The Panamanian supreme court ruled Thursday that a Hong Kong-based company cannot operate ports on each end of the Panama Canal, drawing praise from U.S. leaders who have made it a priority to reduce Chinese influence over the waterway.
The high court’s decision annulled contracts granting CK Hutchinson the ability to operate the ports of Balboa in the Pacific and Cristobal in the Atlantic. The decision marks a major victory for the Trump administration’s efforts to combat Chinese influence over the Panama Canal.
“The United States is encouraged by the recent Panamanian Supreme Court’s decision to rule port concessions to China unconstitutional,” U.S. Secretary of State Marco Rubio said in a statement shared to social media Friday.
The ruling followed an audit from Panama’s comptroller that found irregularities in the 2021 decision to extend CK Hutchinson’s port concession for 25 years. CK Hutchinson’s Panamanian subsidiary denounced the court ruling and called it an afront to the rule of law in Panama.
“The PPC concession contract was the result of a transparent international bidding process. From that time, PPC has complied with its contractual and legal obligations,
including audits conducted by the State, always acting with complete transparency and a full willingness to cooperate,” the statement reads.
“The new ruling, based on available information, lacks legal basis and jeopardizes not only PPC and its contract, but also the well-being and stability of thousands of Panamanian families who depend directly and indirectly on port activity, but also the rule of law and legal certainty in the country. The ruling is diametrically opposed to previous decisions issued by the Supreme Court regarding contracts similar to the PPC contract.”
CK Hutchinson’s subsidiary also suggested it could pursue international legal proceedings in response to the court ruling.
CK Hutchinson and Panamanian authorities will ensure the ports continue operating until the court decision is carried out, Panamanian president Jose Mulino confirmed. When CK Hutchinson ceases port operations, a subsidiary of Danish transportation company A.P. Moller-Maersk will temporarily oversee the ports until a new company is granted the port concession, Mulino said.
Last year, the U.S. helped broker a deal for BlackRock to buy a majority stake in CK Hutchinson’s ports, but the Chinese government opposed the $23 billion transaction. When the deal was announced, CK Hutchinson said geopolitics played no role in it.
At the start of the second Trump administration, Rubio visited Panama in what was his first overseas trip as the top U.S. diplomat. Rubio’s trip reflected Trump’s early focus on China’s influence over the Panama Canal and its growing presence in Latin America more broadly. In his inaugural address, Trump called for the U.S. to regain control over the Panama Canal given its strategic importance and the fact that the U.S. built it.
Initially, Panama was put at the center of the U.S.’s geopolitical competition with China and the Trump administration’s adherence to the Monroe Doctrine, the longstanding belief that the U.S. should be assertive in its backyard and actively influence Latin American countries. The remarkable U.S. operation to oust Venezuelan socialist dictator Nicolas Maduro in early January reflected the administration’s “Donroe Doctrine” of aggressive U.S. involvement in Latin America with Trump’s unique flavor attached to it.