BACKGROUNDER FOLLOWING THE PANAMA SUPREME COURT DECISION RE THE PANAMA PORTS COMPANY
On 30 January 2026, it was announced that, on 29 January, Panama’s Supreme Court of Justice had declared the Panama Ports Company SA (PPC) contracts to operate container ports in Panama as unconstitutional. In fact, what was declared unconstitutional was Law No.5 of 16 January 1997 and other regulations related to the concession granted for operation of the ports.[1]
In July 2025, the Comptroller had filed a lawsuit, following an audit of the company – the aim of which was said to determine whether the company was complying with its concession agreements, including adequate reporting of income, payments and contributions to the state.[2] This the Court had enjoined with an earlier lawsuit filed in February 2025 by two Panamanian lawyers.[3] The Comptroller requested that the Court annul the concession contract signed between Panama and PPC in 1997.
In April 2025, announcing the results of the audit, the Comptroller said that that he found breaches of the contract with the State by PPC for more than $300 million; he accused the Panama Maritime Authority (AMP) of “distorting” figures, and announced that he would file criminal complaints against company officials, as well as against the directors responsible for the renewal of the concession, which had been due to expire in April 2025. He also claimed that auditors could only verify $690 million of the investment of $1 billion required for said automatic renewal of the concession in 2021.
In February 2025, Panama’s Attorney General had given his opinion that the contracts between PPC and the state were unconstitutional. He had argued that the Government in 1997 had improperly agreed to transfer the rights of the state, and that the contract affected public welfare and interest, thereby affecting free competition and demand.[4] Among other claims he made, he alleged that PPC had used “concessionaires” to carry out container transport services, and that Panama had not received a percentage of the profits of these companies. On top of that, despite the fact that the volume of containers (measured in TEU) increased, the company’s reported profit, at least on paper, had remained practically the same.[5]
PPC contested the Court’s decision, saying that the ruling “lacks legal basis”. It also argued that the decision was contrary to previous Supreme Court precedents on contracts of a similar nature. It pointed out that, in 28 years of operation, more than $1.8 billion had been invested in infrastructure, technology and “human development”. This, it said, was far more than other port operators in Panama, had led to thousands of direct and indirect jobs being created, and helped Panama become a world class logistics and port hub.[6] While the decision of the Supreme Court cannot be formally appealed, PPC can request clarification, and the ruling has yet to be published officially, which could delay any changes.
Alternatively, Hutchison might be able to seek international arbitration.[7]
The ports were at Balboa at the Pacific end of the Canal and Cristóbal at the Caribbean/Atlantic end.
PPC is a subsidiary of Hong Kong-based C K Hutchison. In March 2025, Hutchison had reported that it had reached agreement in principle to sell the management of a total of 43 ports around the world, including the two PPC ports, to new owners, a consortium led by US investment firm, BlackRock. This in turn had followed criticism of what was seen as “Chinese ownership” of the ports at either end of the Canal by President-elect Trump, which he repeated following his inauguration.[8]
What was seen initially as a done deal soon hit delays, with the Chinese Government referring to regulatory checks on the proposed sale.[9] In August 2025, the chairman of Hutchison said that the sale would be delayed until 2026 due to “high geopolitical uncertainty“. China had apparently been pushing to have China-based Cosco Shipping join the consortium buying the ports, and separately the French shipping company CMA CGM had also shown interest in the Panamanian concessions.
The immediate response from the Government to the Supreme Court decision came on 30 January and was that there would be no layoffs, and no immediate changes. President Mulino referred to the interest shown in operating the ports by APM Terminals Panama, a subsidiary of the AP Moller-Maersk group. In 2025, APM Terminals had acquired the concession to operate the trans-isthmus railway through acquisition of the Panama Canal Railway Company (PCRC)[10] which, in February 2023, had been granted a 25-year extension to the concession, i.e. to 2048.
President Mulino said that, in the short term, there should be no immediate change for the ports, with a period of continuity for the current operator.[11] After this, a new contest for the concessions would be held.
The reaction from China was that it would “take all necessary measures” to safeguard the legitimate rights and interests of its companies, according to the state-run Xinhua news agency. This was in reporting remarks by a spokesman of the Ministry of Foreign Affairs at a press conference in Beijing.[12] The Hong Kong Government was also reported to strongly disapprove of the ruling and rejected it. It said that it strongly opposed the use of “coercive, repressive or other unreasonable means in international economic and trade relations to seriously harm the legitimate business interests of Hong Kong enterprises”.[13]
In the US, the Wall Street Journal on 30 January described the Court’s decision as a victory of President Trump.
To provide some useful background, there are actually five container terminals on the Canal route, the other three are owned and controlled by a Taiwanese, a US, and a Singapore company – with the US company having the largest of the five.[14] Given its history vis a vis the US occupation of the Canal Zone as effectively a sort of US colony from 1903 to 1999, Panamanian law does not allow that the ports (nor the railway, for that matter) can be owned by anyone other than the Government. Hence what companies wishing to operate such facilities have are concessions. The ACP does not have responsibility over such port concessions or port operators, concessions are granted by the government. However, the ports, though outside the Canal itself, are located in what might be seen as Canal waters, which the ACP controls, and ACP pilots must lead vessels from the ports in, out or through the Canal.
Finally, PPC began operations in Panama in 1997, under the aforementioned Law No.5,[15] seemingly without any complaints at the time.[16] Its Balboa terminal handled more than 2.3 million TEU in 2024, whereas Cristóbal, the smallest of the country’s container ports, handled just under 1.4 million TEU in 2024.
Ray Todd
Panama City
Republic of Panama
30 January 2026
[1] This was the outcome of two lawsuits identified as files 119313-2025 and 17547-2025.
[2] Launched in January 2025, this was said to have revealed as much as $1.3 billion having been lost government revenue.
[3] https://www.prensa.com/judiciales/corte-suprema-de-justicia-declara-inconstitucional-contrato-entre-el-estado-y-ppc/
[4] https://newsroompanama.com/2025/02/26/attorney-general-gomez-considers-contract-with-panama-ports-unconstitutional/
[5] https://www.prensa.com/economia/contralor-flores-estado-dejo-de-ganar-1200-millones-por-contratos-con-ppc/
It has to be said that the former Comptroller and PPC both disagreed with the findings.
[6] https://www.laestrella.com.pa/economia/panama-ports-company-rechaza-fallo-de-la-corte-suprema-y-evalua-acciones-legales-DM19511156
[7] This happened after the Supreme Court ruled in 2023 that the contract for a huge copper mine was also constitutional. The Canadian mining company (and others) sought compensation under the investor-state dispute settlement (ISDS) arrangements. In 2024, a UK law firm noted that Chinese investors had resorted to ISDS mechanisms to address grievances related to their overseas investments.
[8] “China is operating the Panama Canal, and we didn’t give it to China”, he had said in his inaugural address. Obviously, China was in no way “operating” the Canal – the ports are not even a part of the Canal, but lie outside the Canal, albeit at either end of it. The Panama Canal Authority (ACP) was set up to run the Canal, and the country’s Constitution and national law guarantees its independence of the government – as it is, in essence, a neutral international waterway, this would emphasise its neutral status, while also serves to safeguard the Canal from any undue political interference or corruption in Panama.
[9] Both from the Hong Kong authorities, and from the Ministry of Commerce, the State Administration of Foreign Exchange, and other regulatory bodies in China, it was reported.
[10] The former owners of PCRC had been Canadian Pacific Kansas City Limited (CPKC) and the Lanco Group/Mi-Jack of the US.
[11] https://www.laestrella.com.pa/panama/nacional/mulino-sobre-panama-ports-company-no-habra-improvisacion-ni-despidos-MM19512086
[12] https://www.laestrella.com.pa/mundo/china-advierte-que-tomara-medidas-tras-fallo-de-la-corte-suprema-sobre-panama-ports-BM19511404
[13] https://news.rthk.hk/rthk/en/component/k2/1842060-20260130.htm
[14] US multinational SSA Marine operates the Port of Manzanillo in Colón, which handled more than 2.7 million TEU containers in 2024. It has the greatest amount of container movement in the country.
[15] This allowed the company to operate container, bulk, ro-ro, passenger and general cargo terminals on both coasts of the country. Subsequently, it has been amended on three occasions through laws approved by the National Assembly and sanctioned by the Executive
[16] Of course, the UK handed Hong Kong, where PPC’s parent was based, to China in July 1997 but, at the time, Hong Kong was expected to operate as a “Special Administrative Region” under the so-called “one country, two system” principle. China discarded this principle in 2020, making the distinction between Hong Kong and the Mainland largely moot.
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