News / As HPH sues Panama for $2bn, will China revive plan for rival canal?

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Hong Kong port operator Hutchison is claiming $2bn in damages from Panama after its two facilities in the country were seized by authorities last month.

Following the lock-out of Hutchison-owned Panama Ports Co (PPC) employees from the terminals at Balboa and Cristobal, and the subsequent temporary transfer of operations at the facilities to APM Terminals and MSC respectively, Hutchison said it had launched a case against Panama in the International Court of Arbitration.

“PPC already filed an international arbitration against the Republic of Panama under the rules of the International Chamber of Commerce, seeking at least $2bn in damages, a figure that has been mis-stated by the Panamanian state in press comments,” it announced, adding that it was continuing to challenge the implementation of Decree 23 from Panama president Jose Mulino that ordered the cessation of its operating contract and transfer to APMT and MSC.

“PPC filed a recourse related to Executive Decree No. 23 dated 23 February 2026, based on its extreme scope mandating the taking of all property of PPC, including expansive property and equipment at the port terminals, as well as proprietary and legally protected documents and information.

“The recourse also challenges the Panamanian state’s corresponding radical implementation of the decree, and the seizure and misuse of PPC property unrelated to port operations.

“PPC filed a further request with the Panama Maritime Authority demanding immediate access to, and return of, PPC’s proprietary and legally protected documents and information,” it said.

The impact from Panama’s seizure of Balboa and Cristobal continues elsewhere – and far from scuppering the proposed sale of Hutchison’s international port portfolio to the MSC-BlackRock consortium, it appears to have rejuvenated the deal, according to The Financial Times. It reported on Friday that the parties had resumed negotiations on the remaining facilities and excluded PPC from the purchase.

Meanwhile, the longer-term impact on Panama and its canal could also be fundamental, maritime analyst Lars Jensen told delegates at last week’s S&G Global TPM event in Long Beach.

Mr Jensen noted that, from a Chinese perspective, the furore over PPC’s concessions agreement was the result of US pressure on Panama to reduce the influence of China over the canal.

“In the eyes of China, this is basically confirmation that the US, to some degree, has sway over the Panama Canal. And given that the canal is a critical maritime chokepoint also for China, what options does China have, geopolitically?

“A key option geopolitically is, of course, to build the Nicaragua Canal. Not because it will make them money; not because it’s a good financial venture; but because it’s a good geopolitical venture – to make China independent of a maritime chokepoint it clearly does not control.

“My expectation is we are going to see ramped-up activities around designing and potentially beginning to build a Nicaraguan canal in the coming years for geopolitical reasons. What it will do is create a direct competition between Nicaragua and Panama, to the benefit of shipping lines and shippers and to the detriment of Panama.” he said.

The project has been on the table since the Panama Canal was first built, and Mr Jensen reminded delegates that it was only around 10 years ago that Chines interests and Nicaragua’s government held a ground-breaking ceremony to begin construction – only for it to be quietly shelved soon afterwards.

“When you look back on it, this was basically China putting pressure on Panama – suddenly the Panamanian government declared they no longer recognised Taiwan as a country.

“And after that, there was not much talk about building the Nicaragua Canal. I cannot prove that there is a causal link, but the coincidence is interesting,” he added.