Panamanian Supreme Court ruled on Thursday evening that the terms authorizing the operation of two ports at both ends of the Panama Canal by the CK Hutchison Holdings violated the country’s constitution, as reported by US former officials, the ruling was seen as a diplomatic setback for the Chinese Communist Party.
President of Panama, José Raúl Mulino, stated on Friday that if Hong Kong’s CK Hutchison Holdings’ port permits are revoked, the government will hire a third-party company to operate the ports. Mulino emphasized the strategic importance of the ports for the national economy and international trade.
He announced plans to engage APM Terminals, a subsidiary of shipping giant Maersk, to manage CK Hutchison’s port facilities to ensure operational continuity until a new bidding process for permits is initiated. There is a possibility of separating the operation of the two ports.
The Panamanian Supreme Court issued a brief statement declaring the terms under which CK Hutchison operates the Balboa and Cristóbal ports unconstitutional, indicating that CK Hutchison will have to withdraw from the relevant port facilities.
This ruling holds significant geopolitical implications, with US President Trump scoring a win for his security ambitions in the Western Hemisphere, weakening Beijing’s influence in the region.
The case stemmed from accusations by the Panamanian Auditor General and private lawyers against CK Hutchison for violating the constitution, harming Panama’s national interests and taxpayers, and causing government revenue losses amounting to a staggering $1.3 billion.
According to The Wall Street Journal, CK Hutchison cannot appeal the Supreme Court’s decision but can request clarification, potentially delaying the termination of the operating permits.
The Court’s decision represents a diplomatic setback for Beijing. Just weeks ago, the US military captured former Venezuelan President Nicolás Maduro, a key ally of the Chinese Communist Party in Latin America.
A source revealed to The Wall Street Journal that after the US military operation in Venezuela, Beijing is assembling a special workgroup for Latin America to safeguard its interests in the region.
John Feeley, who served as the US Ambassador to Panama from 2015 to 2018, told The Wall Street Journal, “This is a diplomatic setback for China, but not an economic one.”
He noted that Chinese shipping companies are among the largest users of the Panama Canal and will still be able to utilize the waterway, with the ruling not impacting the canal’s operations.
Prior to the ruling, a source close to CK Hutchison believed the lawsuit had political motives. In the event of an unfavorable outcome, CK Hutchison planned to pursue international arbitration.
Felipe Chapman, Panama’s Finance Minister, stressed the importance of the rule of law, emphasizing that Panama has a high success rate in arbitration and highlighting its critical role in commercial activities.
Beijing has invested nearly $300 billion in infrastructure projects in Latin America, with a flagship project being the Chancay Port in Peru inaugurated by Chinese President Xi Jinping in November 2024. The $3.5 billion project is developed by the state-owned China COSCO Shipping Group.
Under pressure from the US, CK Hutchison agreed in 2025 to sell over 40 ports globally to the US-based BlackRock and Mediterranean Shipping Company for $23 billion, including the two ports in Panama.
However, Beijing opposed the deal, demanding COSCO’s inclusion and a majority stake, causing the transaction to be stalled.
The Panamanian government expressed shock as its permits do not allow participation of foreign state-owned enterprises. Officials stated that Chinese government officials and CK Hutchison executives did not engage with the Panamanian government to provide information or seek approval.
US Secretary of State Marco Rubio tweeted on Friday, expressing encouragement over the recent ruling by the Panamanian Supreme Court declaring the granting of port concessions to China unconstitutional.
Rubio’s first overseas visit as Secretary of State was to Panama, where he clearly articulated the US position on the matter.
He emphasized that the US regards the operation of these ports as a “national security issue.” The Trump administration has identified curbing Chinese influence in the Panama Canal region as a top priority, even suggesting Panama should return control of the canal to US administration.
A former Panamanian government official indicated to The Wall Street Journal that Panama has long been discontent with the terms of CK Hutchison’s deals and that Trump’s complaints intensified the longstanding dispute.
In 2025, Panama announced its withdrawal from China’s flagship “Belt and Road Initiative.”
The US is Panama’s largest investor and trading partner, with Panama using the US dollar as its currency and lacking a central bank or armed forces. In 1989, the US military overthrew Panama’s dictator Manuel Noriega.
In late 1999, just two months before Clinton transferred control of the canal to the Panamanian government, CK Hutchison defeated American competitors such as Bechtel to acquire the rights to operate the two ports of the Panama Canal.