In a landmark ruling with significant geopolitical implications, Panama’s Supreme Court has declared unconstitutional the contracts permitting Hong Kong-based CK Hutchison Holdings to operate critical container ports along the Panama Canal. The decision invalidates the legal framework under which subsidiary Panama Ports Company (PPC) has managed Balboa and Cristobal terminals since the 1990s.
The judicial verdict arrives amid escalating tensions between the United States and China regarding influence over global trade corridors. Former US President Donald Trump repeatedly asserted Chinese control over the strategic waterway, with his administration pressuring Panama to address perceived Chinese dominance. Secretary of State Marco Rubio previously demanded ‘immediate changes’ to China’s influence over canal operations.
Panamanian President José Raúl Mulino has consistently maintained national sovereignty over the canal, rejecting US claims of foreign control. The court’s determination followed extensive deliberation but was immediately challenged by PPC as legally unfounded. The company warned the decision jeopardizes stability for thousands of Panamanian families dependent on port operations and disregards over $1.8 billion in infrastructure investments.
The ruling potentially disrupts CK Hutchison’s planned $22.8 billion global port divestiture to a consortium led by US investment firm BlackRock and shipping group MSC. This sale, previously praised by Trump as restoring US ownership while criticized by China, represented a strategic effort to reduce political exposure in sensitive regions.
Financial markets responded swiftly, with CK Hutchison shares dropping 4.6% in Hong Kong trading, dragging the Hang Seng Index down over 2%. The reaction underscores both the company’s market significance and growing investor apprehension regarding geopolitical risk.
Despite Chinese companies representing substantial canal users (21.4% of cargo volume), no public evidence suggests direct Chinese government control over waterway operations. The Panama Canal Authority, a government agency, maintains full operational control of the vital shipping corridor that accommodates approximately 14,000 annual transits and handles 5% of global maritime trade.