CK Hutchison Launches London Arbitration Against Maersk Over Panama Canal Port Takeover
Hong Kong-based CK Hutchison Holdings has started arbitration proceedings in London against Danish shipping major A.P. Moller-Maersk after Panama took control of two key port terminals in the country.
The case has been filed by its unit Panama Ports Company, which previously operated the Balboa and Cristóbal ports along the Panama Canal.
The company said the arbitration will take place in London and is separate from its claim of more than $2 billion in damages against the Panamanian government.
Panama Ports Company accused Maersk of violating its contract by supporting Panama during the dispute that led to the takeover of the terminals.
It said Maersk aligned with the government’s efforts to replace its operations and helped advance a plan to install new operators at the ports.
According to the company, a Maersk-linked operator used its facilities and operational information under what it described as a pre-arranged concession agreement after the takeover.
Following the government’s move, Maersk’s port arm APM Terminals was appointed as the interim operator of the Balboa terminal, while Terminal Investment Limited, backed by MSC, took over the Cristóbal port.
The dispute began after Panama’s top court ruled earlier this year that the concession granted to Panama Ports Company in 1997 was unconstitutional.
After the ruling, authorities took control of the ports. CK Hutchison has called the takeover unlawful and said it is expanding its legal claims, with damages now exceeding $2 billion.
The Balboa and Cristóbal terminals sit on the Panama Canal, one of the world’s most important shipping routes.
The canal handles about 5% of global trade and around 40% of US container traffic, making control of these ports strategically important.
The issue has also gained attention due to tensions between the United States and China. The dispute has become part of a larger geopolitical issue, with both sides closely watching developments around the canal.
At the same time, CK Hutchison has been trying to sell 43 port terminals globally to a consortium led by BlackRock Inc. in a deal worth more than $19 billion.
The group also includes Mediterranean Shipping Company, and the company later added China Cosco Shipping Corporation to the deal in an effort to secure approval from Beijing.
However, the Panama issue has created uncertainty around the deal, which is now on hold.
China has reacted strongly, asking state firms to pause new projects in Panama and advising shipping companies to reroute cargo where possible. Cosco has already suspended services at Balboa.
The United States has also made allegations that China detained Panama-flagged vessels after the takeover, but Beijing has denied these claims.
Panama Ports Company said it will continue to pursue legal action against both Maersk and the Panamanian government.
Reference: Bloomberg
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