Cheung Kong and Hardline against the Panama Government: After the port was forcibly occupied, they are claiming 2 billion in compensation. The rule of law must not be ignored.

Ask AI · What’s behind the contradictory actions of the Panama government taking over the ports?

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Recently, Hutchison Port Holdings, controlled by the Li Ka-shing family, issued another statement. It strongly criticized Panama’s government for continuing to disregard the rule of law and harming the reputation of foreign investment, regarding the forced takeover of two major ports operated by its Panama Ports Company (PPC). It also made it clear that it will not yield even a step, seeking at least $2 billion in compensation through international arbitration. This standoff involving core ports of the Panama Canal affects not only corporate interests, but also global foreign investors’ confidence.

The trigger for the incident began with Panama’s forced takeover. On February 23, the Panama side forcibly took over the ports of Balboa and Cristóbal operated by PPC, citing that the concession agreement was unconstitutional, without sufficient consultation. Armed personnel entered the ports without prior notice, seized facilities, documents, and assets, interrupted normal operations, and even signaled local media to curb PPC’s external communications.

It’s worth noting that since PPC obtained port concession rights in 1997, it has consistently fulfilled its contract. Its actual investment amount far exceeded its commitments. It has paid substantial taxes and dividends to the Panamanian side over the years, making it a foreign investor with significant contributions locally.

In response to Panama’s illegal actions, CK Hutchison quickly initiated legal actions to protect its rights. On March 6, PPC, under the International Chamber of Commerce arbitration rules, initiated international arbitration against the Panama government, claiming at least $2 billion in damages. It emphasized that this move is not symbolic compensation, but full recovery of losses caused by the Panamanian side’s serious breach.

However, the Panama government failed to appear without reason before the arbitration response deadline on March 13, delaying proceedings on the grounds that it had “not hired lawyers” and was “not familiar with the dispute.” This contradicts its earlier public statement that it had been “planning the takeover for a year,” clearly showing its disregard for rules.

Even more concerning is that after taking over, the Panama government continued to trample on the rule of law. It not only refused to return the seized proprietary documents of PPC, but also required PPC to apply for the return on its own in the arbitration proceedings, deliberately slowing down the process. At the same time, it interfered with the lawful interests of port suppliers and damaged the local business ecosystem.

These actions not only violate basic principles of international investment, but also seriously undermine Panama’s reliability as a destination for foreign investment. It is understood that the $2 billion claim is about 2.3% of Panama’s 2024 GDP. If the arbitration ruling goes against it, Panama will face significant fiscal pressure.

As of now, CK Hutchison’s share price is up 1.58%, with a total market value of HK$233.2 billion. The market has responded positively to its legal rights actions. China’s Ministry of Foreign Affairs and the Hong Kong Special Administrative Region government have also spoken out multiple times, firmly safeguarding the legitimate rights and interests of Chinese-funded companies. While the international arbitration process may be lengthy, CK Hutchison has already stated its position of “not yielding even a step,” and will permanently preserve all legal rights to seek remedies.

Panama’s improper behavior is, at its core, a challenge to international rule of law and investment rules. In the context of globalization, a stable, transparent, and rule-of-law-based investment environment is the key competitive advantage for attracting foreign capital. This dispute concerns not only CK Hutchison’s legitimate rights, but also serves as a warning to all companies intending to invest in Panama.

Only by sticking to the bottom line of the rule of law and respecting investors’ rights and interests can we truly retain foreign capital and achieve long-term development; otherwise, it will inevitably bring about the bitter consequences of damaging its investment reputation.