Panama court kicks Hong Kong’s CK Hutchison out of canal ports

Panama’s top court has annulled a contract for a Hong Kong-based company to operate a pair of ports on the country’s famous canal, casting doubt over a deal to sell the terminals and boosting President Donald Trump’s efforts to reassert US influence in the region.

In a unanimous ruling published late on Thursday, the Central American country’s Supreme Court said the concession for a unit of CK Hutchison Holdings to run the ports at either end of the Panama Canal was unconstitutional.

The case stems from lawsuits dating back to 2021 and a government audit in 2025 alleging irregularities.

The ruling will delight the US president, who vowed last year to “take back control” of the canal connecting the Pacific and the Caribbean and has criticised Chinese influence over the waterway.

Kevin Marino, US ambassador to Panama, hailed the ruling as “strongly affirming the rule of law”.

“It confirms that Panama’s independent judiciary enforces legal compliance, transparency and public service obligations.”

It also throws into further doubt a planned deal under which China hoped to keep sway over the two ports. Beijing has invested substantial sums in Panama since the country switched diplomatic recognition from Taiwan in 2017.

Panama’s President José Raúl Mulino said in a video message on Friday that Danish shipping giant AP Møller-Maersk would run the ports on an interim basis once the ruling takes effect.

Mulino added that after a transition period there would be “a new concession, under terms and conditions favourable to our country”. Panama might offer a separate concession for each terminal to avoid putting both ports under the same operator, officials said.

APM Terminals, a unit of Maersk, confirmed in a statement its willingness to temporarily operate both terminals.

The government had been preparing for different scenarios as the Supreme Court considered its verdict, Panamanian officials said, in order to be ready if the court decided to void the concessions.

“We had very good conversations with the US and Chinese governments [prior to the court decision] and explained to them that the only option for us would be to accept the court’s decision, whatever it was,” an official said.

CK Hutchison has operated the ports at Balboa and Cristóbal for nearly 30 years. The contract was extended for 25 years in 2021, without a bidding process.

The company last March agreed to sell its 90 per cent stake in the unit that owns and runs the two ports to a consortium including BlackRock. The proposal also included an 80 per cent stake in subsidiaries that run CK’s 43 non-Chinese ports in 23 countries.

The $23bn deal won praise from Trump, who hailed it as a sign his administration was “reclaiming” the canal. But Beijing later insisted that China’s state-owned shipping giant Cosco should have a majority stake, prompting the buyers to reconsider.

CK Hutchison’s share price closed 4.6 per cent lower in Hong Kong on Friday. The group’s Panama Ports Company unit called the court’s decision a “campaign by the Panamanian state against its own legal and contractual framework”.

The unit “reserve[s] all rights including recourse to national and international legal proceedings”, PPC said.

China’s foreign ministry said Beijing would “take all necessary measures to resolutely safeguard the legitimate and lawful rights and interests of Chinese enterprises” and the Hong Kong government urged its companies to review any investments in Panama.

However, Panamanian officials said China’s options for exerting pressure were limited, given that the two countries’ diplomatic relationship is less than a decade old.

“Panama does not owe China any money,” one official said. “It’s not a problem for us to access financing, we have more financing available than we need.”

The Mulino government already announced last year that Panama would withdraw from China’s Belt and Road infrastructure initiative.

Mulino said he had appointed Alberto Alemán Zubieta, a former administrator of the canal and a presidential adviser, to lead a technical group to guarantee an orderly transition. “There will be no improvisation whatsoever,” he said, and “there will be no lay-offs”.

Panama’s finance minister Felipe Chapman said his country had stressed to China in the run-up to the ruling that “the executive has no sway and does not control what another branch of the state does”.

“We do have the responsibility to accept the decisions of the Supreme Court,” he told the FT this week.

Chapman also noted that Panamanian law did not allow state-owned companies to own port concessions, a stipulation that would rule out Beijing’s move to secure a majority stake for Cosco.

The court’s ruling cannot be appealed but Hutchison can seek clarifications, which might delay its implementation. However, Panamanian officials said they expected the ruling to take effect within weeks.

An initial private lawsuit against the concession was filed in 2021 challenging the extension. This was rejected at first but the court admitted it after it was refiled in 2023.

Panama’s comptroller then brought another lawsuit, over whether CK Hutchison had breached concession contracts and violated the constitution, in July last year. It followed a government audit alleging irregularities and showing that $1.3bn in revenue had been lost since Hutchison took over the ports in 1997.

The US built the 82km canal more than a century ago and controlled it and an adjacent stretch of territory until it signed a treaty in 1977 for a gradual handover to Panama, which was completed in 1999.

Additional reporting by Richard Milne