Panama's President Comments on Arbitration Dispute with PPC

Panamanian President José Raúl Mulino rejected last Wednesday the 'pronouncement' of PPC, insisting that 'Panama is a state of law and respects the decisions of the Judicial Branch'. On Thursday, President José Raúl Mulino stated that the company Panama Ports Company (PPC), a subsidiary of the Hong Kong-based CK Hutchison, has 'every right' to file for arbitration against the country after the operator announced it following the Supreme Court's decision to declare the concession contract 'unconstitutional'. The contract concerned two ports located near the Canal. 'I don't want to sour this milk (worsen the problem) with back-and-forth arguments (verbal confrontations) because for Panama, the transition of these ports is very significant and delicate,' argued Mulino. This arbitration comes after the Supreme Court declared on January 29th the 1997 contract that granted PPC a 25-year concession for the ports of Balboa (Pacific) and Cristóbal (Atlantic) 'unconstitutional', as well as the amendments and the automatic extension of 2021. These were effectively nullified by the ruling, which responded to two lawsuits filed by Panama's Comptroller General, Anel Flores. Mulino again rejected that his Government had been 'harassing or threatening the Chinese company for a year', arguing that during that period, 'conversations were held in Panama and outside Panama with them (the operator) in a respectful, but very frank manner'. On February 3rd, the Hong Kong-based operator announced the initiation of an arbitration against the Republic of Panama at the International Chamber of Commerce (ICC) 'under the concession contract' and in accordance with the rules of that body, based in Paris. 'Given the terms in which that authority of Hong Kong and Macao referred to what happened regarding the Court's ruling, yesterday the Ministry of Foreign Affairs issued a statement because, unlike China, the Panamanian Executive Branch does not interfere in the justice or the courts of our country,' stated Mulino. The day after the Supreme Court's decision, the Panamanian Government announced that APM Terminal Panama, a subsidiary of the AP Moller-Maersk group, would temporarily take over the operation of both ports once PPC's exit is finalized and for the time it takes to hold a new 'open and transparent' concession bidding. 'And, he continued, 'there is a big difference between an economy governed by the Central Committee of the Chinese Communist Party and the democratic institutionalism that governs in Panama.' 'PPC, or the aforementioned Hutchison conglomerate, has every right to arbitration.' Although he did not refer to the United States, since the beginning of his second term, U.S. President Donald Trump has threatened to take control of the Panama Canal due to China's supposed influence over this key infrastructure for world trade. The beginning of the arbitration announced by PPC occurred, according to the company, 'following a campaign by the Panamanian state specifically directed against PPC and its concession contract, through a year marked by a series of abrupt actions by the Panamanian state, which culminated in serious and imminent additional damages to PPC, while similar contracts in the port sector have not been targeted.' 'And, perhaps, for China it would have been the best Supreme Court in the world,' he added. 'If the decision had been different, we would have complied with it just the same. There they will present their complaints, their opinions, their legal positions, and we have every right to respond and defend ourselves from that claim,' Mulino said in his weekly press conference.