CK Hutchison faces limited legal options after Panama voids port rights: experts

CK Hutchison faces limited legal options after Panama voids port rights: experts

Beijing will need to step in if the case is to be brought to an international court in The Hague, legal expert tells SCMP

Lam Ka-sing

1 Feb 2026 www.scmp.com

Hong Kong-based CK Hutchison Holdings faces limited legal avenues to challenge a Panama court ruling that nullified its rights to operate two major ports at the country’s canal, while taking the case to the International Court of Justice will require Beijing to act on its behalf, a legal expert has said.

Basil Hwang, managing partner of law firm Hauzen LLP, said billionaire Li Ka-shing’s conglomerate could turn to a suitable court with jurisdiction over Panamanian assets to seek damages against the country through seizures elsewhere.

“It appears the Supreme Court that delivered the judgment annulling CK Hutchison’s port contracts is Panama’s highest court,” Hwang said. “It’s not clear to me that CK Hutchison has any avenues of appeal in Panama.”

Hwang pointed to an alternative litigation strategy involving foreign jurisdictions.

“CK Hutchison’s options appear limited – it could take action against Panama in a neutral court and attempt to seize Panamanian assets overseas as damages,” he said.

“Any suitable court that has jurisdiction over Panamanian assets, for example, assets held in that jurisdiction, ships passing through, might be an option. The court would, however, have to accept jurisdiction in the first place.”

Hwang added that another obstacle for CK Hutchison was that Panama would almost certainly plead “sovereign immunity” if the country was sued in a foreign court.

The ruling, delivered on Thursday by the Plenary of Panama’s Supreme Court of Justice, declared Law No 5 of January 16, 1997, unconstitutional.

This decision strips the Hong Kong-based conglomerate’s subsidiary, Panama Ports Company (PPC), of its concession to operate the Balboa and Cristobal terminals.

CK Hutchison holds a 90 per cent stake in PPC, which had a 25-year concession to operate the Balboa and Cristobal ports that was renewed in 2021.

In response to the ruling, PPC said on Friday that the court’s decision was “inconsistent” with the relevant legal framework, warning that it might pursue legal action to challenge the ruling.

The judgment has jeopardised the company’s long-standing operations at the strategic waterway and further complicated its stalled efforts to sell its global port assets to a Western consortium.

Hwang dismissed the possibility of the company filing a direct claim with the International Court of Justice in The Hague.

“Not the International Court of Justice, as only nation-states can take action there, so for example, China will have to sue Panama on behalf of CK Hutchison,” Hwang said.

“Recourse against Panama in the International Court of Justice can only be sought by another state, such as China.”

Lawyer David Man Kwok-leung said the court order terminating the contract in question was based on certain alleged breaches.

“The alleged breach is not a fundamental breach, and it does not entitle the [Panamanian] government to terminate the contract,” Man said. “Even if the breach can be proved, compensation for the breach is to be awarded. There is no ground for termination.”

Man said the nullification lacked a solid basis in commercial law principles.

“According to commercial law … if there is a breach, you can only take back damages,” he said. “There is absolutely no reason to take back … [there must be] a fundamental breach to cancel.”

Man also said international courts would not handle the case.

“In law, [Panama] has no right to take it back,” he said. “This is not an international event … International courts will not bother with this … [it is] commercial law litigation.”

He suggested that the decision was driven by external geopolitical pressure rather than by the legal merits of the performance of the contract.

“The Americans forced [Panama, so Panama did it at will like this,” Man said. “But if viewed from a legal angle … the country claimed the reason added is a breach.

“If [it is a] breach, [CK Hutchison] can only give back damages to rectify … instead of nullifying a contract.”

Xiang Fangliang, executive director and partner at Shanghai BeautyValley Law Firm, said the odds of overturning the verdict at a domestic level were “extremely low”.

“Even at the international level, the possibility of obtaining compensation is not high,” he said.

Xiang said another option was seeking a settlement through arbitration.

“The company should negotiate transitional arrangements domestically while simultaneously initiating international arbitration procedures,” he said. “This should be combined with diplomatic efforts to form a comprehensive strategic response.”

Xiang also pointed to specific international arbitration channels.

“Both China and Panama are contracting states to the [International Centre for Settlement of Investment Disputes], meaning its arbitration awards are binding on the signatory nations,” he said.

“[Arbitration under the United Nations Commission on International Trade Law] is an ad hoc arbitration, which allows parties to select arbitrators with greater flexibility, though it lacks the daily management of a permanent institution.”

The legal setback follows a contentious audit launched in January 2025 by Panama’s comptroller general, who claimed the concession had generated US$3.78 billion for the operator at the two ports between 1997 and 2023, while Panama received only US$236 million.

PPC rejected these findings, asserting it had invested more than US$1.8 billion in infrastructure and complied with contractual obligations.

The United States government welcomed the court’s decision as a victory against Chinese influence in the western hemisphere, while the Panamanian presidency announced a transition period to ensure continuity of service before a new operator is selected.

Beijing has vowed to take all necessary measures to safeguard the rights of Chinese enterprises.

The Hong Kong government said it “strongly disapproves of and firmly rejects” the court’s ruling, warning that the move could prompt the city’s businesses to “carefully review their existing and future investments” in the country.00:10

Lam Ka-sing

He joined the Post in 2017 and has won numerous awards. These include Business Reporter of the Year and Best Property Market News Reporting at the 7th Business Journalism Awards of The Hang Seng University of Hong Kong, Excellence in Business Reporting at The Sopa 2020 Awards for Editorial Excellence as well as Merit Award at The 21st Consumer Rights Repor