Hong Kong firm begins arbitration proceedings over ruling against its
Panama Canal port contract
[February 04, 2026] By
KANIS LEUNG
HONG KONG (AP) — Hong Kong’s CK Hutchison Holdings said Wednesday its
subsidiary has started arbitration proceedings against Panama after that
country's Supreme Court ruled a concession for the subsidiary to operate
Panama Canal ports was unconstitutional.
Hutchison said it strongly disagreed with last week's ruling, and China
warned Panama would pay “a heavy price" if it persisted. Panama’s
president has moved to assure the public that the ports would operate
without interruption after the ruling, which advanced a U.S. aim to
block any influence by China over the canal linking the Atlantic and
Pacific oceans.
Hutchison's subsidiary, Panama Ports Company, began arbitration
proceedings Tuesday under the rules of the Paris-based International
Chamber of Commerce, the company said in a statement.
It's unclear what the impact of the proceedings would be. The Panamanian
president’s office and commerce ministry did not immediately respond to
requests for comment late Tuesday.
A process that may take years
Analysts believe the company is likely to buy time with legal
proceedings, such as the latest arbitration move, while looking for
alternatives for the broader port deal.
Yueming Yan, a Chinese University of Hong Kong law professor, said if an
arbitral tribunal is constituted, future hearings may be held outside
Paris or New York, although the agreement specified the arbitration
board should be in New York. The timing is difficult to predict, but
arbitration involving investment-related concession contracts may extend
over several years.
While not overturning domestic court decisions, the tribunal's ruling
would be binding and address whether the Panamanian government breached
its obligations and owes compensation. But a result favoring CK
Hutchison could raise questions over its recognition or enforcement, she
said.
"The approach that domestic courts in Panama may take in any recognition
or enforcement proceedings cannot be assessed with certainty at this
stage,” she said.
Albert So, chairman of Hong Kong Mediation and Arbitration Center, said
if Hutchison wins, this may result in compensation since the concession
was just renewed in 2021 or it could possibly restore parts of the
firm's rights in operating the ports.
If Panama wins and the concession is confirmed unconstitutional, it
could raise further questions over the company's past operations over
almost three decades, he said.
Robbert van Trooijen, founder of Panama-based consultancy Inception
Partners, said there is little CK Hutchison can do to directly override
Panama’s Supreme Court ruling.
Ruling draws Chinese backlash
The court ruling has drawn backlash from China, and the tensions may
complicate Hutchison's plan to sell its port assets in dozens of
countries to a group that includes the U.S. investment firm BlackRock
Inc.
The planned sale has already been caught up in tensions between Beijing
and Washington. U.S. President Donald Trump, who has alleged that China
interferes with the canal, initially welcomed that plan. However, it
apparently angered Beijing and drew a review by Chinese anti-monopoly
authorities.
On Tuesday night, Beijing's office overseeing Hong Kong affairs said the
ruling reflected that Panamanian authorities were bowing down to
hegemonic powers. It did not specify the countries but pointed to
politicians from some countries who had said they were “encouraged” by
the ruling, in an apparent veiled reference to U.S. Secretary of State
Marco Rubio.
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Cranes load a cargo ship at Panama Canal's Port of Balboa, managed
by CK Hutchison Holdings, in Panama City, Friday, Jan. 30, 2026. (AP
Photo/Matias Delacroix)
 In a statement shared on social
media platform WeChat, the office said that China will never bow to
hegemonism and has sufficient means and tools, as well as
capability, to uphold justice in the international economic and
trade order.
“Panama’s authorities should recognize the situation and correct
their course," it said. “If they persist in their own way and refuse
to see reason, they will pay a heavy price both politically and
economically!”
The Panama Ports Company said in a separate statement Wednesday that
the arbitration followed its efforts to consult and avoid disputes,
but the Panamanian state routinely disregarded communications and
clarification requests. The company said it seeks damages based on
data and necessary relief and reiterated its invitation to Panama
for clarity and consultations.
The company said that while the court ruling has yet to become
effective, the state conducted unexpected site visits and instructed
it to provide unrestricted access to physical, commercial and
intellectual property, information and employees.
China Foreign Ministry spokesperson Lin Jian doubled down on China’s
stance Wednesday, saying China will “firmly protect the legitimate
and lawful rights and interests” of Chinese companies.
“Who is seeking to monopolize the (Panama) canal? And who is
undermining international laws in the name of the rule of law?
That’s quite clear in the international community,” Lin said in
Beijing.
Company is caught in U.S.-China tensions
The Hutchison subsidiary has operated ports at both ends of the
Panama Canal since 1997. The awkward position Hutchison found itself
in highlights the challenges Hong Kong business elites face in
navigating Beijing’s expectations of national loyalty, especially
during U.S-China tension. CK Hutchison is owned by the family of
Hong Kong’s richest man, Li Ka-shing.
The company said last July that it was considering seeking a Chinese
investor to join as a significant member of the consortium under its
sale plan, a move that some interpreted as way to please Beijing,
but CK Hutchison hasn’t said more since.
The consortium also includes BlackRock subsidiary Global
Infrastructure Partners and Terminal Investment Limited, which is
chaired by Italian shipping scion Diego Aponte, whose family
reportedly has a longstanding relationship with Li’s.
Last May, Hutchinson co-managing director, Dominic Lai told
shareholders that Terminal Investment was the main investor.
Panama’s government has maintained it has full control over the
canal and that the operation of the ports by Hutchison does not mean
Chinese control of it. But Rubio made clear the U.S. viewed the
operation as a national security issue.
___
Chan Ho-him contributed to this report.
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