Hong Kong conglomerate CK Hutchison Holdings has launched international arbitration proceedings against Panama after the country’s Supreme Court annulled contracts allowing its subsidiary to operate two strategic ports at either end of the Panama Canal.
In a statement to the Hong Kong Stock Exchange, CK Hutchison said its Panama Ports Company unit had begun arbitration after the court ruled last week that the licences violated Panama’s constitution by granting exclusive privileges and tax exemptions. The company said it “strongly disagrees” with the decision and is consulting legal advisers while reserving the right to pursue additional national and international remedies.
The arbitration could take years to resolve. Analysts say the dispute sits at the intersection of law, trade and geopolitics, given the strategic importance of the Panama Canal and rising tensions between the United States and China. Jason Karas, managing partner at Karas So LLP, said the case illustrates how legal battles over infrastructure assets increasingly reflect broader geopolitical rivalry.
The ruling has cast fresh uncertainty over the future of the Balboa and Cristobal ports, which CK Hutchison has operated for nearly three decades, and over the group’s planned $23 billion sale of its global ports business. Those two terminals are central to the deal, which is led by BlackRock and Mediterranean Shipping Company. Neither BlackRock nor MSC immediately commented.
Political pressure and deal uncertainty
China reacted sharply to the Panamanian court’s decision, warning of “heavy prices” and branding the ruling “absurd” and “shameful.” Panamanian President Jose Raul Mulino rejected Beijing’s criticism, saying Panama is governed by the rule of law and that judicial decisions are independent of the executive branch.
Political scientists note that while international arbitration awards can be influential, states are not always compelled to comply. Ja Ian Chong of the National University of Singapore said Panama could ultimately ignore an adverse ruling, suggesting CK Hutchison may be seeking to demonstrate to shareholders, as well as to Beijing and Hong Kong, that it is exhausting all legal avenues.
CK Hutchison shares rose about 2% in early Hong Kong trading following the announcement, even as broader markets dipped.
The ports dispute has also been welcomed by some U.S. lawmakers, who view the court ruling as a strategic victory amid concerns about Chinese influence over critical trade routes. President Donald Trump has previously called for the United States to “take back” the Panama Canal.
CK Hutchison’s Balboa port sits at the canal’s Pacific entrance, while Cristobal is located on the Atlantic side. Together, they are considered among the most sensitive logistics assets in global maritime trade. Danish shipping group Maersk’s local unit has said it would be willing to operate the terminals temporarily if needed, to avoid disruption to regional and global commerce.
For now, arbitration adds another layer of uncertainty to a high-stakes legal and political battle whose outcome could reshape control over one of the world’s most important shipping corridors.
