Hong Kong-based conglomerate CK Hutchison Holdings has initiated international arbitration proceedings against the Panamanian government after the country’s Supreme Court annulled licences held by its subsidiary, Panama Ports Company, to operate two key ports at the Panama Canal.
The arbitration move follows a ruling by Panama’s top court last week, which declared the port concession contracts unconstitutional, citing exclusive privileges and tax exemptions granted to the company. CK Hutchison has operated the Balboa and Cristobal ports—located at the Pacific and Atlantic entrances of the canal respectively—for nearly 30 years.
In a statement filed with the Hong Kong Stock Exchange, CK Hutchison said its board “strongly disagrees with the determination and corresponding actions in Panama” and confirmed it is consulting legal counsel while reserving the right to pursue additional national and international legal remedies.
Analysts cautioned that the arbitration process could take several years, particularly given the geopolitical sensitivities surrounding the case amid rising US-China tensions. “This is an example of the increasing interconnection between international trade, geopolitics and law,” said Jason Karas, managing partner of Karas So LLP.
Panama has not yet commented on the arbitration filing. Experts noted that international arbitration decisions are voluntary for states to honour. “Panama can just ignore CK Hutchison,” said Ja Ian Chong, associate professor at the National University of Singapore, adding that the company may be seeking to demonstrate to shareholders and governments in Beijing and Hong Kong that it is exhausting all legal options.
The court ruling has also cast uncertainty over CK Hutchison’s proposed $23-billion sale of its global port assets—43 ports across 23 countries—to a consortium led by BlackRock and Mediterranean Shipping Company (MSC). The two Panama Canal ports are central to the transaction, though some analysts believe the deal could proceed without them.
“The deal may continue with the remaining ports,” said Winston Ma, adjunct professor at New York University School of Law, adding that arbitration could allow CK Hutchison to seek damages or compensation.
China has reacted sharply to the Panamanian court decision, warning of “heavy prices” and calling the ruling “absurd” and “shameful and pathetic.” The development has intensified scrutiny of strategic infrastructure ownership, particularly as the Panama Canal remains one of the world’s most critical maritime trade routes into the United States.
CK Hutchison shares rose about 2 per cent in early Hong Kong trading on Wednesday, even as the broader Hang Seng Index slipped 0.4 per cent.
Meanwhile, APM Terminals Panama, a subsidiary of Maersk, said it is prepared to temporarily operate the Balboa and Cristobal terminals to avoid disruption to regional and global trade flows.
