The dispute over the management of the Panama Canal is heating up. Hong Kong-based CK Hutchison has announced that it has initiated international arbitration proceedings against the Panamanian government in response to the Supreme Court ruling of 29th January.
As is well known, Panama Supreme Court ruled that the legal framework allowing Panama Ports Company (PPC), controlled by Hong Kong giant CK Hutchison, to manage the ports of Balboa and Cristóbal was unconstitutional, effectively cancelling the state concessions granted to the Chinese conglomerate in 1997.
The ruling has drawn strong criticism from China, which has accused Panama of bowing to hegemonic pressure from the United States. For its part, CK Hutchinson has stated that it will continue to consult with its legal advisors, reserving the right to take further legal action in the appropriate national and international courts.
To avoid disruptions to traffic flows, the Panamanian government has temporarily entrusted the management of the two ports to APM Terminals, part of the Maersk group.
The new legal dispute also casts a heavy shadow over the £23 billion sale of CK Hutchison’s global portfolio, which has been on the market since last year.
If the international arbitration against Panama fails, CK Hutchison may be forced to sell off its assets or withdraw its bid, setting a historic precedent in the decline of Hong Kong’s commercial influence on global shipping routes.
Translation by Giles Foster