The Panama Canal ports at the heart of a months-long U.S.-China dispute have officially and formally changed hands. On Monday, Panama annulled key concessions held by Hong Kong-based CK Hutchison, and handed the Balboa and Cristobal terminals — which CK Hutchison’s subsidiary, Panama Ports Company (PPC), had run for close to three decades — to Maersk and MSC under temporary 18-month arrangements. The Panama Canal ports sold story moves quickly on the heels of a Supreme Court ruling from late January, and analysts and observers are already describing the Panama Canal ports deal as one of the more consequential geopolitical shifts in global trade in recent memory. For anyone following the Panama Canal ports China tensions or the broader Panama ports US alignment question, right now is a significant moment.

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Monday’s move started when Panama published the Supreme Court ruling in its official gazette, which formally and legally set the annulment in motion. The Panama Maritime Authority (AMP) took possession of both terminals by decree shortly after — cranes, vehicles, computer systems, software, all of it. Two temporary concession contracts, each running up to 18 months, were approved at the same time. APM Terminals Panama, a Maersk unit, was given the Balboa port on the Pacific side, and TIL Panama, part of MSC, took over Cristobal on the Atlantic side. APM Terminals confirmed Tuesday that temporary operations at the Balboa port had already started.

The head of the technical team that was in charge of the transition, Alberto Aleman Zubieta, affirmed that both the ports of the Panama Canal were already in the hands of the AMP once the ruling was declared legally binding when it was published.

CK Hutchisondid not hold back. In a statement to the Hong Kong Stock Exchange, the company said Panamanian authorities made “direct physical entrance” to both terminals on Monday, removed PPC employees, and threatened them with criminal prosecution if they refused to leave. Staff were also apparently told not to make any contact with the company.

“CKH considers the ruling, the executive decree, the purported termination of PPC’s concession, and the takeover of the terminals to be unlawful. The actions by the Panama State also raise serious risks to the operations, health and safety at the Balboa and Cristobal terminals.”— CK Hutchison, statement to the Hong Kong Stock Exchange

CK Hutchison is now consulting legal counsel on both national and international action against Panama and third parties. As far back as February 12, the conglomerate had already warned that “any steps” taken by Maersk or its subsidiary to operate the Panama Canal ports without its agreement would likely “result in legal recourse.” Hong Kong’s government also weighed in on Tuesday, expressing “strong dissatisfaction and opposition” and urging Panama authorities to respect the spirit of contracts and maintain a fair business environment.

CK Hutchison shares fell 1.9% on Tuesday. Hong Kong’s broader Hang Seng Index was also off 1.9% the same day.

Panamanian President José Raúl Mulino addressed the seizure in a televised statement Monday afternoon, framing the temporary contracts as, in his own words, “a legitimate tool that respects asset ownership.” He was also direct on the expropriation question:

“Let me be clear, this does not imply an expropriation of those assets, but rather their use to ensure the operation of the ports until their real value is determined for the corresponding actions. I repeat, this is not an expropriation.”

Source: Watcher Guru