Hong Kong’s richest man Li Ka-shing’s company seeks $1.5B from Panama over port takeover

The conglomerate said Thursday that Panama breached an investment protection treaty after a series of measures over the past two years that culminated in the “destruction of the concession contract for the ports of Balboa and Cristóbal and takeover of the ⁠port terminals,” according to Reuters.

“Panama has demonstrated that it has become a risky country that disregards the rule of law, corporate form, the scope of parties to a contract, the scope of arbitration agreements, treaty rights and the resolution of treaty disputes,” the conglomerate said in a statement.

The latest claim is separate from contractual arbitration initiated by its subsidiary, Panama Ports Company (PPC), which is seeking at least HKD15.6 billion in damages over what it called an illegal takeover of the operations.

CK Hutchison said it notified Panama of the treaty dispute on Feb. 4, following a year-long state campaign against its assets, but efforts to reach a resolution had failed.

Panama’s Supreme Court ruled in January that PPC’s concession to operate the ports was unconstitutional, annulling the contract. The government took control of the terminals on Feb. 23.

CK Hutchison accused the authorities of seizing property, equipment, technology, documents and other materials during the takeover, causing substantial damage to its investments.

The group last week revealed that the “forced termination” of operations at the two strategic Panama Canal ports cut overall throughput by 1% in the first half of the year, even as its wider port portfolio performed better than a year earlier.

Billionaire Li Ka Shing in 2018. Photo by Reuters

The dispute followed CK Hutchison’s attempt last year to sell 43 ports in 23 countries in a US$22.8 billion deal, triggering a geopolitical standoff between Washington and Beijing over control of global trade infrastructure.

Sandra Marco Colino, an associate professor at the Chinese University of Hong Kong’s law school, said that unlike the earlier contract dispute arbitration initiated by PPC, CK Hutchison’s latest claim was an investor-state dispute settlement claim based on public international law, according to the South China Morning Post.

“A treaty claim shifts the fight from a private concession battle into international diplomacy and state liability,” said Colino, who also serves as a non-governmental adviser to the International Competition Network.

Li Ka-shing has been named the richest man in Hong Kong for several years in a row. His net worth was at almost $50 billion at the time of publishing. His business empire spans ports, retail, infrastructure, telecommunications and property through his flagship companies CK Hutchison Holdings and CK Asset Holdings.