Panama’s Supreme Court on Friday scrapped the contract granted to Li Ka-shing’s CK Hutchison Holdings Ltd to operate two ports near the Panama Canal. The court ruled that the deal was unconstitutional, rattling shares of the Hong Kong-based multinational conglomerate.
Following the ruling, China's foreign ministry has said it will take all measures to protect the lawful rights and interests of Chinese companies.
CK Hutchison’s shares fell as much as 5.7% in Hong Kong trading on Friday, the steepest drop since April, according to a report by Bloomberg.
CK Hutchinson canal deal
The Panama Supreme Court's ruling comes after an audit by Panama’s comptroller, which 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 had threatened to take back the canal – built by the United States and handed to Panama in 1999 – claiming Beijing was effectively "operating" it.
Win for Trump administration?
The decision is widely seen as a win 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 overseas stop after he assumed office as a diplomat under the Trump administration.
Although Panama’s government and the canal authority have repeatedly said China has no role in running the canal, Rubio made it clear that the United States sees the operation of the ports as a national security concern. President Donald Trump had even claimed that Panama should hand control of the canal back to the United States.
What CK Hutchinson said about the ruling
In its statement, Panama Ports Co – led by parent company CK Hutchison – said it has not yet been formally notified of the court’s decision. It has, however, claimed that the ruling is inconsistent with the legal framework underpinning its operations at Balboa and Cristobal. The company called for coordination with the government to avoid disruption and safeguard the concession, while reserving all legal options.
Panama Ports Co will continue to run the facilities while legal clarification is sought, according to a person familiar with the matter. The process is expected to take several weeks, reported Bloomberg.
How China reacted
The Hong Kong government said it strongly disapproves of and firmly rejects the Panama Supreme Court ruling, as per a report by Reuters.
