UPDATE 3-Panama terminates CK Hutchison canal port contracts, Maersk, MSC to take over temporarily

​Panama on Monday published in its official gazette a Supreme Court ruling canceling key port contracts held by a subsidiary of CK Hutchison, clearing the way for Maersk and the Mediterranean Shipping Company (MSC) to take over temporarily.

The publication finalizes the legal annulment ‌of concessions for the Balboa and Cristobal terminals near the Panama Canal, which Panama Ports Company, a subsidiary of Hong Kong-based CK Hutchison, had operated for nearly three decades. CK Hutchison did not immediately respond to a request for comment from Reuters. The company's shares were down 0.4% in early trade on Tuesday, while Hong Kong's Hang Seng Index was ‌off 1.82%.

The Hong Kong conglomerate said

on February 12 it had notified Panama of an investment-protection treaty dispute that it would pursue after Maersk signalled its interest in ‌running the ports. It said that such a takeover would result in legal recourse against APM Terminals Panama, a Maersk subsidiary, unless it is done in agreement with the firm. CK Hutchison had previously said it would look to international arbitration to appeal the court's decision.

The Panama Maritime Authority (AMP) has taken possession of both ports by decree to ensure uninterrupted operations, said Alberto Aleman Zubieta, head of the ⁠technical team overseeing the ​transition, after the ruling became final ⁠upon publication. The government said it approved two temporary concession contracts with AMP, lasting up to 18 months, for the operation of the Balboa and Cristobal terminals. APM Terminals Panama will operate the Balboa port, ⁠while TIL Panama, part of MSC, will run operations at Cristobal.

The move could disrupt CK Hutchison's proposed $23 billion sale of dozens of ports worldwide, including the Panamanian terminals, to a consortium ​led by BlackRock and(MSC). The court ruling issued in late January came amid growing U.S.-China rivalry over global trade routes and marks a win for Washington.

U.S. ⁠President Donald Trump has pushed to curb Chinese influence over the Panama Canal, which carries about 5% of global maritime trade. Panamanian President Jose Raul Mulino said the temporary contracts had been issued as "a legitimate tool ⁠that ​respects asset ownership."

"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,” Mulino said in a televised address on Monday afternoon. Early in February, ⁠Mulino had said the government would move forward to formalize an agreement with APM Terminals Panama to manage and control the ports once the ruling became legally binding.

Mulino ⁠said the arrangement would remain in place ⁠while the state develops a new "competitive" concession framework to be awarded in the future, "with the humility not to repeat the mistakes of the past." He said neither port operations nor employment will be affected throughout the process.

Maersk did not immediately have a comment ‌on the matter.