The dispute over two ports on the Panama Canal continues to escalate: Panama Ports Company (PPC), which belongs to CK Hutchison, has initiated arbitration proceedings against Maersk.
The proceedings are to take place in London and are separate from the already pending claim for damages of more than $2 billion against the state of Panama.
The background to this is the withdrawal of the concessions for the terminals in Balboa and Cristóbal. Panama’s Supreme Court declared the concession granted by PPC in 1997 to be unconstitutional at the beginning of the year. As a result, the two facilities were transferred to new operators: a Maersk unit took over operations in Balboa on the Pacific side of the canal, while MSC’s port division TiL manages the Atlantic port of Cristóbal. The handover initially took place on an interim basis.
PPC makes serious accusations against Maersk and Panama
PPC accuses Maersk of undermining the existing contract and colluding with the Panamanian government to oust the previous operator. Literally, the company stated that Maersk had coordinated with Panama as part of a government campaign against PPC and a plan to replace the company with new port operators.
The case is politically explosive beyond Panama: the terminals on both sides of the canal are considered strategically sensitive. The dispute is also linked to the planned sale of large parts of CK Hutchison’s international port portfolio. The deal with a consortium led by BlackRock, which was originally valued at around $23 billion, has been politically controversial for months. The Panama terminals should no longer be part of the transaction.
