Panama's government has taken control of two strategic ports at the Panama Canal after the country's Supreme Court ruled that a Hong Kong company's operating agreement was unconstitutional. The move comes amid growing tensions between the U.S. and China over influence in the region, particularly after President Trump's recent claims about Chinese control of the canal.
PANAMA CITY — Panama’s administration issued an official order Monday to take immediate control of two strategic ports positioned at the Panama Canal’s gateways, following the nation’s highest court’s final decision that deemed a Hong Kong corporation’s management contract unconstitutional.
The government directive gives the Panama Maritime Authority permission to assume control of the facilities citing “urgent social interest” as justification. This takeover encompasses all equipment and assets at both the Balboa and Cristóbal port facilities, including lifting equipment, transportation vehicles, computing infrastructure and operational software.
This port controversy reflects the larger geopolitical tension between America and China, with Panama finding itself in the crossfire after President Trump claimed last year that China was “running the Panama Canal.”
The Hong Kong firm CK Hutchison had planned to transfer ownership of both ports to a group including American investment giant BlackRock, but China’s government quickly stepped in to block the transaction.
Earlier this year in January, Panama’s highest court overturned the legislation that had approved the management agreement for Panama Ports Company, a CK Hutchison subsidiary. The court decision also cancelled a 2021 contract extension, leaving the port management without legal authorization.
Since 1997, PPC has managed these port facilities after Panama granted the company rights to oversee operations at both the Pacific and Atlantic canal entry points.
Just days earlier, Panama’s leadership promised to maintain uninterrupted port services and protect worker employment, announcing that APM Terminals, owned by Denmark’s A.P. Moller-Maersk corporation, would handle interim management duties until new contracts are finalized.
In response, CK Hutchison Holdings has initiated dispute resolution procedures against Panama through the International Chamber of Commerce framework. The duration and potential consequences of these legal actions remain uncertain. The company has also warned of potential legal action against APM Terminals should they proceed with operations, though the Danish company maintains it has no involvement in the legal dispute.
Last week, a PPC representative informed local news outlets that the company was pursuing negotiations with Panama’s government to maintain their operational role.