By Eunice Yung
The recent decision of Panama's Supreme Court to annul the long-standing concession contract of Hong Kong-based Panama Ports Company (PPC), a CK Hutchison subsidiary, not only undermines the rule of law but also deals a blow to international commercial confidence in Panama. As a legal professional, I am gravely concerned by both the procedural irregularities and the wider geopolitical ramifications of this ruling.
PPC has operated critical terminals at both ends of the Panama Canal under a concession awarded in the 1990s, the product of fair and transparent negotiations. These contracts, ratified and monitored by relevant Panamanian authorities and reaffirmed through repeated governmental reviews, have underpinned nearly three decades of seamless operations and have contributed over USD 1.8 billion in investment to Panama's economy, creating thousands of jobs and fostering maritime development in the region.
The unilateral annulment of such a well-established and successfully executed contract – absent any fundamental change in the law or evidence of contractual breach – constitutes a serious affront to the principle of pacta sunt servanda: agreements must be kept. This is a foundational doctrine of both common law and civil law traditions, the world over. If a government can retroactively nullify contracts based on shifting political winds, legal certainty is lost, and investor confidence is fatally undermined. This raises legitimate questions: will Panama compensate for its own oversight in allowing PPC's operations for thirty years? Can any international enterprise henceforth rely on Panama's business environment?
Equally concerning is the apparent political context of this decision. Statements by foreign politicians celebrating the ruling as a "victory" in curbing the commercial influence of other global powers suggest that extraneous, geopolitical considerations have intruded upon what should be an independent legal process. From a legal standpoint, such interference runs contrary to the spirit and obligations of international investment law, in which host states are expected to treat foreign investors equitably and protect them from arbitrary or discriminatory treatment.
Legal professionals and lawmakers must recognize that commercial disputes – especially those concerning core economic infrastructure such as ports – should be resolved in accordance with law, not according to extraterritorial political designs. The rule of law is not a tool for international rivalry, but the foundation of prosperity for all.
The ripple effects of this ruling are not limited to Hong Kong enterprises or companies from a single country. The undermining of legal certainty jeopardizes Panama's investment climate and sets a troubling precedent that may deter participation by international investors in future infrastructure projects. No government should leave its own economic future hostage to outside pressure, nor should it risk eroding its global standing as a jurisdiction committed to due process.
Hong Kong has long been recognized as a beacon of the rule of law and a staunch supporter of fair international business practices. The Hong Kong Special Administrative Region Government, together with the Ministry of Foreign Affairs of the People's Republic of China, has registered strong objections to any external coercion or unreasonable measures detrimental to the interests of law-abiding Hong Kong companies operating overseas.
The Panamanian authorities should reconsider this course of action. The principles of legal certainty, contractual security, and judicial independence are not merely theoretical ideals, but indispensable ingredients in a functioning global trading system. Undermining them in pursuit of transient political gains will damage Panama's own development and the broader climate of international cooperation.
History teaches us that nations abandoning the rule of law in favor of expediency invariably pay a high price in lost credibility and opportunity. If Panama is to remain attractive to global investors, upholding the sanctity of contracts and the independence of its judiciary must be its watchwords.
The views do not necessarily reflect those of DotDotNews.
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