Panama Court Ruling: CK Hutchison Starts Arbitration Proceedings

• The two Panama ports (Balboa and Cristobal) handle over 40% of U.S. container traffic worth roughly $270 billion annually, making them strategically critical despite representing only 5% of Hutchison Port Holdings' EBITDA
• The court decision has intensified U.S.-China tensions, with the U.S. welcoming the ruling as a 'win for America' while Beijing warned Panama of 'heavy prices' to pay for annulling the contract
• Some analysts suggest the global ports sale may be easier to complete without Panama included, though regulatory approval across nearly 50 jurisdictions could take at least two years, with parties considering breaking up the portfolio among the three bidders

Summary: CK Hutchison Initiates Arbitration Over Panama Port Contract Annulment

Hong Kong-based CK Hutchison announced February 4, 2026, that its Panama Ports Company (PPC) subsidiary has commenced international arbitration proceedings against Panama following the Supreme Court's annulment of contracts to operate two strategic Panama Canal ports.

Key Details:

• Panama's Supreme Court ruled last week that PPC's contracts violated the constitution by granting exclusive privileges and tax exemptions
• The affected ports—Balboa (Pacific entrance) and Cristobal (Atlantic entrance)—are part of a larger $23 billion deal announced in March 2025 to sell 43 ports across 23 countries
• Buyers include BlackRock, MSC (Italian shipping firm), and potentially COSCO as a Chinese "major strategic investor" added in July 2025
• The two Panama ports represent just 5% of Hutchison Port Holdings' EBITDA but hold significant strategic value

Geopolitical Tensions:

The situation has intensified U.S.-China competition over critical trade routes. Over 40% of U.S. container traffic, valued at approximately $270 billion annually, passes through the Panama Canal. President Trump initially praised the sale to BlackRock and MSC, while U.S. lawmakers previously deemed CK Hutchison's port control a security risk.

China warned Panama on February 3 of "heavy prices" following the court decision, while Hong Kong's government condemned "coercive" actions against its business interests.

Market Implications:

Analysts from JPMorgan and Citigroup suggest the deal may proceed more smoothly without Panama involved. Parties are considering breaking up the portfolio, with buyers potentially holding stakes in different ports. The broader portfolio includes strategic assets in Rotterdam, Barcelona, Mexico, and the Bahamas. Regulatory approval across nearly 50 jurisdictions could take at least two years.