Panama has taken control of two major ports located at the Pacific and Atlantic entrances of the Panama Canal, ending decades of operation by a subsidiary of Hong Kong–based conglomerate CK Hutchison. The move follows a final ruling by the country’s Supreme Court that declared the company’s concession contract unconstitutional, setting off a legal and diplomatic dispute involving Panama, China, and the United States.
Government officials entered the Balboa and Cristóbal terminals on Monday after a decree authorized the Panama Maritime Authority to assume administrative and operational control. The order cited “urgent social interest” as justification and granted authorities access to equipment and infrastructure ranging from cranes and vehicles to computer systems and software. CK Hutchison said employees were warned they could face criminal prosecution if they refused to comply with instructions to vacate the facilities.
The ports have been managed by Panama Ports Company, a CK Hutchison subsidiary, since 1997. The company renewed its concession in 2021 for another 25 years, but Panama’s Supreme Court ruled in January that both the original agreement and the extension violated constitutional requirements. Publication of the ruling in the country’s official gazette finalized the cancellation of the contracts and cleared the way for the takeover.
Panamanian officials have insisted the action does not amount to expropriation. President José Raúl Mulino said the state was temporarily using the assets to guarantee uninterrupted port operations while authorities determine the next steps. The government has issued interim concessions lasting up to 18 months, allowing APM Terminals, part of the Danish shipping giant A.P. Moller-Maersk, to operate Balboa, while TIL Panama, affiliated with Mediterranean Shipping Company, manages Cristóbal.
Officials say employment levels and daily operations will remain stable throughout the transition. The administration has also promised to develop a new competitive bidding process for long-term concessions, aiming to avoid past contractual disputes.
CK Hutchison strongly disputes the government’s actions and has begun arbitration proceedings through the International Chamber of Commerce. The company argues it has received no compensation despite decades of investment and claims Panama conducted a coordinated campaign against the concession. Executives have also warned they may pursue legal action against third parties involved in operating the terminals without agreement from the firm.
The dispute has drawn international attention because of the canal’s central role in global commerce. Roughly five percent of maritime trade passes through the waterway each year, making control of nearby logistics hubs strategically sensitive. Tensions have intensified amid growing rivalry between Washington and Beijing over shipping routes and infrastructure projects worldwide.
U.S. President Donald Trump has repeatedly criticized Chinese involvement in canal-related operations, arguing that American interests must be protected in the Western Hemisphere. China’s Hong Kong and Macao Affairs Office responded sharply to Panama’s court decision, urging the country to maintain a fair business environment and respect contractual commitments.
The controversy may also affect a proposed $23 billion sale of CK Hutchison port assets worldwide, including the Panamanian terminals, to a consortium led by U.S. investment firm BlackRock and Mediterranean Shipping Company. With arbitration now underway and diplomatic pressure mounting, the future ownership and management of the canal’s gateway ports remain uncertain as legal battles continue across multiple jurisdictions.
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