(Feb 4): CK Hutchison Holdings Ltd is seeking “extensive damages” through arbitration against Panama’s decision to invalidate its contract to operate two ports near the country’s strategic canal.
While the Panama top court’s ruling hasn’t been published or become effective, the Central American country has launched unexpected site visits and instructed CK Hutchison’s local unit, Panama Ports Co, to provide authorities unrestricted access to its property, data and employees, the firm said in a statement Wednesday.
The Hong Kong-based conglomerate, which didn’t specify the damages sought, said in a separate stock exchange filing that it will “vigorously pursue” the case under the rules of the International Chamber of Commerce, known as ICC. Those rules are overseen by the ICC’s Court of Arbitration, a global body that handles major business and investment disputes.
The group will keep working with legal advisers while reserving all options, including pursuing further action in local and international courts, it said. The company also advised shareholders and potential investors to “exercise caution” when dealing in its shares or other securities.
The critical question is “whether an international tribunal has the clout to overturn the Supreme Court decision,” David Blennerhassett, an analyst at Quiddity Advisors, said, suggesting that such a move would be legally fraught. “The safe takeaway here is that this entire construct won’t be concluded anytime soon.”
The company’s stock gained as much as 2% in Hong Kong on Wednesday, recovering part of the losses after last week’s Panama ruling, which sparked its steepest decline since April.
See also: CK Hutchison warns Maersk of legal action if it takes over Panama Ports
Disputes over the Balboa and Cristobal ports in Panama have injected fresh uncertainty to CK Hutchison’s plan to sell 43 global facilities. The deal has become a proxy of US-China rivalry, making it one of the company’s most geopolitically complex yet. The ruling has handed a political win to President Donald Trump’s push to curb China’s influence over strategic infrastructure in Latin America, including the canal. But Beijing has expressed strong displeasure, warning of “serious political and economic consequences.”
If completed, the transaction would net CK Hutchison, founded by Hong Kong tycoon Li Ka-shing, more than US$19 billion ($24.1 billion) in cash. But talks with the buyer consortium including US investment firm BlackRock Inc have dragged on since it was announced in March last year over mounting geopolitical headwinds. Trump has portrayed the sale of the Panama assets as a boost for US influence, while Beijing has criticised the deal as capitulating to American pressure. To secure Chinese approval, CK Hutchison last year invited state-owned China Cosco Shipping Corp to join the consortium.
China’s Hong Kong and Macau Affairs Office on Tuesday called the ruling “absurd” and a violation of legal principles, urging Panama to reverse course or face “serious political and economic consequences.” The commentary followed pro-Beijing newspaper Ta Kung Pao’s article on Saturday, which called on Hong Kong businesses to halt investment in Panama and accused the country of yielding to US pressure.
See also: China bans below-cost car sales to end prolonged price war
Panama President Jose Raul Mulino has repeatedly asserted the country’s sovereignty over its operations. After the ruling, he said the government was in talks with APM Terminals, a division of AP Moller-Maersk, to operate the ports on an interim basis.
Panama Ports will continue running the facilities while proceedings play out, Mulino said. APM Terminals would then take over until a new contract is awarded through an open tender “that defends the interests of Panama.”
CK Hutchison has operated the ports since 1997. The contract was extended in 2021.
Cases like these aren’t new in global arbitration. In 2015, Egypt’s Damietta Port Authority terminated a concession granted to a private consortium to run a container terminal. Five years later, an international tribunal awarded the consortium damages. Egypt’s top court rejected the ruling, but the dispute was eventually settled with a partial payout.
To keep the CK Hutchison port sale talks moving and ease regulatory hurdles, people familiar with the matter said the parties have been considering a plan to split the assets into separate parcels with different ownership structures. Under that approach, Cosco could take bigger stakes in ports located in regions more friendly with China, they said earlier.
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