PANAMA CITY – In a landmark ruling with global economic and political ramifications, the Supreme Court of Panama has declared unconstitutional the long-standing contract that allowed a Hong Kong-based company to operate two of the most strategic ports at the entrances to the Panama Canal. The decision immediately calls into question the future of port operations at Balboa on the Pacific side and Cristóbal on the Atlantic side, and forces the Central American nation to rethink who will manage critical infrastructure that handles a significant share of global maritime trade.
The case concerns Panama Ports Company (PPC), a subsidiary of the Hong Kong conglomerate CK Hutchison Holdings, which has operated the canal’s container terminals under concession contracts dating back to the late 1990s. These contracts were renewed in 2021, extending management rights for decades without a competitive public tender — a key reason the court found the legal framework supporting the concession to be incompatible with Panama’s constitution.
The Supreme Court’s ruling effectively strips the current legal basis for the PPC’s control over these facilities. The decision follows a lawsuit filed in 2025 by Panama’s comptroller general, who argued that the concession laws had generated irregularities and failed to protect national interests. In a statement, the court said it found the underlying laws and acts that enabled the concession to be unconstitutional after extensive review.
China’s government and Hong Kong authorities have criticized the ruling and vowed to protect the interests of Chinese enterprises, warning that the decision could undermine investor confidence. CK Hutchison condemned the judgment as inconsistent with the legal framework under which it has operated for nearly 30 years and signaled its intention to pursue legal remedies both domestically and internationally.
The Panama Canal itself remains under Panamanian control and is not directly affected, but the ports at Balboa and Cristóbal serve as essential logistical hubs for vessels transiting the waterway — collectively handling a substantial portion of container traffic linking the Atlantic and Pacific. Economists note that these terminals play a vital role in international supply chains, making their legal status a matter of global concern.
The ruling also reverberates in the global geopolitics of trade infrastructure. It comes amid ongoing efforts by the United States to counter perceived Chinese influence in critical logistics networks throughout the hemisphere. While some U.S. officials have publicly supported reducing foreign state influence near major hubs like the canal, Panama has previously maintained that the waterway and its surrounding facilities are sovereign national assets.
Investors reacted swiftly to the decision: CK Hutchison’s Hong Kong-listed shares dropped sharply, reflecting uncertainty over the future of the Panamanian assets and how they might be treated in ongoing negotiations, including past proposed transactions that would have transferred stakes in the terminals to global investment consortia.
Panama now faces the complex task of redefining its port management framework. Authorities are expected to explore interim administrative measures to ensure uninterrupted operations while preparing a new system for tendering or licensing strategic port activities in a way that aligns with constitutional and public interest standards.
The case underscores a broader global debate about sovereignty, foreign investment, and control over strategic infrastructure — a debate that resonates far beyond Panama’s borders and could influence how small and medium-sized states navigate economic development, national security, and international partnerships in a changing geopolitical landscape.