Hong Kong-based CK Hutchison Holdings said on Wednesday that its subsidiary, Panama Ports Company (PPC), has initiated arbitration proceedings against the Panamanian government after the country’s Supreme Court ruled that its long-standing port concession was unconstitutional.
The arbitration, filed on Tuesday under the rules of the International Chamber of Commerce, follows last week’s court decision that invalidated PPC’s concession to operate ports at both ends of the Panama Canal. CK Hutchison said it strongly disagreed with the ruling, while Panama has insisted that port operations will continue without interruption.
The dispute has escalated into a geopolitical flashpoint. China warned that Panama would pay a “heavy price” if it persisted, accusing Panamanian authorities of bowing to “hegemonic powers,” in an apparent reference to the United States. Panama’s President José Raúl Mulino rejected Beijing’s criticism, stressing that the country respects judicial independence and the rule of law.
The two Panama ports are part of a broader $23 billion deal announced last March, under which CK Hutchison agreed to sell 43 global ports to a consortium led by U.S. investment firm BlackRock and Terminal Investment Limited, a unit controlled by Mediterranean Shipping Company. The transaction has been delayed amid the Panama court case and heightened U.S.–China tensions.
Legal experts say arbitration could take years. While an arbitral tribunal cannot overturn Panama’s Supreme Court ruling, it could determine whether the government breached its contractual obligations and order compensation. Any award, however, could face challenges in recognition or enforcement within Panama.
PPC said it pursued arbitration after efforts to seek clarification and avoid disputes were ignored, alleging that Panamanian authorities conducted unexpected site visits and demanded unrestricted access to company assets and information. The concession was last renewed in 2021 for 25 years.
Analysts believe CK Hutchison is likely using legal proceedings to buy time while exploring alternatives for the wider ports sale. The company has operated the Panama Canal ports since 1997, while the canal itself has been under Panamanian control since 1999, following decades of U.S. administration.
