China's Hutchison Launches Arbitration Against Panama Over Port Contract Cancellations

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Panama's Supreme Court cancels Hutchinson's contract to operate the Balboa and Cristobal ports in the Panama Canal, triggering an international arbitration and raising tensions between Washington and Beijing.

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Hong Kong-based Hutchinson, acting through its subsidiary, Panama Ports Company (PPC), commenced arbitration proceedings against Panama on February 3 through the International Chamber of Commerce. This move follows Panama's void of PPC's contracts to operate the ports of Balboa and Cristobal, both located along the Panama Canal.

Panama's Supreme Court voided PPC's concession to operate both ports on January 29. The concession dated back to 1997. Since then, the company has invested about US$1.8 billion in infrastructure at the assets.

The Supreme Court stated that the contract was "unconstitutional." In response, PPC denounced what it called the "destruction" of its existing contract.

"As a backdrop to the arbitration, and in addition to the other aspects of its campaign, over the past year, the Panamanian State has chosen to reverse its longstanding positions regarding the legal and contractual framework, breached its obligations under the contract, and commenced, pursued, and/or supported legal proceedings aimed at destroying the concession contract," said PPC.

The Chinese company Hutchison controls two of the five ports that are part of the Panama Canal, one of the world's most important navigation routes connecting Asia to the Americas' East Coast.

China-U.S. Tensions

The Supreme Court's announcement follows U.S. President Donald Trump's remarks suggesting the canal was controlled by Chinese companies.

Since taking office, President Trump has sought to expand U.S. influence across the Americas and counter Chinese and Russian interests in the region.

Since the order was announced last week, Chinese authorities have rejected and criticized Panama's decision.

Al Jazeera quoted the Chinese government's Hong Kong and Macau Affairs Office, stating that Panama's court "ignored the facts, breached trust, and seriously damaged the legitimate rights and interests of enterprises in Hong Kong, China." The office said that a political and economic price will be paid.

Panama's President Raul Mulino backed the judicial decision. "Panama strongly rejected the statement issued by the Office of Hong Kong and Macao Affairs regarding the Supreme Court's ruling on the port contract. Panama is a state governed by the rule of law and respects the decisions of the judiciary, which is independent of the central government. The Ministry of Foreign Affairs will issue a statement on the matter and take appropriate action."

The Panama Canal recorded 13,404 transits in its 2024-2025 fiscal year, accounting for about 3% of the world's maritime global trade volume.

Key Takeaways

• Panama's Supreme Court voids Hutchison's port contracts in the Panama Canal.
• The Chinese company launched an arbitration against Panama.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resource's Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).

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