Panama’s Supreme Court on Friday annulled the contract awarded to Li Ka-shing’s company CK Hutchison Holdings Ltd. on the operation of two ports near the Panama Canal. The court called the deal unconstitutional, rattling the shares of a Hong Kong-based multinational conglomerate.
Following the ruling, China’s Foreign Ministry said it would take all measures to protect the legal rights and interests of Chinese companies.
CK Hutchison shares fell as much as 5.7% in Hong Kong trading on Friday, the steepest drop since April, a Bloomberg report said.
CK Hutchinson Canal Treaty
The decision by Panama’s Supreme Court comes after an audit by Panama’s comptroller alleged irregularities in the 25-year extension of the concession granted in 2021.
Within the first few days of his second term, US President Donald Trump threatened to take back the canal – built by the United States and handed over to Panama in 1999 – claiming that it was effectively “run” by Beijing.
A victory for the Trump administration?
The decision is widely seen as a victory for the Trump administration’s security agenda in the Western Hemisphere as Washington seeks to limit China’s strategic influence in the region.
Panama was US Secretary of State Marco Rubio’s first foreign stop after taking office as a diplomat under the Trump administration.
Although the Panamanian government and the canal authority have repeatedly said that China has no role in managing the canal, Rubio has made it clear that the United States considers port operations a national security issue. President Donald Trump has even argued that Panama should hand control of the canal back to the United States.
What did CK Hutchinson say about the verdict?
Panama Ports Co – led by parent company CK Hutchison – said in a statement that it had not yet been formally informed of the court’s decision. However, he argued that the ruling was inconsistent with the legal framework underpinning its operations in Balboa and Cristobal. The company called for coordination with the government to avoid disruption and protect the concession, while retaining all legal options.
Panama Ports Co. will continue to operate the facility while legal clarification is sought, according to a person familiar with the matter. The process is expected to take several weeks, Bloomberg reported.
How did China respond?
The Hong Kong government has said it strongly disapproves of and strongly rejects the Panamanian Supreme Court’s decision, Reuters reported.
