CK Hutchison has confirmed that its Panama Ports Company subsidiary has launched international arbitration proceedings after Panama’s Supreme Court voided the company’s licences to operate two terminals on the Panama Canal.
The court last week found the contracts violated Panama’s constitution, saying they provided the operator with exclusive privileges and tax exemptions. CK Hutchison said the board "strongly disagrees with the determination and corresponding actions in Panama." In a statement to the Hong Kong Stock Exchange, the group added that it "continues to consult with its legal counsel and reserves all rights, including recourse to additional national and international legal proceedings in the matter."
Company officials did not provide a timetable for the arbitration. Observers noted the process could extend for years, given the political sensitivities and legal complexity surrounding ownership and operation of the facilities.
Implications for the proposed ports sale
The ruling raises questions about the ownership and operability of the Balboa and Cristobal terminals and casts uncertainty over CK Hutchison’s planned $23 billion deal to sell its port businesses. The proposed buyout, led by BlackRock and Mediterranean Shipping Company, covers CK Hutchison’s network of 43 ports in 23 countries.
After criticism from Beijing earlier in the process, CK Hutchison said in July it had been negotiating to include a Chinese "major strategic investor" in the consortium bidding for the ports. Sources have said that investor is COSCO, which was reportedly seeking a large stake while other parties preferred it to take a minority share; that disagreement was described as a sticking point in negotiations.
Strategic significance and reactions
The two terminals sit at pivotal points on the Panama Canal: Balboa at the Pacific entrance and Cristobal at the Atlantic entrance. That geography underpins their strategic value for global shipping, particularly for trade into and out of the United States.
China reacted strongly to the Panamanian court decision. Chinese officials warned Panama there would be "heavy prices" to pay for the ruling, which Beijing called "absurd" and "shameful and pathetic." The Hong Kong and Macau Affairs Office said on social media that "The ruling ignored the facts, breached trust, and seriously damaged the legitimate rights and interests of enterprises in Hong Kong, China."
In the United States, some lawmakers welcomed the court decision as a "win for America." President Donald Trump, who had initially hailed the proposed $23 billion sale, has urged the U.S. to "take back" the Panama Canal in response to concerns over Chinese influence.
Market and operational responses
CK Hutchison’s shares rose about 2% in early trading on Wednesday, while the Hang Seng Index climbed roughly 0.1%.
With uncertainty over the immediate operatorship of the two terminals, APM Terminals Panama, a unit of Maersk, said it was prepared to run the Balboa and Cristobal terminals on a temporary basis to avoid disruption to regional and global trade.
The Panamanian government had not immediately provided a response to requests for comment.
Process and outlook
CK Hutchison has managed the Panama terminals for nearly three decades. The company’s initiation of arbitration marks the start of a formal legal challenge to the court’s annulment of the licences. How long the arbitration will take is uncertain; some analysts expect the case to be prolonged because of its legal intricacies and the geopolitical tensions it involves.
For now, the dispute leaves multiple outcomes on the table: ownership and operational control of two strategically important terminals are unresolved, the status of the $23 billion ports sale is in doubt, and international diplomatic strains have intensified as key governments react.