Hong Kong-based CK Hutchison has launched an arbitration case against Panama after the government revoked its concession to operate two ports on the Panama Canal, according to news agencies Reuters and AFP, citing a company statement.
The conglomerate argues that Panama breached an investment protection treaty by cancelling the concession agreement covering the Balboa and Cristóbal terminals, which were operated through its subsidiary, Panama Ports Company (PCC), Reuters reports. Balboa and Cristóbal sit at opposite ends of the canal and had been run by CK Hutchison since the 1990s.
A concession, in this context, refers to a time-limited government authorization allowing a private company to operate public infrastructure under agreed terms.
Compensation claim exceeds $1.5bn
According to AFP, CK Hutchison’s board disclosed the arbitration filing in a statement to the Hong Kong Stock Exchange, in which the company is seeking more than USD 1.5bn in compensation for what it calls the destruction of its investments in Panama.
The board stated it “strongly disagrees with the steps Panama has taken in violation of the treaty” and said it “will continue to seek a resolution with Panama, while at the same time vigorously pursuing all of the company’s rights and legal remedies under the treaty and international law,” as cited by AFP.
Reuters notes that Panama’s Ministry of Economy and the Office of the President had not immediately responded to requests for comment.
Background: political pressure led to concession loss
The dispute traces back to comments made by U.S. President Donald Trump in his inaugural address in January, in which he criticized what he described as Chinese control of ports along the Panama Canal. Panama’s government subsequently revoked CK Hutchison’s concession contracts for Balboa and Cristóbal.
In February, Panama’s Supreme Court ruled that Danish company Maersk, via its subsidiary APM Terminals, would temporarily take over operations at Balboa, while Switzerland’s MSC would assume control of Cristóbal.
Separately, PCC filed its own lawsuit in February challenging the suspension of its operations and announced the following month that it is seeking at least USD 2bn in compensation. CK Hutchison’s board clarified that PCC’s arbitration case is proceeding independently from the parent company’s newly filed claim.
Does this matter to you?
The outcome of this dispute could have implications for terminal operators, carriers, and cargo interests relying on transits through the Panama Canal, given that Balboa and Cristóbal serve as key gateways at each end of the waterway. With Maersk’s APM Terminals and MSC now operating these facilities following the concession’s revocation, any prolonged legal uncertainty could be relevant for parties tracking canal capacity, terminal reliability, or geopolitical risk affecting transit planning. The source material does not indicate any immediate operational disruption at the ports resulting from the arbitration filing itself.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Reuters, AFP (via ShippingWatch)
