Authors: Claire Jim, Kane Wu, and Scott Murdoch
HONG KONG, Feb 4 (Reuters) – Hong Kong’s CK Hutchison said on Wednesday its Panama Ports Co. had started international arbitration proceedings against Panama after a Panama court canceled its license to operate two Panama Canal ports.
Panama’s Supreme Court last week revoked CK Hutchison’s contract to operate two Panama Canal ports, which was at the center of a $23 billion deal to sell CK Hutchison’s global port assets.
The court said the contract held by CKH Holdings subsidiary Panamanian Ports Company (PPC) gave the company exclusive privileges and tax exemptions, violating the Panamanian constitution.
Some analysts said it was unclear how long the arbitration process might take, but given the political sensitivity and complexity of the deal, it could last several years.
What we know:
CK Hutchison, controlled by Hong Kong’s richest man Li Ka-shing, announced in March 2025 that it would sell operations covering 43 ports in 23 countries, including two ports near the Panama Canal, to a group led by BlackRock and MSC, the shipping company run by Italy’s Gianluigi Aponte family.
The group said in July that it was in talks to bring “major strategic investors” from China into the consortium after Beijing criticized the deal.
The Chinese investor, Cosco, is seeking a large stake, while other companies want it to become a minority shareholder, a position that has become a sticking point in negotiations, sources said.
COSCO did not respond to a request for comment.
CK Hutchison’s shares have fallen more than 8% since the court ruling, but they are still trading at their highest level since June 2021. The stock has risen nearly 60% since the sale was announced as investors believe it will bring more than $19 billion in cash to the company.
Tensions between China and the United States
The agreement opens a new front in the battle between the United States and China, which are vying for control of the world’s most important trade route.
CK Hutchison’s Ports of Balboa and Cristobal are considered strategic assets for the Panama Canal, a major maritime trade route to the United States. Balboa is at the Pacific entrance of the canal, while Cristobal is at the Atlantic entrance.
More than 40% of U.S. container traffic (worth approximately $270 billion annually) passes through the canal, which is critical to U.S. supply chains.
President Donald Trump initially welcomed CK Hutchison’s proposed sale to BlackRock and MSC, saying he wanted to regain control of the strategic waterway.
U.S. lawmakers have previously said CK Hutchison’s control of the port poses a security risk to canal operations.
The court’s ruling was welcomed by US authorities, with John Mueller, chairman of the US House of Representatives Special Committee on China, calling it a “victory for the United States”.
In a clear sign of China’s unease, Beijing warned Panama on February 3 that it would pay a “heavy price” after a court ruled to cancel CK Hutchison’s contract.
The Hong Kong government stated that it strongly opposes the use of “coercion” by any foreign government to harm Hong Kong’s commercial interests.
The current situation and what happens next:
Although the two ports account for only 5% of Hutchison Port Holdings’ earnings before interest, taxes, depreciation, and amortization (EBITA), their strategic importance is high.
It’s unclear how losing the ports will affect CK Hutchison’s global port deals, but some analysts including JPMorgan Chase & Co. and Citigroup said it would be easier for all parties to reach a deal with Panama.
A person with direct knowledge of the transaction, who asked not to be named, said the parties were still negotiating the sale of CK Hutchison Ports.
In addition to the Panama port, other strategic assets in the portfolio for sale include ports in Rotterdam in the Netherlands, Barcelona in Spain, Mexico and the Bahamas.
CK Hutchison’s Chinese ports are important but not part of the sale.
Another person familiar with the matter said one option in the latest discussions is for the two sides to consider splitting the portfolio so that the three bidders hold stakes in different ports.
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, such as gaining approval from anti-competition regulators in nearly 50 jurisdictions.
(Reporting by Clare Jim and Kane Wu in Hong Kong and Scott Murdoch in Sydney; Editing by Anne Marie Roantree and Clarence Fernandez)