CK Hutchison’s Panama unit files arbitration against Maersk over ports takeover

[PANAMA CITY] Hong Kong-based conglomerate CK Hutchison’s Panama unit has launched an arbitration against Maersk after the takeover of two strategic ports near the Panama Canal which are at the centre of a legal battle that has embroiled Beijing and Washington.

In a statement, Panama Ports Company (PPC) said that Maersk broke a long-term contract by siding with the Panamanian government to help remove PPC from its operations at the Balboa port and replace it with a Maersk-affiliated operator.

“Contrary to the contract, Maersk undermined the agreement and aligned itself with the Republic of Panama in connection with its state-led campaign against PPC and a scheme to replace it through a takeover that installed new port operators,” PPC said.

Panama’s Supreme Court in late January invalidated the legal framework supporting the 1997 concession granting PPC the right to operate the Pacific-facing Balboa and Atlantic Cristobal terminals on either side of the Panama Canal.

By the following month, the government had awarded temporary contracts for subsidiaries of Maersk and the Mediterranean Shipping Company (MSC) to run Balboa and Cristobal, respectively.

The dispute also complicated CK Hutchison’s planned US$23 billion sale of a majority stake in its global ports business to a consortium led by BlackRock and MSC.

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The court ruling followed extended pressure from the Trump administration, which said it wants to “take over” the Panama Canal, to curb what it calls Chinese influence over the key waterway, which carries about 5 per cent of global maritime trade. Beijing has accused the US of “bullying tactics” and called on foreign governments to provide a fair trade environment.

PPC said that the arbitration will take place in London, and that its claim against Maersk is separate from and without prejudice to its ongoing efforts “to hold Panama accountable for its anti-contractual and anti-investment conduct”.

Neither Maersk nor the Panamanian government immediately responded to requests for comment. REUTERS