CK Hutchison's subsidiary Panama Ports Company (PPC) said it had begun arbitration after Panama's Supreme Court last week invalidated its contrat.

US President Donald Trump last year put Panama under pressure to annul PPC's contract by threatening to reclaim the US-built waterway over what he claimed was China's outsize influence on the canal.

PPC said Tuesday it had begun arbitration "after a campaign by the Panamanian state specifically against PPC and its concession contract, throughout a year marked by a series of abrupt actions by the Panamanian state, culminating in serious damages."

The statement did not specify the amount of damages sought.

The Panama Canal connects the Atlantic and Pacific oceans through Central America.

It handles about 40 percent of US container traffic.

Since 1997, Hutchison had managed the ports of Cristobal on the canal's Atlantic side and Balboa on the Pacific side.

The concession was extended for 25 years in 2021, but on his first day back in the White House last year Trump repeated a threat to "take back" the interoceanic waterway.

The United States built the canal and operated it for nearly a century before ceding control to Panama in 1999.

In the aftermath of Trump's threats, the office of Panama's comptroller -- an autonomous body that examines how government money is spent -- requested that PPC's contract be annuled.

It argued the concession was "unconstitutional" and said Hutchison had failed to pay the Panamanian state $1.2 billion due.

After the Supreme Court ruling, the Panamanian government tapped Danish company Maersk to temporarily take over management of the port terminals until a new concession is awarded.

The case has drawn ire from China, which has warned it will take measures to "protect the legitimate and lawful rights" of Chinese companies.