Panama’s Supreme Court has ruled that the contract awarded to Li Ka-shing’s CK Hutchison Holdings Ltd. to operate two ports near the Panama Canal is unconstitutional, in a victory for Donald Trump’s attempt to curb China’s control over strategic infrastructure in Latin America.
The decision, announced by the court on Thursday night in a brief Instagram post, brought new uncertainty to the Hong Kong conglomerate’s long-running effort to sell the facilities. CK Hutchison shares fell as much as 5.7% in trading in Hong Kong this Friday (30), the biggest drop since April.
Panamanian President José Raúl Mulino said in a TV address this Friday that the government is in talks with APM Terminals, a division of AP Moller-Maersk, to manage the ports on an interim basis. CK Hutchison’s local unit, Panama Ports Company, will continue to operate them until the procedures are completed; after that, APM Terminals would take over until a new contract is tendered “through an open process that defends Panama’s interests,” Mulino said.
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Mulino instructed the Panama Maritime Authority to meet with the Panama Ports Company and said he expected all parties involved to “openly collaborate in this process.”
CK Hutchison’s local unit, Panama Ports Co., said in a statement that it has not yet been formally notified of the court’s decision, but argued that the ruling is incompatible with the legal framework that underpins its operations in Balboa and Cristobal. The company defended coordination with the government to avoid interruptions and safeguard the concession, while reserving all applicable legal measures.
“China will take all necessary measures to firmly protect the legitimate and legal rights and interests of Chinese companies,” Foreign Ministry spokesman Guo Jiakun said at a press conference in Beijing this Friday, when asked about the Panamanian court’s decision.
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The court’s decision adds to the ports’ history as a focus of geopolitical tension. Trump has criticized what he perceives as Chinese influence over the canal and has even threatened to place it under American control, while Mulino has repeatedly asserted his country’s full sovereignty over the operation. CK Hutchison began operating the facility in 1997, with the contract later extended in 2021.
The legal challenge was filed last year by Panama’s comptroller general, Anel Flores, who claimed that the contract extension cost the country more than $1 billion in lost tax revenue and that Panama Ports Co. did not obtain proper approvals. Flores initially announced an audit of Panama Ports on January 14, 2025.
Parent company CK Hutchison has limited options following the verdict. The company can submit a request for clarification of the court’s decision, but cannot appeal. You can also seek international arbitration.
Panama Ports Co. will continue to operate the facility until requests for legal clarification are resolved, a person familiar with the matter said. The process may take a few weeks.
The two ports are part of the Hong Kong conglomerate’s plan to sell its 43 global terminals to a consortium led by Italian billionaire Gianluigi Aponte’s Terminal Investment Ltd. and American manager BlackRock Inc. While Trump presented the sale of the two facilities as a victory for U.S. influence in the strategic Panama Canal, China saw the move as submission to American pressure and a betrayal of the country’s interests in trade and navigation. To secure Beijing’s approval, CK Hutchison last year invited state-owned China Cosco Shipping Corp. to join the purchasing consortium.
The new turnaround “reflects the broader direction of the Donroe doctrine and emphasis on security, which will continue to bring headwinds to the U.S.-China relationship,” said Gary Ng, senior economist at Natixis SA. “Countries may face greater pressure from the US to filter foreign participation in infrastructure, and geopolitics will be an even more crucial factor.”
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If the transaction closes, it could net CK Hutchison more than $19 billion in cash. To advance discussions and reduce possible regulatory risks, the parties involved in the deal have been considering splitting the agreement into separate blocks, with different control structures, so that Cosco can have larger stakes in ports in regions more friendly to China, people familiar with the matter previously said.
“Panama’s decision will reduce the valuation of CK Hutchison’s ports business and transaction revenue, although this was widely expected given previous legal and political signals,” said Bloomberg Intelligence analyst Denise Wong. “With Panama accounting for less than 10% of international port movement and with the change to a block sales structure, the company should still be able to complete the majority of the port divestment and guarantee a smaller, but relevant, cash inflow.”
This is not the first time that countries have broken concessions with private companies to operate public infrastructure projects. Last year, Panama repossessed land from a Chinese company after the company failed to build a port there, as required by the government concession.
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In 2015, Egypt’s Damietta Port Authority terminated a concession contract awarded to a private consortium to operate a container terminal. In 2020, an international court approved the request for compensation for damages presented by the consortium. Although Egypt’s Supreme Court rejected the international court’s decision, the case was eventually resolved with a partial payment.
“There is a long list of precedents in which states have taken back control of ports and other infrastructure from private or foreign operators,” said Winston Ma, associate professor of law at New York University. “Concession contracts normally reserve governments the right to terminate for just cause or in the public interest.”
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