Panama ports contract with Hong-Kong based CK Hutchison ruled 'unconstitutional' by Supreme Court

Panama’s Supreme Court has ruled the contracts that allow a Chinese-linked company to operate two major ports at the entrances to the Panama Canal 'unconstitutional,' a decision that could significantly reshape control of one of the world’s most strategic waterways. The ruling, announced late on Thursday (January 29), declared that the legal framework underpinning concession agreements between the Panamanian state and Panama Ports Company (PPC) violates the country’s constitution.

PPC is a subsidiary of Hong Kong-based conglomerate CK Hutchison Holdings. Under the contracts, PPC has operated the Balboa container terminal on the Pacific side of the canal and the Cristobal terminal on the Atlantic side since the late 1990s. The concessions were automatically renewed in 2021, extending the company’s operating rights for an additional 25 years. The case was brought before the court last year amid allegations that the contracts were based on unconstitutional legislation and that PPC failed to meet its tax obligations.

A government audit later identified accounting errors and irregularities that authorities claim resulted in losses of approximately $300 million since the most recent extension and about $1.2 billion over the original contract period. The court’s decision may force Panama to revise its legal framework for port concessions and could lead to new tenders for the operation of the terminals.

PPC strongly rejected the ruling, saying it lacks a legal foundation and threatens economic stability. In a statement, the company warned that the decision could harm thousands of Panamanian families who rely directly or indirectly on port activity.

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China’s government also responded swiftly, with a foreign ministry spokesperson saying Beijing would take all necessary steps to protect the legitimate rights and interests of Chinese companies. The ruling comes amid rising geopolitical pressure from the United States. After returning to office in early 2025, US President Donald Trump renewed claims that Chinese influence over canal-linked infrastructure poses a national security risk. The United States built the Panama Canal and transferred control to Panama in 1999. Today, the canal handles roughly five percent of global maritime trade.

Following Trump’s threats last year to reassert US control over the canal, CK Hutchison announced plans to sell dozens of ports worldwide, including the Panamanian terminals, to a consortium led by US investment firm BlackRock in a deal valued at nearly $23 billion. The transaction, however, has stalled amid reported objections from the Chinese government. Trump has adopted a similarly aggressive stance toward other parts of the Western Hemisphere, issuing economic and military threats and declaring that US dominance in the region will not be challenged.