Panama’s Supreme Court has annulled the concession framework underpinning Panama Ports Company’s long-running contracts at the Panama Canal’s Atlantic and Pacific gateways, casting immediate uncertainty over who will control the Balboa and Cristóbal container terminals and complicating CK Hutchison’s proposed $23 billion sale of its global ports business to a consortium led by BlackRock and Mediterranean Shipping Company.
In a ruling issued after what it called “extensive deliberation,” the court found the laws and state acts that supported the concession with Panama Ports Company—PPC, a subsidiary of Hong Kong-based CK Hutchison—were unconstitutional. The terminals sit at the canal’s Pacific and Atlantic entrances and operate separately from the Panama Canal Authority’s management of the waterway itself.
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The decision strikes at the heart of a privatization framework that has governed the terminals since the 1990s and could force Panama to redesign its legal architecture for port concessions, potentially requiring new tenders to keep the facilities running. Ensuring uninterrupted operations at Balboa and Cristóbal is critical for carriers that rely on Panama as a transshipment hub linking Asia, the Americas and Europe. About 5% of global maritime trade transits the canal.
PPC said it had not been formally notified of the ruling but called the decision inconsistent with the legal framework that has governed its operations. The company said it has invested $1.8 billion in infrastructure and technology over nearly three decades in Panama. Analysts expect PPC to consider international arbitration in response.
The court’s move is a fresh blow to CK Hutchison’s sweeping divestment plan, which includes selling dozens of ports worldwide. CK Hutchison’s Hong Kong-listed shares fell about 5% on Friday, outpacing a roughly 2% drop in the Hang Seng Index. “I would expect near-term weakness in CK Hutchison until such time as they flesh out a new sale structure,” said David Blennerhassett, a strategist at Ballingal Investment Advisors who publishes on Smartkarma. “That new structure could be substantially delayed depending on how they weigh up options on this court decision.”
The ruling lands amid an intensifying geopolitical contest over chokepoints in global trade and follows years of scrutiny of Chinese-linked assets near the canal. The planned sale to a consortium led by BlackRock and MSC had been welcomed in Washington as a way to place strategic terminals under majority U.S.-aligned ownership. Former President Donald Trump publicly praised the prospective deal, including the Panamanian assets. Chinese authorities had signaled opposition, and people familiar with discussions previously said Beijing favored an outcome involving state-owned COSCO taking a controlling role.
BlackRock and MSC did not immediately respond to requests for comment on the court’s decision or whether the Panama uncertainty could force changes to the deal perimeter or valuation. CK Hutchison had been awaiting a final court ruling after Panama’s attorney general previously argued the concession framework was unconstitutional.
Critics of the PPC contracts, which were extended in recent years, have long contended the terms disadvantaged Panama. In July, President José Raúl Mulino said that if the court invalidated the concessions, public-private partnerships could step in to manage the two ports, signaling a potential transition path if new tenders are required.
For carriers and shippers, the immediate question is continuity. Any disruption at Balboa and Cristóbal could ripple through schedules already stretched by drought-related draft limits on canal crossings, redirections around the Cape of Good Hope and ongoing Red Sea security concerns. For investors, the uncertainty threatens to delay or reprice one of the infrastructure sector’s largest deals in recent years.
The Panamanian government has yet to outline an interim operating plan. CK Hutchison and PPC must decide whether to litigate or negotiate, while prospective buyers weigh whether and how to carve Panama out of the sale. The stakes—for Panama’s reputation as a logistics hub, for the flows of global commerce and for a marquee ports transaction—are now unmistakably higher.
By Abdiwahab Ahmed
Axadle Times international–Monitoring.
