Hutchison Expands Arbitration Claims Beyond $2B Against Panama
The ongoing battle between CK Hutchison’s Panama Ports Company and the government of Panama has reportedly been “escalated beyond $2 billion,” the company announced in its latest volley in the back-and-forth between the two sides. It reportedly expanded the international arbitration with an additional filing on March 24.
PPC continues to call Panama’s actions an “unlawful takeover” of the terminals at the ports of Balboa and Cristóbal. It filed the arbitration claim in February with the International Chamber of Commerce Court of Arbitration related to the termination of its 1997 concession, which was extended for 25 years in 2021 to operate the two port terminals. The Supreme Court of Panama, however, ruled the enabling legislation unconstitutional, and on February 23, Panama seized the operations and placed them under the temporary management of Maersk’s APM Terminals and MSC’s Terminal Investment Limited (TiL).
In its latest filing, PPC cites the “state’s extreme executive actions, takeover, occupation, seizure of proprietary and protected documents, and a range of related misconduct over more than a month,” as it said it escalated the claims in the arbitration above $2 billion.
It also contends that Panama is seeking to slow the arbitration and bring in parties that are not related to the contract. The President of Panama, José Raúl Mulino, denied the allegations from PPC and dismissed the claim that Panama did not have lawyers to represent it in the arbitration. Panama had filed seeking additional time to review the case and prepare its initial response.
The CK Hutchison operating company continues to allege that the seizure was the end of a more than year-long case against the company by Panama. Prosecutors in the case alleged the company had not fulfilled its financial obligations and undertook multiple related-party transactions.
Panama confirmed after it took over the terminal operations that it had also searched PPC’s operations. At the time, it said it was part of a new case that was being investigated against the company’s operations. PPC continues to demand the return of the documents that were seized.
The legal case is likely to run for years, with CK Hutchison contending that Panama ignored its calls for discussions to resolve the dispute before the terminals were seized. Last year, the company had agreed to sell PPC to a partnership led by BlackRock and with the participation of TiL.
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In the chairman's statement issued with the year-end financial report on March 19, CK Hutchison asserted that “geopolitical pressure” had led to the “meaningful legal conflict with the Panamanian State.” It said it had also complicated ongoing discussions with potential counterparties regarding possible new arrangements for the disposition of interests in the group’s global port operations outside of Panama, Hong Kong, and mainland China.
Reports had said that MSC and BlackRock were anxious to complete the delayed agreement now that the issues of the Panama terminals had been removed. China, however, has opposed the sale of the port operations and demanded that COSCO play a significant role in the future of the operations. It was suggested that the meeting between Donald Trump and Chinese President Xi Jinping might help the negotiations. The presidential meeting has been rescheduled for May.