DAWG: Panama Supreme Court Annuls Chinese Canal Ports Deal, Country Retakes Possession

The last time I wrote anything at length about the Panama Canal specifically was last April, so almost a year ago.

The new Trump administration had moved swiftly to reassert American influence in the region and engineered a pretty impressive about-face as far as the Panamanian government went, which had been in the middle of a Belt and Road Initiative build-up with the Chinese Communists.

All that came to a screeching halt. Secretary of War Pete Hegseth went down there with a couple of US Navy ships for some collaborative maneuvers, managed to back the Panamanians out of a recently extended port management agreement with Hong Kong-based firm CK Hutchinson subsidiary Panama Ports Company (PPC) , and into a multinational deal to sell the rights (among others) for the Panamanian Canal ports to Blackrock.

Heads exploded in Beijing, who reached out and scuttled the entire deal, sending a high-level Chinese delegation to the isthmus country to do some personal reaffirmation relationship damage control.

…Three weeks ago, with the mainland Chinese government basically scuttling the Hutchinson-Blackrock port deal and the Panamanians having already signaled in February that they would leave the Belt and Road Initiative (BRI), the Chinese were agitated enough to take a personal hand in the situation.

Beijing rustled up some senior Chinese diplomatic firepower and sent them off to the isthmus for ‘talks.’

China has sent a senior-level delegation to Panama at a time when relations have been clouded by developments surrounding the Panama Canal, a move seen by observers as an attempt to “understand what is unfolding” and possibly reverse the situation.

The Chinese delegation walked into an unfriendly fusillade of reawakened Panamanian-American ties, and left the country with even less than they’d had on arrival. 

The president of Panama announced an official withdrawal from the BRI, Hegseth announced a deal working towards allowing American warships to transit the Canal ‘cost neutral,’ and the Panamanian government went after the port company for ‘failing to meet its contractual obligations’ and told them they wanted them gone.

In the intervening months, as Latin America itself seemed to swing back towards the United States, as country after country shook off Marxist-induced decades of torpor and decline by electing conservative, US-friendly candidates, Panama and CK Hutchinson waited for a court decision.

That finally came yesterday, and the government was ready for it. In January, the Panamanian Supreme Court ruled that the original agreement between the country and the Hong Kong firm was ‘unconstitutional.’ 

In yesterday’s ruling, it also annulled the extended port contract signed in 2021.

The government moved immediately to occupy both the Pacific-side Puerto de Cristobal and the Atlantic Port of Balboa, establishing national control of the Canal from one end to the other.

Panama Occupies Hutchison’s Terminals After Court Publishes Decision

The Supreme Court of Panama published its decision annuling the concession for the port terminals in Balboa and Cristobal to CK Hutchison, and immediately afterward, the Government of Panama moved to “occupy” both operations and take control of all of the equipment required to run the operations. The Government said in its statement that it will guarantee the operations of the ports until a new tender can be completed.

The publication of the decision in the court’s Official Gazette finalized its ruling that the law establishing the concession to the Panama Ports Company in January 1997 was unconstitutional. The court combined two suits into a single case and also declared the June 2021 25-year extension to be unconstitutional. It annulled the concession in a decision related to the management of national resources.

The government’s decree said the Panama Maritime Authority (AMP) would temporarily occupy the operations due to “urgent social interests.” The decree said AMP would determine the equipment required to maintain the operations, including cranes, vehicles, computers, programs, software, and other property, and take control of the property. It notes that it was not a definitive loss of ownership of the movable property. The government said it would also provide stability for the workers at the two ports.

The country had also pre-gamed running the ports with minimal interruption should the decision be favorable. They had Maersk and someone else on stand-by until they can get a proper contract tender going.

In the meantime, all that’s left for Hutchinson to do is kind of mewl, ‘Hey! But that’s our stuff!’

Panama says they’ll get back to them on that when things simmer down.

…Hutchison’s Panama Ports Company had predicted that the operations would be halted. It said Panama owned the land, but that all the equipment was its property. It had previously said that the government did not have a plan for the transition.

The government reported that a presidential advisor had met with the Panama Ports Company and notified them of the takeover of the facilities. It said the process would include the steps toward establishing two new concessions, which would take up to 18 months, and that there would be a different operator for each port. 

Previously, it had been reported that Maersk’s AMP Terminals would operate the two port terminals located at each terminus of the Panama Canal, and the company confirmed its willingness to assist the government. Media reports today indicate that AMP will operate one terminal in the interim and that MSC’s Terminal Investments Ltd. (TiL) will operate the other terminal.

The Panamanian government is sort of borrowing the PPC’s assets to keep the ships running smoothly, and then they’ll figure out who owes whom what.

…Publication of the court ruling in the official gazette Monday effectively ended the legal process.

“This does not imply the expropriation of those assets, but rather their use to guarantee the operation of the ports until their real value is determined for the corresponding actions,” said Panamanian President Jose Raul Mulino.

Hutchinson is reportedly willing to enter negotiations with Panama on a $2B buyout before resorting to international maritime lawsuits. 

In being booted from the operations, PPC did suffer quite a loss, as the ports concerned are integral to the overall operation of the Canal, handling a tremendous amount of cargo and vessel traffic.

…Maintaining the operations at Balboa and Cristobal is critical to Panama. The two terminals handle nearly 4 million TEU annually, representing more than a third of the containers moved in Panama. The terminals also provide important services to vessels transiting the Panama Canal.

Predictably, the Chinese are blustering and snorting fire for effect.

…China’s Hong Kong and Macao Affairs Office had previously warned that Panama would pay a “heavy price, both politically and economically” for stripping Hutchison of its tender.

Trump is saving the western hemisphere.

— US Patriot 🇺🇸 (@NJ_USA_Patriot) February 24, 2026

I’m much happier watching them protest in Hong Kong rather than closing things down in Balboa, you know?

Art of the deal.

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