According to a Reuters report, a Panama-based subsidiary of the Hong Kong conglomerate CK Hutchison has commenced arbitration proceedings against Maersk. The action follows the takeover of two major ports adjacent to the Panama Canal, which are subject to an ongoing legal conflict.

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The Panama Ports Company stated that Maersk violated a long-term contract by supporting the Panamanian government’s effort to remove the company from operating the Balboa port. The company alleged Maersk aligned with the government in a campaign to replace it with a port operator linked to Maersk.

Panama’s Supreme Court invalidated the legal structure underpinning a 1997 concession that granted the company rights to operate the Balboa and Cristobal terminals. Subsequently, the government issued temporary contracts for Maersk and Mediterranean Shipping Company subsidiaries to manage the Balboa and Cristobal ports, respectively.

The court’s decision occurred after sustained pressure from the administration of the current President of the United States, which has expressed a desire to assume control of the canal and limit influence over the strategic waterway. Chinese officials have accused the U.S. of employing aggressive tactics and urged foreign governments to ensure equitable trade conditions.

This dispute has also impacted a separate, planned multibillion-dollar sale of a majority stake in CK Hutchison’s global ports business. The arbitration case will be heard in London, and the company notes this claim is distinct from its other legal actions regarding the matter. Neither Maersk nor the Panamanian government provided an immediate comment.

Source: IndexBox Market Intelligence Platform