Panama Supreme Court Cancels Hong Kong Firm’s Canal Port Deals

Panama’s Supreme Court has annulled contracts allowing Hong Kong-based CK Hutchison Holdings to operate container ports on the strategic Panama Canal, one of the world’s most vital shipping routes. The ruling affects two of the five canal ports—Balboa and Cristobal—which CK Hutchison, via its subsidiary Panama Ports Company (PPC), has operated since the 1990s.

The decision comes a year after former US President Donald Trump repeatedly claimed that China was “operating the Panama Canal” during his inaugural address, a claim that has been publicly denied by Panama’s government. US officials, including Secretary of State Marco Rubio, have previously called on Panama to curb Chinese influence in the canal’s operations.

The Panamanian court declared that the laws enabling CK Hutchison to run the ports were unconstitutional. PPC responded, stating the ruling “lacks legal basis” and could jeopardize the livelihoods of thousands of Panamanians dependent on port activities. The company highlighted that it had invested over $1.8 billion in infrastructure and technology since 1997.

Although CK Hutchison is privately owned by Hong Kong billionaire Li Ka-shing and not the Chinese government, recent political changes in Hong Kong have intensified scrutiny of the company internationally. Analysts view the court’s decision within the context of broader US-China rivalry over global trade and strategic infrastructure.

The ruling could also disrupt CK Hutchison’s $22.8 billion plan to sell port assets to a consortium led by US investment firm BlackRock and shipping group MSC, a deal seen as a step to mitigate political risk and secure US majority ownership of key global ports.

Following the announcement, CK Hutchison shares fell 4.6% in Hong Kong, while the Hang Seng Index dropped over 2%, reflecting investor concern over political uncertainties.

Panama’s government has maintained that the canal is sovereign Panamanian territory and remains under its control. Chinese authorities, however, have vowed to “safeguard the legitimate rights and interests” of Chinese companies, while Hong Kong’s government also rejected the court ruling.

The Panama Canal handles around 5% of global maritime trade, with up to 14,000 ships annually using the 51-mile (82 km) waterway as a shortcut between the Atlantic and Pacific Oceans. China accounted for 21.4% of cargo transiting the canal from October 2023 to September 2024, making it the second-largest user after the United States.