The government of Panama on Monday took administrative and operative control of two key Panama Canal ports following the Panamanian’s Supreme Court ruling that annulled the contracts signed with a China-linked organization.
Panama’s top court ruled in late January that two contracts signed between the Panamanian state and the Panama Ports Company (PCC), a subsidiary of Hong Kong-based Hutchison Port Holdings, were unconstitutional. The contracts, originally signed in 1997 and then renewed in 2021, granted PPC control of two key Panama Canal ports located at opposite ends of the trade route in the provinces of Balboa and Cristóbal — both of which handle as much as 40 percent of the canal’s traffic.
The now-annulled contracts, and the Balboa and Cristóbal ports, were at the center of an ongoing debate initiated by President Donald Trump in December 2024 over China’s alleged growing influence and control of the Panama Canal.
The court’s ruling follows extensive investigations from both the Panamanian Attorney General and Comptroller General’s offices finding numerous violations of Panama’s rights in the contracts and numerous irregularities in PPC’s management of the two ports. Comptroller General Anel Flores, who presented a lawsuit against the contracts in 2025, accused PPC of breaching the terms of the agreement and causing roughly $1.2 billion in financial damages to Panama.
The Supreme Court’s ruling officially went into effect on Monday upon its publication in Panama’s Official Gazette — allowing the Panamanian state to initiate a process that will result in new administration deals for the two key ports. Moments after the ruling was published, conservative President José Raúl Mulino signed an executive decree ordering the temporary occupation “for reasons of urgent social interest” of all movable property within the two ports such as cranes and computer software.
Mulino addressed his nation on Monday evening and explained that the Panamanian state now has control of Balboa and Cristóbal ports. He clarified that the measure is not an expropriation of the ports, but rather, a use of the facilities to ensure port operations until their “real value is determined” for the eventual new management deals.
“In this regard, the Panama Maritime Authority, representing the State, owner of both ports, took possession of these facilities in strict compliance with Panamanian law and in protection of national interests, bearing in mind that this is a strategic activity for our economy and fundamental to world trade,” Mulino said.
The Panamanian president explained that he authorized two contracts presented by the Panama Maritime Authority (AMP) for the temporary management of the ports. One of the contracts grants APM Terminals, a subsidiary of Danish shipping conglomerate Maersk, temporary administration of the Balboa port while the other contract grants temporary administration of the Cristóbal port to TIL Panama, a subsidiary of Geneva-based Mediterranean Shipping Company (MSC).
Mulino emphasized in his address that the continuity of more than 7,000 workers is guaranteed in the first two stages of a transition process towards new port management deals. He stressed that suppliers will continue to provide their services in the ports and assured customers that they can continue operations in Panamanian ports.
“I would like to announce that, at the same time, we will begin the third stage, in an open and competitive manner, for the new port concessions, one in each port,” Mulino said.
“We will do so with transparency, with the humility not to repeat the mistakes of the past, and with the patriotic conviction that Panama’s interests must always come before any others, guaranteeing transparency, efficiency, investment, legal stability, and the greatest benefit for our Republic,” he continued.
The Panamanian newspaper La Prensa reported that APM Terminals and TIL Panama will have temporary administration of the ports for a period of 18 months. Collectively, both companies will pay $41.9 million to the Panamanian state for temporary operation rights. La Prensa pointed out that, in the case of the APM Terminals and the Balboa port contract, the company should give hiring preferences to Panamanian workers and should offer ongoing technical training programs for Panamanian workers in port operation and administration areas.
Panama Ports Company’s parent company, Hong Kong-based CK Hutchison Port Holdings, reportedly claimed on Tuesday that Panama authorities had “threatened” its employees with criminal prosecution if they defied orders to leave the Balboa and Cristóbal ports. The company argued that Panama’s decision to grant temporary control of the ports to Maersk and MSC was “unlawful” as it mulls national and international legal actions against Panama.
“CKH considers the ruling, the executive decree, the purported termination of PPC’s concession, and the takeover of the terminals to be unlawful,” CK Hutchison reportedly said in a statement to the Hong Kong Stock Exchange. “The actions by the Panama State also raise serious risks to the operations, health, and safety at the Balboa and Cristóbal terminals.”
The Panamanian Supreme Court’s annulment of the two China-linked canal port contracts drew the ire of the Chinese communist regime, which, days after the ruling, ordered a suspension of all “projects” in Panama in response to the court’s ruling. Mulino addressed the Chinese regime’s pressure campaign on early February, emphasizing that, “Unlike China, the Panamanian executive organ does not interfere in justice or the judicial courts of our country.”
“There is a great difference between a government managed by the Central Committee of the Chinese Communist Party and democratic institutions, which are what reign in Panama,” he explained.
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
