PANAMA CITY, April 7 (Reuters) – 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 at the center of a legal battle that has embroiled Beijing and Washington.
Panama Ports Company (PPC) said in a statement 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 in a statement.
Neither Maersk nor the Panamanian government immediately responded to Reuters’ requests for comment.
CK Hutchison’s Hong Kong-listed shares rose 3.54% on Wednesday, as the Hang Seng Index was up 2.77%.
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.
Panama’s government then awarded temporary contracts for subsidiaries of Maersk and the Mediterranean Shipping Company (MSC) to run Balboa and Cristobal, respectively. PPC had previously said cancelling the contracts and awarding the temporary licenses was ‘unlawful’.
PPC said in late March it had widened the international arbitration against Panama and its damages claim had now risen to more than $2 billion.
The court ruling to annul the contract followed extended pressure from the Trump administration which said it wants to “take over” the Panama Canal. The administration said it wanted to curb what it calls Chinese influence over the key waterway, which carries about 5% of global maritime trade.
Beijing has accused the U.S. of “bullying tactics” and called on foreign governments to provide a fair trade environment.
The dispute also complicated CK Hutchison’s planned $23 billion sale of a majority stake in its global ports business to a consortium led by BlackRock and MSC.
PPC said 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-investor conduct.”
(Reporting by Elida Moreno; Writing by Sarah Morland and Scott Murdoch; Editing by Brendan O’Boyle and Stephen Coates)
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