Chinese company seeks compensation of US$ 1.5 billion from Panama

The CK Hutchison conglomerate, with shares traded on the stock exchange in Hong Kong, initiated an international arbitration process against the Panamanian government, seeking compensation of more than US$1.5 billion (R$7.8 billion) for possible violations of an investment protection treaty, according to a statement released on Thursday (20.Aug.2026).

The measure represents a new legal front in the dispute over the operating rights of 2 important container terminals along the Panama Canal. The dispute began last year and intensified after the US government of Donald Trump (Republican Party) pressured Panama to regain control of the Chinese-linked operator.

CK Hutchison’s subsidiary, PPC (Panama Ports Company), held the concession to operate the ports of Cristóbal and Balboa, signed in 1997 and renewed for 25 years in 2021. CK Hutchison’s Hutchison Ports owns 90% of PPC, while the local government owns the remainder.

The facilities were embroiled in a geopolitical dispute after US President Donald Trump stated in his inauguration speech on January 20, 2025 that the US received a disadvantageous deal on the Panama Canal and that China operated it, promising to regain control of the waterway.

Under pressure from Washington, Panama’s Comptroller General began an audit of the PPC. On January 29 of this year, Panama’s Supreme Court ruled that PPC’s operating contract was unconstitutional and canceled the agreement.

The Panamanian government took possession of the 2 container terminals on February 23, assuming administrative and operational control and prohibiting PPC representatives from entering the sites. The company was forced to stop operations.

ARBITRATION IN PROGRESS

In a statement released on Thursday (Aug 20), CK Hutchison accused Panama of initiating a state crackdown on its investments in early 2025. The company said the government initiated arbitrary investigations without due process, revoked a 30-year legal position that protected the concessions, orchestrated the replacement of the PPC and systematically disseminated false information to cover up its misconduct.

CK Hutchison stated that Panama confiscated PPC’s assets, equipment, technology, employees and protected data, causing enormous financial losses.

The company issued a notice of treaty dispute on February 4, 2026, but Panama took no action to resolve the issue, according to the statement. After more than 6 months, the government only held a token consultation meeting and offered no compensation.

The new investment arbitration is distinct from an ongoing commercial arbitration initiated by the PPC on February 4. In this previous case, brought under the rules of the International Chamber of Commerce, the port operator seeks compensation of at least US$2 billion (R$10.4 billion) for contractual violations.

CK Hutchison noted that Panama had previously tried unsuccessfully to force the parent company to participate in the PPC commercial arbitration process, a move that the company said disregarded “the legal form of the company and the applicable contract”.

Liu Yang, partner at Haiwen & Partners and member of the Hong Kong Justice Department’s expert advisory group, said the two lawsuits are based on completely different legal foundations, despite sharing the same essential facts.

The February action is a commercial arbitration focused on contractual rights, such as breach of obligations and compensation calculations, while the August action is an investor-State arbitration based on investment protection treaties.

“Investment arbitration elevates the question of whether the State’s actions give rise to international liability, offering the claimant a broader scope for pressure and legal redress”Liu said.

He stated that the move signals that the company sees the situation not just as a breach of contract, but as a violation of state commitments to protect foreign capital, transforming a commercial dispute into a matter of international law and reputation.

When initiating the 2nd arbitration, CK Hutchison stated that events demonstrate that Panama has become a “risk country” which disrespects the rule of law, the legal personality of companies, contractual limits and the resolution of disputes arising from treaties.

This report was originally published in English by Caixin Global on August 20, 2026. It was translated and republished by Poder360 under mutual content sharing agreement.