison announced it would sell 43 overseas port operations—including the two Panama Canal ports—for US$22.8 billion (RM89.617 billion) to an international consortium made up of US asset management giant BlackRock and Italy’s Aponte family’s Mediterranean Shipping Company.
The move angered Beijing, prompting China’s State Administration for Market Regulation to investigate and review the transaction. CK Hutchison subsequently stated that it would bring in Chinese state-owned COSCO Group as part of the buying consortium, and would only proceed with the transaction after obtaining approval from Chinese regulators and authorities.
It was also the involvement of COSCO Group that slowed progress on the port sale plan. Just last week, it was reported that CK Hutchison planned to split the deal into several parts and use different ownership structures to keep negotiations ongoing.
CK Hutchison has been operating the two Panama ports since 1997, with the contract renewed in 2021.
Panamanian President Mulino has repeatedly stressed that the canal should be operated by Panama and that the nation has complete sovereignty over it.
Last year, Panama’s Comptroller General Flores filed a lawsuit against Hutchison’s contract renewal, alleging that the contract cost Panama more than US$1 billion (RM3.931 billion) in lost tax revenue, and that Hutchison’s Panama port company did not obtain proper approval when renewing the contract.