Panama’s president categorically denied on Thursday the allegations that government officials failed to respond to an arbitration lawsuit filed by a Hong Kong-based company contesting the takeover of operations at two key Panama Canal ports. Emphasizing the country’s commitment to defending its position, the president assured that Panama would mount a vigorous legal defense in the ongoing dispute.
The conflict originates from a January ruling by a Panamanian court that invalidated the contract allowing Panama Ports Company (PPC), a subsidiary of the Hong Kong conglomerate CK Hutchison, to operate the Pacific port of Balboa and the Atlantic port of Cristobal. This judicial decision followed heightened tensions fueled by remarks from then-US President Donald Trump, who accused China of effectively controlling the Panama Canal, a strategic waterway vital to global trade and a flashpoint in the broader geopolitical rivalry between Washington and Beijing.
In response to the court’s verdict, PPC initiated arbitration proceedings through the International Chamber of Commerce (ICC), seeking compensation exceeding $2 billion for what it describes as an unlawful seizure of its assets. Recently, PPC accused Panama’s government of disregarding the arbitration process, claiming that the country had neither engaged legal counsel nor prepared a defense strategy, instead requesting additional time to formulate a plan.
Addressing these accusations, President Jose Raul Mulino dismissed them as both “scandalous” and untrue. He clarified that Panama had indeed appointed international legal experts to represent the nation’s interests robustly in the arbitration. Mulino also highlighted the challenging timeline, noting that Panama was given only two days to respond to the proceedings, which necessitated a request for an extension to adequately prepare its case.
The dispute has further complicated Panama’s diplomatic relations, especially given China’s warnings of retaliatory measures following the court’s January ruling. Meanwhile, CK Hutchison has escalated its legal efforts, filing additional petitions urging Panamanian authorities to reconsider the executive actions that resulted in the takeover and alleged confiscation of its property at the canal ports.
Throughout the controversy, Panama has consistently denied any Chinese control over the Panama Canal, an 80-kilometer (50-mile) waterway that serves as a crucial maritime passage primarily used by both the United States and China. The government maintains that the canal remains under Panamanian sovereignty, despite the complex international interests involved.
