In a significant legal move, Hong Kong-based CK Hutchison is pursuing over $1.5 billion from Panama following the controversial seizure of two canal ports. This development comes amid rising tensions between China and the United States, with the ports now positioned at the heart of these geopolitical frictions.
CK Hutchison has initiated new arbitration procedures against Panama, asserting that the latter breached an investment protection treaty. The conglomerate claims Panama engaged in “sovereign acts that targeted a decades-old ports concession,” labeling it as a “state attack campaign” on its assets.
Earlier this year, Panama’s government took control of the Balboa and Cristobal ports, located at strategic points on the Panama Canal. This action followed a decision by Panama’s Supreme Court, which declared that CK Hutchison’s subsidiary’s concession to operate these ports was unconstitutional.
The ports have become a flashpoint in the ongoing U.S.-China tensions. The issue gained prominence after Donald Trump, returning to the White House last year, accused China of “running” the canal.
Despite the canal being owned and managed by Panama, CK Hutchison’s Panama Ports Company had been operating the ports since 1997, with a renewed concession in 2021 extending their management for another 25 years.
Both Hong Kong and Beijing have criticized Panama for its actions regarding the ports seizure. These events have also affected CK Hutchison’s previously announced $23 billion deal to sell its ports business, which included the Panamanian ports, to a consortium featuring U.S. investment firm BlackRock. Progress on this deal has stalled amidst geopolitical and legal challenges involving China, the U.S., and Panama.
In a parallel legal effort, the Panama Ports Company sought at least $2 billion in compensation in March, claiming Panama’s takeover was unlawful under international arbitration standards. CK Hutchison has noted progress in these arbitration efforts.
Thursday’s proceedings by CK Hutchison are distinct, focusing on its treaty rights rather than the previous contract rights pursued by Panama Ports Company.
Furthermore, in April, CK Hutchison’s subsidiary initiated arbitration against Maersk, the Danish shipping and logistics giant, after Maersk assumed some of its port operations in Panama. Maersk responded, stating it did not believe it was liable for the claims.
