New Delhi, Feb. 4 -- Hong Kong's CK Hutchison Holdings said Wednesday its subsidiary started arbitration proceedings against Panama after that country's Supreme Court ruled a concession for the subsidiary to operate Panama Canal ports was unconstitutional.

Hutchison said it strongly disagreed with last week's ruling, and China warned Panama would pay "a heavy price" if it persisted. Panama's president has moved to assure the public that the ports would operate without interruption after the ruling, which advanced a U.S. aim to block any influence by China over the canal linking the Atlantic and Pacific oceans.

Hutchison's subsidiary, Panama Ports Company, began arbitration proceedings Tuesday under the rules of the Paris-based Internati...