Panama’s Supreme Court is nearing a decision in a high-stakes lawsuit that could terminate a Hong Kong-based company’s 50-year license to operate two key ports at the entrances to the Panama Canal, a ruling with major implications for U.S.-China geopolitical competition, according to reporting by The Wallstreet Journal.
The case centers on CK Hutchison, which has managed the Balboa port on the Pacific side and Cristóbal on the Atlantic side since the late 1990s. Private lawyers and Panama’s comptroller have alleged the company violated the constitution by harming government and taxpayer interests, pointing to a government audit that identified up to $1.3 billion in lost revenue over the decades.
A 2021 renewal of the license has drawn particular scrutiny, with critics arguing Hutchison secured overly favorable terms amid booming global trade that transformed Panama into a vital transshipment hub.
Panamanian Finance Minister Felipe Chapman described the company’s relationship with the country as “very tense and difficult,” while President José Raúl Mulino has signaled the status quo is untenable, saying last year he did not see continuation of the contract, “amended or not.”
The dispute has gained fresh attention amid President Trump’s renewed criticism of the canal’s handover. In a speech Tuesday at the Detroit Economic Club, Trump highlighted the canal’s historical significance, stating: “We built the Panama Canal out of tariffs. The Panama Canal was the single biggest investment, relatively speaking, that this country has ever made—it would be the equivalent of trillions of dollars today. And Jimmy Carter gave it away for $1. It was also the most profitable thing ever built… We gave it away for $1. At least we got a dollar; it’s better than most of those guys do—we got $1.”
The justices face intense political pressure: upholding Hutchison’s license risks straining relations with the Trump administration, which has repeatedly criticized Chinese influence near the canal and demanded greater U.S. control over the strategic waterway. A ruling against the company could deliver a symbolic victory for Trump, who has long claimed the U.S. should “take back” the canal it built and handed over to Panama in 1999.
If the court voids the license, Panama officials say they are prepared to ensure operational continuity by appointing an interim operator and launching a new bidding process, potentially splitting the two ports to maximize value.
CK Hutchison views the lawsuits as politically motivated and has indicated it would pursue international arbitration to protect its investment if the ruling goes against it. China’s foreign ministry has called for a fair and nondiscriminatory environment for companies, and Beijing is reportedly forming a Latin America task force to safeguard its regional interests amid heightened U.S. pressure.
The dispute has also complicated a separate global deal in which CK Hutchison agreed to sell more than 40 ports worldwide—including the Panama terminals—to a group led by BlackRock and Mediterranean Shipping Co. for nearly $23 billion. China opposed the transaction, demanding involvement by state-run Cosco, and Panama officials were surprised the talks proceeded without their input or consent, given restrictions on foreign state-owned entities in local licenses.
At least 5% of global trade passes through the Panama Canal, underscoring the stakes for Panama’s economy and the broader shipping industry. Officials have assessed scenarios to prevent disruptions, with former Panama Canal administrator Alberto Alemán emphasizing that “continuity of operations is fundamental for the transshipment industry worldwide.”
A decision is expected soon, with no appeal possible from the Supreme Court, though Hutchison could seek clarifications that might delay implementation.
