Panama’s supreme court just delivered a major blow to a Hong Kong-based company by ruling its port concession at the Panama Canal unconstitutional.
The Daily Mail reported that on Thursday, the court declared the contract held by Panama Ports Company (PPC), a subsidiary of Hong Kong’s CK Hutchison, to be invalid due to alleged irregularities in a 25-year extension granted in 2021.
Panama’s president, José Raúl Mulino, assured the public on Friday that port operations at both ends of the strategic waterway would continue without disruption. The decision sparked immediate criticism from Beijing and Hong Kong officials, while aligning with U.S. concerns over Chinese influence near the canal.
Mulino emphasized continuity, stating, “Panama moves forward, its ports will continue operating without interruption, and we will continue serving the world as the logistics centre of excellence that we are.” That’s a bold promise, but it sidesteps the messy reality of transitioning operations while legal battles loom.
Until the court’s ruling is executed, maritime officials will collaborate with PPC to keep things running. Once the concession officially ends, a subsidiary of Danish logistics giant AP Moller-Maersk will step in temporarily until a new contract is awarded. The court, however, offered no timeline or clear next steps, leaving stakeholders in limbo.
PPC, blindsided by the ruling, claimed it hadn’t even been notified of the decision. The company insisted its concession came from transparent international bidding and hinted at legal action in Panama or beyond to protect its interests.
PPC’s statement didn’t hold back, arguing the ruling lacked “legal basis and jeopardises not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity.” That’s a fair point—local jobs and economic stability shouldn’t be collateral damage in geopolitical chess games.
Yet, the broader context can’t be ignored: the U.S. views these port operations as a national security matter. Trump has even suggested Panama should return control of the canal to American hands, a stance that underscores Washington’s unease with foreign players in the region.
Beijing didn’t mince words either, with China’s foreign ministry spokesperson Guo Jiakun vowing to take necessary measures to protect the interests of the Chinese company. While specifics weren’t provided, the threat signals potential escalation. This isn’t just about a port; it’s about global power dynamics.
Hong Kong officials also slammed the decision, accusing Panama of failing to honor contracts and urging their enterprises to rethink investments there. Their frustration is palpable, and it raises valid questions about whether Panama’s actions undermine trust in its business environment.
Look, the Panama Canal isn’t just a waterway—it’s a lifeline for global trade and a symbol of national sovereignty. Handing influence over it to any foreign entity, especially one tied to a rival power, is a gamble most Americans would rather not take. Panama’s right to decide must be weighed against legitimate security concerns.
The comptroller’s audit that triggered this ruling pointed to irregularities in the 2021 extension of PPC’s contract. That’s a red flag, but without clearer details from the court, it’s hard to gauge if this is purely legal or politically driven.
For now, Mulino’s administration is playing a balancing act—keeping ports operational while navigating international backlash. The involvement of a Danish firm in the transition might ease some tensions, but it’s a stopgap, not a solution.
What happens next is anyone’s guess, as the court’s vague statement leaves more questions than answers. Will Panama maintain its independence in decision-making, or will external pressures—be it from Washington or Beijing—shape the canal’s future?
At the end of the day, this ruling isn’t just about a contract; it’s about who controls a critical artery of world commerce. The stakes couldn’t be higher, and while Panama deserves to chart its own course, ignoring U.S. security interests in our backyard would be a risky move.
