Panama port dispute escalates as Hong Kong firm launches arbitration

A legal and geopolitical fight over control of ports on the Panama Canal is rapidly intensifying, with Hong Kong-based CK Hutchison moving to international arbitration after Panama’s top court voided its long-standing operating contract.

The company said on Wednesday that it had begun arbitration proceedings following last week’s ruling by Panama’s Supreme Court, which annulled the concession held by its subsidiary, Panama Ports Company, to operate two key ports along the canal. CK Hutchison said its board “strongly disagrees with the determination and corresponding actions in Panama” and is consulting legal counsel while reserving “all rights” to pursue further national and international legal remedies.

The decision has triggered an unusually blunt response from Beijing. China’s Hong Kong and Macau Affairs Office described the Panamanian ruling as “absurd”, “shameful and pathetic”, accusing the court of ignoring facts and “seriously damaging the legitimate rights and interests of enterprises in Hong Kong, China”.

“China has sufficient means and tools, and sufficient strength and ability to defend a fair and just international economic and trade order,” the office said, warning that “heavy prices both politically and economically will surely be paid” if Panama proceeds with the ruling.

The court decision came amid growing pressure from the United States, after President Donald Trump publicly accused China of exerting control over the Panama Canal and threatened to retake the waterway on national security grounds. While China’s statement did not name Washington directly, it said “some country has … used bullying tactics to force other countries to obey their will”, adding that Panama had “willingly succumbed” to hegemonic pressure.

US officials welcomed the outcome. John Moolenaar, chair of the US House Select Committee on China, called the court ruling a “win for America”.

Panama’s government has so far declined to publicly respond to China’s warnings. Following the court’s decision, the Panama Maritime Authority announced that Danish shipping giant Maersk would temporarily take over operations at the two ports previously managed by CK Hutchison’s subsidiary.

The dispute touches a strategically vital artery of global trade. The Panama Canal carries roughly 40 percent of US container traffic and about 5 percent of world trade. Built and operated by the United States for much of the 20th century, the canal was handed over to Panama in 1999, but it remains a focal point of geopolitical rivalry as US-China tensions spill into global infrastructure and logistics.