Container ship Maersk El Alto is guided by tugboats at Panama Ports Company. PPC said in a statement that Maersk broke a long-term contract by siding with the Panamanian government to help remove PPC from its operations at the Balboa port and replace it with a Maersk-affiliated operator.Aris Martinez/Reuters
Hong Kong-based conglomerate CK Hutchison’s Panama business said it would seek arbitration over Maersk’s takeover of two strategic ports near the Panama Canal, which are at the centre of a legal battle between Beijing and Washington.
Panama Ports Company (PPC) – which is already seeking an arbitration ruling against Panama – said in a statement that Maersk broke a long-term contract by siding with the Panamanian government to help remove PPC from its operations at the Balboa port and replace it with a Maersk-affiliated operator.
“Contrary to the contract, Maersk undermined the agreement and aligned itself with the Republic of Panama in connection with its state-led campaign against PPC and a scheme to replace it through a takeover that installed new port operators,” PPC said in a statement.
It said the arbitration would take place in London.
Maersk, one of the world’s largest shipping groups and a major ports operator, rejected the accusations. “Maersk does not believe it is liable for the claims and will address them in the appropriate forum,” the Danish company said in a statement to Reuters.
The Panamanian government did not respond immediately to a request for comment.
CK Hutchison’s Hong Kong-listed shares rose 3.54 per cent, as the Hang Seng Index gained 2.77 per cent.
Court ruling invalidates PPC Concession
Panama’s Supreme Court in late January invalidated the legal framework supporting the 1997 concession granting PPC the right to operate the Pacific-facing Balboa and Atlantic Cristobal terminals on either side of the Panama Canal.
Panama’s government then awarded temporary contracts for subsidiaries of Maersk and the Mediterranean Shipping Company (MSC) to run Balboa and Cristobal, respectively. PPC had previously said canceling the contracts and awarding the temporary licences was unlawful.
PPC said in late March it had widened its international arbitration claim against Panama and its damages claim had risen to more than US$2-billion. It said its claim against Maersk is separate from and without prejudice to its ongoing efforts “to hold Panama accountable for its anti-contractual and anti-investor conduct.”
The Supreme Court ruling to annul the contract followed extended pressure from the Trump administration, which said it wants to “take over” the Panama Canal. The administration said it wanted to curb what it calls Chinese influence over the key waterway, which carries about 5 per cent of global maritime trade.
Beijing has accused the U.S. of “bullying tactics” and called on foreign governments to provide a fair trade environment.
The dispute also complicated CK Hutchison’s planned US$23-billion sale of a majority stake in its global ports business to a consortium led by BlackRock and MSC.