Panama’s Supreme Court ruled late Thursday that the concession granted to a subsidiary of Hong Kong–based CK Hutchison Holdings to operate ports at both ends of the Panama Canal was unconstitutional, a decision that aligns with long-standing U.S. efforts to curb any Chinese influence over the strategic waterway.
The ruling followed an audit conducted by Panama’s comptroller, which cited irregularities surrounding a 25-year extension of the concession approved in 2021.
Blocking China’s influence over the Panama Canal has been a key objective of U.S. policy in the region, particularly under the Trump administration. Panama was also the first foreign destination visited by U.S. Secretary of State Marco Rubio after taking office.
While Panama’s government and the Panama Canal Authority have repeatedly stated that China exerts no influence over canal operations, Rubio has underscored Washington’s view that control of the ports poses a national security concern. U.S. President Donald Trump had previously gone so far as to suggest that Panama should return control of the canal to the United States.
The Supreme Court issued only a brief statement on the matter and did not clarify what steps would follow regarding the future management of the ports.
Political analyst Edwin Cabrera said the immediate next step would be formal notification of the parties involved.
Responsibility for deciding the fate of the ports would then fall to Panama’s executive branch, specifically the Panama Maritime Authority.
“I have the impression from conversations that I have had with some people that the operation (of the ports) will not stop,” Cabrera said.
CK Hutchison Holdings announced last year that it had reached a deal to sell its controlling stake in the Panamanian ports, along with other port assets worldwide, to an international consortium that included BlackRock Inc. That transaction, however, appeared to stall amid objections from the Chinese government.
At the same time, Panama’s comptroller carried out an audit of the concession held by the Panama Ports Company, which has operated the ports since 1997. The contract was renewed for another 25 years in 2021 under the previous Panamanian administration.
Comptroller Anel Flores said the audit uncovered unpaid obligations, accounting discrepancies and what he described as the existence of a “ghost” concession operating within the ports since 2015. The company has denied the allegations.
According to the audit, the irregularities resulted in losses of approximately $300 million to the Panamanian government since the extension of the concession, and an estimated $1.2 billion over the original 25-year term.
Flores also said the extension had been approved without the legally required endorsement from his office.
On July 30, the comptroller formally challenged the Panama Ports Company’s operating contract before the Supreme Court.
