Hong Kong’s Cheung Kong Holdings Limited announced on April 7 that it has initiated arbitration proceedings against the global shipping giant Maersk Group regarding the takeover of the operating rights of a container terminal in Panama. The dispute centers on allegations that Maersk Group violated a long-standing cooperation agreement by assisting the Panamanian government in replacing the operating company.
The statement released by Cheung Kong Holdings Limited’s subsidiary in Panama voiced its objection to the takeover of the container terminal and formally started arbitration proceedings against Maersk Group, with the arbitration set to take place in London.
According to the statement, there was an existing long-term contract between the two parties that specifically outlined the exclusive operational arrangement for the container terminal in Panama and outlined joint business development through a series of operational facilities and data owned by the company.
The statement pointed out that Maersk Group breached the contract by aligning with the Panamanian government and facilitating the replacement of Cheung Kong Holdings Limited’s subsidiary as the operator of the port.
The incident stems from a ruling by the Panamanian Supreme Court on January 29, declaring the operating concession contracts of Cheung Kong Holdings Limited’s subsidiary on both ends of the Panama Canal invalid due to exclusive rights and tax benefits that were deemed unconstitutional.
Prior to this, the Panamanian Office of the Comptroller General conducted an audit, alleging irregularities in the extension of the 25-year concession rights granted to Cheung Kong Holdings’ subsidiary by the Panama Canal Authority in 2021.
Following these events, Panamanian President Jose Raul Mulino ordered the temporary takeover of the Balboa port on the Pacific side and the Cristobal port on the Atlantic side on February 23 to ensure the stability of port operations.
Local media outlet La Prensa reported that the temporary operation after the takeover involved subsidiaries of APM Terminals under Maersk Group and Mediterranean Shipping Company (MSC) until a new concession arrangement is determined through bidding.
On February 3, China cautioned Panama that there would be a “heavy price” to pay for the Supreme Court ruling. In response on February 5, President Mulino emphasized that Panama is a dignified country and will not tolerate threats from any nation.
The issue has escalated geopolitically, with U.S. Secretary of State Marco Rubio publicly criticizing China’s detention of Panamanian-flagged vessels on April 2.
According to data from Lloyd’s List Intelligence, the number of detained Panamanian-flagged vessels in Chinese ports has significantly increased since March, with potentially up to 100 vessels being held, and nearly 70 cases since March 8. The U.S. Federal Maritime Commission also noted that such inspections are “far beyond the norm.”
Rubio stressed that these actions by China could disrupt global supply chains and increase costs for businesses, reaffirming U.S. support for Panama’s sovereign decisions and recognizing it as a reliable business partner.