Panama’s Supreme Court has annulled key port concession contracts held by Panama Ports Company, a subsidiary of Hong Kong-based CK Hutchison, casting uncertainty over the future ownership of container terminals at the Panama Canal’s Pacific and Atlantic entrances.
The ruling affects long-standing contracts dating back to the 1990s that allow Panama Ports Company to operate the Balboa and Cristobal container terminals, which are separate from the canal’s waterway operations. The decision could also complicate CK Hutchison’s proposed sale of a global ports portfolio, including the Panamanian terminals, according to Reuters.
CK Hutchison had agreed to sell dozens of ports worldwide in a transaction valued at approximately US$23 billion, with BlackRock and Mediterranean Shipping Company among the leading parties in the buyer consortium. The Supreme Court decision introduces new uncertainty over whether the Panamanian assets can be included in that deal.
Panama Ports Company said it had not been formally notified of the ruling but described it as inconsistent with the legal framework under which it has operated for decades. The company said it has invested US$1.8 billion in infrastructure and technology over nearly 30 years of operating the ports and stated that it reserves all rights, including recourse to national and international legal proceedings.
The court said that, following extensive deliberation, it found the laws and acts underpinning the concession for the development, construction, operation, and management of the Balboa and Cristobal terminals to be unconstitutional.
The decision comes against the backdrop of intensifying US-China rivalry over global trade routes and control of strategic infrastructure. The ruling has been viewed by some observers as aligning with US efforts to limit Chinese influence around the Panama Canal, which handles roughly 5% of global maritime trade.
China’s foreign ministry said it would take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises, while the Hong Kong government said it strongly disapproved of the ruling, warning against actions that harm the legitimate business interests of Hong Kong companies.
CK Hutchison’s Hong Kong-listed shares closed 4.6% lower following the decision, while Hong Kong’s Hang Seng Index declined 2.1%. Market analysts said the ruling could weigh on the company’s shares in the near term as it reassesses its options regarding the planned asset sale.
