Hong Kong-based holding company CK Hutchison has launched a new arbitration case against Panama, seeking more than $1.5 billion in compensation after the Panamanian government took control of ports located at both ends of the Panama Canal.

In a statement, the company said it had initiated the arbitration process, claiming that Panama violated an investment protection agreement. CK Hutchison accused Panamanian authorities of carrying out a state-backed campaign targeting the company's port assets in the country.

Panama took control of key canal ports

The Panama government took over the Balboa and Cristobal ports on both ends of the Panama Canal in February, following a ruling by the Panama Supreme Court that found the concession agreement allowing CK Hutchison subsidiary Panama Ports Company to operate the facilities was unconstitutional.

The Panama Canal itself is owned and managed by Panama. However, Panama Ports Company had operated the two strategic ports since 1997 under a concession agreement that was extended for another 25 years in 2021.

Ports became part of US-China tensions

The Balboa and Cristobal ports became a focus of geopolitical tensions between the United States and China after Donald Trump returned to the White House.

Trump claimed that China had influence over the Panama Canal, while Beijing and Hong Kong authorities criticized Panama's decision to take control of the ports.

CK Hutchison, controlled by the family of Hong Kong billionaire Li Ka-shing, had previously announced an agreement to sell its global port operations, including the two Panama facilities, to a consortium involving U.S. investment firm BlackRock for around $23 billion.

However, the deal faced difficulties due to rising geopolitical tensions between the United States, China and Panama, as well as ongoing legal disputes.

Multiple arbitration cases underway

Panama Ports Company launched its own arbitration process in March, arguing that the takeover of the ports was unlawful and seeking at least $2 billion in compensation from Panama.

CK Hutchison said the latest arbitration case focuses on rights arising from the company's investment agreement and is separate from Panama Ports Company's contractual claims.

The company's subsidiary also initiated arbitration proceedings in April against Danish shipping and logistics company Maersk, which took over some port operations in Panama. Maersk said it did not believe it was responsible for the claims.(ILKHA)