Panama’s Supreme Court has declared the concession agreements for the operation of two container ports on the Panama Canal null and void.
The Panama Ports Company (PPC), a subsidiary of the Hong Kong-based conglomerate CK Hutchison, which has operated the ports of Balboa and Cristóbal since the 1990s, is affected.
Panama court finds concession unconstitutional
Following a “thorough examination”, the court declared the legal basis of the concession unconstitutional. PPC rejected the decision and spoke of a measure without legal basis. The judge’s decision not only jeopardized the contract, but also the economic stability of thousands of families who depended directly or indirectly on the port activities. According to the company, PPC has invested more than 1.8 billion dollars in infrastructure and technology since 1997.
Politically, the ruling comes at a time of increasing tensions between the US and China. US President Donald Trump has repeatedly claimed that China is operating the Panama Canal, a claim that Panama has always rejected. President José Raúl Mulino once again emphasized that the canal “is and will remain” under Panamanian control. There is no public evidence of Chinese control over the canal, even though Chinese companies have a strong economic presence there. CK Hutchison itself is not owned by the Chinese state, but is increasingly being viewed internationally in the context of geopolitical influence debates.
Port investment worth billions at risk?
The decision could also affect a multi-billion dollar sale of CK Hutchison’s port holdings to a consortium led by US investor BlackRock and shipping group MSC. The total volume of the planned deal is around 22.8 billion dollars. The transaction was seen as an attempt to reduce political risks and mobilize capital from high-quality assets.
Investors reacted nervously on the markets: CK Hutchison shares lost 4.6% in Hong Kong trading, while the Hang Seng Index fell by more than 2%. China’s Foreign Ministry announced that it would take “all necessary measures” to protect the legitimate rights of Chinese companies; the Hong Kong government also sharply criticized the ruling.
The approximately 82 km long Panama Canal is used by up to 14,000 ships every year and handles around 5% of the global maritime trade volume. It is operated by the state-run Panama Canal Authority. In the period from October 2023 to September 2024, China accounted for 21.4% of the cargo volume transported, making it the second-largest user after the USA. Industry observers assume that PPC will initiate arbitration proceedings following its defeat in court.
