China warns Panama as Hong Kong firm contests ruling on canal ports 

Hong Kong firm CK Hutchison has announced the start of international arbitration proceedings against Panama after the country’s top court annulled its contract to operate two ports on the strategic Panama Canal amid pressure from the United States.

The announcement on Wednesday comes as the Chinese government’s Hong Kong and Macau Affairs Office (HKMAO) said that Panama’s ruling against CK Hutchison subsidiary – the Panama Ports Company – was “absurd”, “shameful and pathetic”.

The Panamanian court had “ignored the facts, breached trust, and seriously damaged the legitimate rights and interests of enterprises in Hong Kong, China”, the HKMAO said on Tuesday.

“China has sufficient means and tools, and sufficient strength and ability to defend a fair and just international economic and trade order,” the office said.

“Heavy prices both politically and economically will surely be paid” by Panama if it insists on going ahead with the ruling, the office warned.

The decision last week by Panama’s Supreme Court to annul the Hong Kong firm’s contract to operate two ports on the canal followed after US President Donald Trump threatened to seize control of the crucial passageway that connects the Pacific and Atlantic oceans, claiming the waterway was effectively under Chinese control and therefore a security threat to Washington.

Without naming the US, the Chinese statement further said that “some country has … used bullying tactics to force other countries to obey their will,” and that Panama had “willingly succumbed” to hegemonic power.

John Moolenaar, chairman of the US House Select Committee on China, called the Panama court’s decision a “win for America”.

The Panamanian government did not immediately respond to a request for comment regarding China’s warning.

CK Hutchison said in a statement to the Hong Kong Stock Exchange on Wednesday that its board of directors “strongly disagrees with the determination and corresponding actions in Panama”.

“The group continues to consult with its legal counsel and reserves all rights, including recourse to additional national and international legal proceedings in the matter,” the company said.

Following the court ruling last week, the Panama Maritime Authority (AMP) announced that the Danish firm Maersk will temporarily take over the operation of two ports previously operated by the Hong Kong firm’s subsidiary.

The canal handles about 40 percent of US container traffic and 5 percent of world trade. The canal’s construction was paid for by the US, which operated it for a century before turning control over to Panama in 1999.