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CK Hutchison has taken Panama to arbitration while Beijing has warned that the Central American country will pay a “heavy price” after its top court ruled to kick out the Hong Kong-based conglomerate from ports on its canal.
CK, whose subsidiary runs a pair of ports on the Panama Canal, said on Wednesday it had begun international arbitration proceedings against Panama over a court decision to annul its contract to operate the terminals.
The announcement followed a statement the day before from China’s Hong Kong and Macau affairs office in which it said Panama would “pay a heavy price both politically and economically” for the “absurd” decision.
Panama’s Supreme Court last week ruled unanimously that the concession was unconstitutional. The case stemmed from lawsuits dating back to 2021 and a government audit in 2025 alleging irregularities.
The decision is a boost for President Donald Trump’s efforts to reassert US influence in the region but casts further doubt on CK’s effort to offload its international port operations.
CK’s board on Wednesday said it “strongly disagrees with the determination and corresponding actions in Panama” and “reserves all rights, including recourse to additional national and international legal proceedings in the matter”.
The conglomerate run by Hong Kong’s richest man Li Ka-shing had negotiated a $23bn deal with a BlackRock-led consortium in March last year to sell its non-Chinese port subsidiaries, which operate in strategic locations such as Rotterdam and the UK’s Felixstowe.
The initial deal terms would have given BlackRock a controlling stake in the Panama Ports Company, while Aponte family-controlled MSC would become the majority owner of CK’s 41 other non-Chinese ports, including in south-east Asia, Europe and the Middle East.
But the proposal alarmed Beijing, where officials have worked to reshape the deal, including demanding it undergo China’s merger review process even though no mainland assets are involved.
Chinese state-owned shipping group Cosco was then invited to join the acquiring consortium, though the size of its stake and whether it will be given a share of the Panama Ports Company remains unclear.
Industry watchers said the Supreme Court decision added to uncertainty around the transaction.
“The deal will have to be potentially renegotiated,” said Dan Baker, an analyst at Morningstar who covers CK. “Obviously the price would come down.”
A person familiar with the transaction said it was difficult to know how the court decision would affect the broader deal, but if the sale of the non-Panamanian ports went ahead without the Panama ports stake, the deal could be reopened to negotiations on price and ownership.
BlackRock and MSC did not respond to requests for comment.
José Raúl Mulino, Panama’s president, wrote on social media site X on Wednesday: “Panama is a country with the rule of law and it respects the decisions of its judiciary, which is independent of the central government.”
In a statement, Panama’s foreign ministry said any legal dispute “should be resolved exclusively within the corresponding legal framework”.
Mulino said early last year that his country would not renew its participation in China’s Belt and Road infrastructure initiative — a decision that followed pressure from US secretary of state Marco Rubio for Panama to make “immediate” changes to rein in China’s “influence and control”.
Moody’s, which maintains a credit rating for Panama of Baa3 with a negative outlook, the lowest level of investment grade, said the decision by the Supreme Court “does not have a direct impact on Panama’s credit profile” itself.
But the arbitration proceedings “would constitute a contingent liability that could have implications for public finances, a key factor in the sovereign rating”, it added.
Additional reporting by Milagro Vallecillos in Panama City
