CK Hutchison Seeks $1.5 Billion from Panama Over Seized Ports

Hong Kong conglomerate CK Hutchison announced on Thursday it has filed international arbitration proceedings against Panama, seeking more than $1.5 billion in damages.

The claim is over Panama's cancellation of a concession that allowed CK Hutchison's unit, Panama Ports Company (PPC), to operate two strategic ports at the entrances to the Panama Canal: Balboa on the Pacific and Cristobal on the Atlantic. The company's board of directors stated in a Hong Kong Stock Exchange filing that it seeks damages for the destruction of the Company’s investments in Panama.

The dispute stems from a Panama Supreme Court ruling in January that struck down PPC's concession contract as unconstitutional. The Panamanian government took control of the terminals on February 23. CK Hutchison accused authorities of seizing property, equipment, technology, and documents during the takeover, causing substantial damage. The company said it notified Panama of the treaty dispute on February 4, but efforts to reach a resolution failed.

PPC had previously filed a separate contractual arbitration, seeking at least $2 billion in damages over what it called an illegal takeover of operations. The Panama Canal handles about 40 percent of US container traffic and five percent of world trade. CK Hutchison stated Panama breached an investment-protection treaty and international law through sovereign acts targeting its concession.

The company said Panama held only one perfunctory consultation meeting and made no offer of compensation. CK Hutchison asserted Panama has become a risky country that disregards the rule of law. The company will continue to seek resolution with Panama while pursuing its rights and remedies under the treaty and international law.