Hong Kong conglomerate CK Hutchison announced Thursday it has initiated new arbitration proceedings against Panama, seeking more than $1.5 billion in damages after the Central American nation seized two key ports at either end of the Panama Canal.
The company alleges that Panama breached an investment protection treaty through “sovereign acts that targeted a decades-old ports concession,” calling the actions a “state attack campaign” against its assets in the country.
Panama’s government took control of the Balboa and Cristobal ports in February. This action followed a Supreme Court ruling that the concession held by CK Hutchison’s subsidiary, Panama Ports Company, to operate the ports was unconstitutional. The concession had been in place since 1997 and was renewed for 25 years in 2021.
The ports' seizure occurred amidst heightened U.S.-China tensions, with former U.S. President Donald Trump having previously alleged that China was controlling the Panama Canal. The canal itself is managed and owned by Panama.
CK Hutchison, controlled by the family of Hong Kong magnate Li Ka-shing, had previously announced a significant deal to sell its global ports business, including the two Panama ports, to a consortium that included U.S. investment firm BlackRock. However, that $23 billion deal has faced considerable delays due to geopolitical sensitivities and legal challenges involving China, the United States, and Panama.
In March, Panama Ports Company separately initiated international arbitration proceedings, seeking at least $2 billion in compensation from Panama, asserting that the port takeover was unlawful. CK Hutchison stated that these actions are progressing.
The conglomerate clarified that the new proceedings initiated on Thursday are specifically focused on treaty rights, distinguishing them from the contract rights at issue in the earlier arbitration filed by Panama Ports Company.
In April, CK Hutchison's subsidiary also launched arbitration proceedings against Danish shipping and logistics group Maersk, which had taken over some of its port operations in Panama. Maersk has previously stated it does not believe it is liable for the claims.