CK Hutchison Holdings Limited said its Panama Ports Company S.A. (PPC) unit has initiated arbitration proceedings against Panama after the country’s Supreme Court of Justice ruled against PPC, declaring the concession granted to PPC to operate the Balboa and Cristóbal port terminals at the Panama Canal “unconstitutional.”

PPC commenced arbitration on 3 February under the applicable concession contract and the arbitration rules of the International Chamber of Commerce, according to the company. CK Hutchison Holdings Limited said the arbitration is grounded in the concession contract and a legal framework it described as having been embedded over almost three decades as “contract-law,” intended to provide legal certainty and long-term respect for the applicable legal and contractual framework.

Following last week’s decision regarding the Balboa (Pacific) and Cristóbal (Atlantic) terminals, the Panamanian State activated a technical operational transition plan aimed at ensuring continuity of port activities at both ports. The court ruling has not yet been published or become effective.

PPC, which has operated the two terminals under the concession contract since the 1990s, said the Panamanian State declared and broadly deployed steps to take over PPC’s operations after the judicial press release. PPC stated that, with references to the unpublished ruling, the steps taken by the State included unexpected site visits and instructions that PPC provide unrestricted access to physical, commercial, and intellectual property and information, as well as to employees, on the basis that the State is “systematizing and executing” a port transition plan through “coordinated actions” of State authorities.

PPC claims Panama has breached the applicable contract and law. The company said it would seek “extensive damages” based on an assessment of relevant financial data, subject to prompt resolution, and such other requests for relief as may prove necessary.