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Panama’s Supreme Court has annulled a contract held by a unit of a Hong Kong company to operate key ports at either end of the Panama Canal, in a victory for Donald Trump, who has vowed to reassert US influence in the region.
In a unanimous ruling late on Thursday the court said the concession for a unit of CK Hutchison Holdings to operate the Balboa and Cristóbal ports at either end of the waterway was unconstitutional.
The court said in a statement the decision, in a lawsuit brought by Panama’s comptroller after a government audit alleging irregularities, was reached after “wide deliberation and discussion”.
The court ruling will delight the US president, who vowed last year to “take back control” of the lane connecting the Pacific and the Caribbean. It also throws a spanner in the works of a planned deal under which Beijing had hoped to keep sway over the ports.
China has invested lavishly in Panama since the Latin American country switched diplomatic recognition from Taiwan in 2017.
US critics of Chinese influence in Panama have focused on the two ports, which Hutchison has operated for nearly 30 years. The contract was extended for 25 years in 2021, without a bidding process.
CK Hutchison said in March last year it had agreed to sell its 90 per cent stake in the company that owns and runs the two canal ports to a consortium including BlackRock. The proposal also included an 80 per cent stake in subsidiaries that run CK’s 43 non-Chinese ports in 23 countries.
The $23bn deal won praise from Trump, who hailed it as a sign his administration was “reclaiming” the Panama Canal. But Beijing later insisted that China’s state-owned shipping giant Cosco should have a majority stake, prompting the buyers to reconsider.
Following the ruling, Panama will have to put the ports out to tender again amid speculation that officials could separate them to maximise value.
CK Hutchison’s share price fell 2.5 per cent in Hong Kong to HK$64.65 per share.
