Panama Supreme Court Declares Chinese Company’s Canal Port Management Deal Unconstitutional

International Desk, PNN

Panama’s Supreme Court has ruled that the agreements for managing two key ports in the Panama Canal with a Chinese company are unconstitutional. The decision, announced late Thursday, pertains to facilities managed by Hong Kong-based company CCCC Hutchison.

The ruling stated that the legal framework and permits for port development, construction, management, and operations between the state and Panama Ports Company (PPC) are inconsistent with the country’s constitution. PPC has long managed the Balboa port at the Pacific end and the Cristobal container port at the Atlantic end of the Panama Canal. These agreements, in effect since the 1990s, were automatically renewed in 2021 for an additional 25 years.

The verdict comes amid U.S. concerns over China’s influence on the Panama Canal. A year ago, President Donald Trump warned that strategic control of the canal was effectively under China’s sway and posed a threat to U.S. security.

Approximately five percent of global maritime trade passes through the Panama Canal. The United States transferred control of the canal to Panama in 1999. In early 2025, the Trump administration increased pressure on Panama to reduce Chinese influence and strengthen U.S. involvement.

The petition to annul PPC’s agreements claimed the deals were unconstitutional and that the company had failed to pay proper taxes. Subsequent audits revealed accounting errors and irregularities, allegedly causing Panama approximately $30 million in losses, and around $1.2 billion over the original 25-year term.

The court’s ruling may require restructuring of the legal framework for port management and may necessitate new tenders in the future, analysts say.

PPC denied all allegations, stating the verdict has no legal basis and that it jeopardizes the livelihoods and stability of thousands of Panamanians involved in port operations.

China also responded, with a foreign ministry spokesperson saying all necessary steps will be taken to protect the legal rights and interests of Chinese companies.

After Trump’s threats, CCCC Hutchison offered several ports worldwide for sale, including Panama’s, in a proposed $23 billion deal led by U.S. investment firm BlackRock. However, objections from the Chinese government prevented the deal from proceeding.

The Trump administration’s tough stance on regions such as Panama, Venezuela, and Greenland has sparked discussions in the international arena, and its assertions of influence in the Western Hemisphere are creating new geopolitical tensions, analysts say.