CK Hutchison begins arbitration as CK Hutchison explains what we know about the court’s decision in an explainer sheet

By Claire Jim, Ken Wu and Scott Murdoch

HONG KONG, Feb 4 (Reuters) – Hong Kong’s CK Hutchison said on Wednesday that its Panama Ports Company unit had launched international arbitration proceedings against Panama after a court there revoked its license to operate the two Panama Canal ports.

Panama’s Supreme Court last week voided CK Hutchison’s contract to operate the two Panama Canal ports at the center of a $23 billion deal to sell global port assets to a Hong Kong group.

A contract held by Panama Ports Company (PPC), a subsidiary of CK Hutchison, violated Panama’s constitution by granting special privileges and tax breaks to the company, the court said.

It is unclear how long the arbitration proceedings could take, although given the political sensitivities and complexity of the deal, it could drag on for years, some analysts said.

What we know:

CK Hutchison, controlled by Hong Kong’s richest man Li Ka-shing, announced in March 2025 the sale of 43 ports in 23 countries, including two near the Panama Canal, to a group led by BlackRock and Italian Gianluigi Aponte’s family-led shipping firm MSC.

After Beijing criticized the deal, the group said in July that it was in talks to include a Chinese “major strategic investor” in the consortium.

Sources said the Chinese investor is COSCO, and that it was seeking a larger stake, while others were interested in it being a minority shareholder, making the position a critical point for negotiations.

COSCO did not respond to a request for comment.

CK Hutchison’s shares have fallen more than 8% since the court ruling, although it is still trading at its highest since June 2021. It has risen nearly 60% since the sale was announced, as investors believe the bank will earn the company more than $19 billion in cash.

Tensions between China and the United States

The deal opens a new front in the dispute between the United States and China, as they battle for control of one of the world’s most important trade routes.

CK Hutchison’s ports of Balboa and Cristobal are considered strategic assets on the Panama Canal, the main maritime trade route to the United States. Balboa is at the Pacific entrance of the canal while Cristóbal is at the Atlantic entrance.

More than 40% of US container traffic, valued at approximately $270 billion annually, transits the canal, making it critical to the US supply chain.

President Donald Trump initially celebrated the proposed sale of CK Hutchison to BlackRock and MSC, saying he wanted to regain control of the strategic waterway.

US lawmakers had previously said CK Hutchison’s control of the port was a security risk to canal operations.

The court’s decision has been welcomed by US officials, with John Mullenar, chairman of the US House Select Committee on China, calling it a ‘victory for America’.

In a clear sign of China’s unease, on February 3, Beijing warned Panama that it would pay a “huge price” after a court ruling voided the CK Hutchison contract.

Hong Kong’s government has said it strongly opposes any foreign government using “coercive” means to harm its territory’s commercial interests.

What’s up and what’s next:

The two ports account for only 5% of Hutchison Port Holdings’ earnings before interest, tax, depreciation and amortization (EBITA), but their strategic importance is high.

It is unclear how the loss of the ports would affect CK Hutchison’s global port deal, but some analysts, including JPMorgan and Citigroup, said it would be easier for the parties to agree terms with Panama out of the picture.

All parties are still in negotiations on the sale of the port to CK Hutchison, a person with direct knowledge of the transaction said on condition of anonymity.

In addition to the Panama ports, other strategic assets for sale in the portfolio include the ports of Rotterdam in the Netherlands, Barcelona in Spain, Mexico and the Bahamas.

CK Hutchison’s China ports are important, but not part of the sale.

One option in the latest discussions is for the parties to consider breaking up the portfolio and stake three bidders in different ports, another source familiar with the matter said.

CK Hutchison, MSC and BlackRock did not respond to requests for comment.

Sources said it could take at least two years to clear all regulatory hurdles given the challenges of getting approval from anti-competition regulators in about 50 jurisdictions.

(Reporting by Claire Jim and Ken Wu in Hong Kong, Scott Murdoch in Sydney; Editing by Anne Marie Rowntree and Clarence Fernandez)