巴拿马运河港口争端（Panama Canal Port Dispute）

These are my personal views. I do not know what to post, so I wrote this. Thank you. My English is not good.

Regarding the Panama Supreme Court's forced takeover of the ports at both ends of the Panama Canal, which CK Hutchison Holdings has operated for nearly 30 years, on the grounds of "unconstitutionality," my personal view is that the Panamanian government's action not only constitutes a fundamental breach of contract at the factual level, but also, at the legal level, is a blatant trampling of the basic principles of international law and its own domestic constitutional order.

First, let us examine the contract itself. Panama Ports Company, under CK Hutchison, lawfully obtained and has operated Balboa Port and Cristobal Port since 1997 pursuant to Panama's Law No. 5. In 2021, after the Panama Maritime Authority formally reviewed and confirmed that PPC had performed satisfactorily, the 25-year operating rights were lawfully renewed. This means that at the time the renewal was completed, the executive branch of Panama had already made a final and definitive legal determination as to the legality and validity of the contract. However, four years later, the Supreme Court of Panama, without raising any procedural challenge to the 2021 renewal, directly overturned the contract on the grounds of "unconstitutionality." Here it is necessary to invoke the principle of pacta sunt servanda established by Article 26 of the Vienna Convention on the Law of Treaties — a principle that is not only a cornerstone of public international law, but also binds investment agreements concluded between states and foreign investors. When the Panamanian government signed the renewal, it promised that the contract was valid; four years later, it overturned its own administrative commitment through domestic judicial review. This act in itself constitutes a fundamental violation of the obligation of good faith performance. The same constitution, the same contract, and the same performing party produced a completely opposite legal conclusion in only four years. This is not a difference in legal interpretation, but the result of political interference in the judiciary.

Second, the lack of procedural justice cannot be ignored either. If the contract had indeed suffered from an unconstitutional defect at the time of its 2021 renewal, the Panamanian government should have completed a constitutionality review before approving the renewal. But the fact is that the 2021 renewal procedure was complete and the administrative review was thorough, and the Panamanian government never initiated any judicial procedure to challenge its validity. It was only after CK Hutchison, relying on the validity of the contract, continued to invest and operate, and after the port assets were fully in operation, that Panama overturned the foundation of the contract through a retroactively affirmed judicial judgment. This operational model of "signing first and turning hostile later" seriously violates the "due process of law" requirement necessary for lawful expropriation. The Washington Convention sets out four statutory requirements for lawful expropriation — public interest, non-discrimination, due process of law, and full and prompt compensation. None of Panama's actions in this case satisfied them. The international arbitral tribunal in ADC v. Hungary already held that when a host state unilaterally deprives an investor of investment rights without the investor's knowledge, without participation in decision-making, and without access to remedies, it constitutes a violation of due process. Panama not only failed to consult with CK Hutchison beforehand, but also provided no effective remedy afterward, and its deviation from due process is even more serious than in the ADC case. At the same time, the award in Pope & Talbot v. Canada further established the review standard for fair and equitable treatment — discriminatory measures taken by a host state against a specific foreign investor constitute a violation of that treatment standard. The sole targeted object of Panama's action this time was PPC, and this discriminatory characteristic is clear and indefensible.

Finally, let us examine Panama's domestic legal order. Article 17 of the Panamanian Constitution explicitly provides: "The function of the state is to guarantee the life, honor, property, and the legal force of contracts of all residents." The legal force of contracts — this is the fundamental commitment made by the Panamanian Constitution to the country's rule-of-law order. The concession contract approved in 1997 in the form of Law No. 5 by the legislature, and renewed in 2021 after lawful review by the executive branch, was completed and took effect under the legal framework then in force in both procedures. Now, declaring it "void ab initio" by judicial judgment means that all three branches of Panama's government — legislative, executive, and judicial — participated over the past 28 years in an "unconstitutional act." This is constitutionally illogical. Scholars in Panama have already pointed out that the judgment is essentially a kind of "retroactive constitutional review," which is a highly controversial operation in comparative constitutional practice, and its own legality is seriously questionable.

In summary, the Panamanian government did not initiate any judicial procedure at the time of the 2021 renewal, but after CK Hutchison had invested enormous resources, it forcibly took over the ports under the name of ex post judicial review, and to date has not provided CK Hutchison with any compensation. This action has seriously violated the pacta sunt servanda principle established by Article 26 of the Vienna Convention on the Law of Treaties, fully departed from the statutory requirements of the Washington Convention that lawful expropriation must satisfy due process and full compensation, and ADC v. Hungary and Pope & Talbot v. Canada provide the arbitral tribunal with directly applicable standards for determining illegality from both positive and negative sides. Article 17 of the Panamanian Constitution cannot even provide a basis for the legality of its own conduct. If the arbitral tribunal ultimately decides in favor of Panama, the legal consequence will not be limited to the individual case, but will send a clear signal to the international investment community: any host state may evade its obligations under international law through domestic judicial procedures and arbitrarily tear up investment agreements signed with foreign investors. Once this opening is created, the foundation of the global investment order will face systemic collapse.