Panama Seizes Control of Key Canal Ports Following Supreme Court Ruling

On February 23, 2026, the Panamanian government ordered the occupation of the Balboa and Cristóbal ports, critical gateways to the Panama Canal, following a Supreme Court ruling that deemed the operating concession held by Hong Kong-based CK Hutchison unconstitutional. This ruling, which was finalized in January 2026, invalidated the management contract that had allowed CK Hutchison's Panama Ports Company (PPC) to operate the terminals since 1997. The court found that the concession provided excessive privileges and tax exemptions, costing the Panamanian state approximately $1.2 billion over its duration.

Panama orders occupation of 2 key canal ports after Supreme Court rulingSupply Chain BrainTico TimesThe Rio TimesPanama Seizes Control of Major Canal Ports Following Court DecisionPanama takes control of two canal ports operated by HK firm: maritime authority

The decree issued by the Panama Maritime Authority allows for the occupation of all movable property at the ports, including cranes, vehicles, and operational software, citing "urgent social interest." The Danish firm APM Terminals, a subsidiary of A.P. Moller-Maersk, has been appointed to manage the ports during an 18-month transition period while Panama prepares a new international tender for long-term operations. This takeover is viewed as a significant assertion of national sovereignty amid escalating geopolitical tensions between the United States and China, particularly following U.S. President Donald Trump's claims regarding Chinese influence over the canal.

Panama Seizes Control of Major Canal Ports Following Court Decision

Panama's Labor Minister Jackeline Muñoz assured that the approximately 1,200 workers at the terminals would retain their jobs during the transition. Meanwhile, CK Hutchison has initiated arbitration proceedings against the Panamanian government through the International Chamber of Commerce, claiming the court's decision lacks legal basis and threatens their investments. The company has warned APM Terminals of potential legal action should they proceed with operations without consent.

The Rio Times

The ruling and subsequent seizure have drawn sharp criticism from Beijing, which warned that Panama would "pay a heavy price" for its actions. The Hong Kong and Macao Affairs Office labeled the court ruling "utterly ridiculous." In contrast, U.S. officials, including the chair of the House Select Committee on China, welcomed the decision as a victory for American interests in the region.

The Rio Times

While Panama's government has emphasized that port operations will continue uninterrupted, CK Hutchison's threats of legal action raise concerns about potential disruptions. The duration and implications of the arbitration process remain uncertain, and the broader impact on international trade through the Panama Canal, which handles about 5% of global maritime trade, is yet to be fully assessed.

Tico Times

The next steps involve the formal handover of operations to APM Terminals and the initiation of a public tender process for new operators. The Panama Canal Authority has not commented directly on the changes, but officials are coordinating to ensure that shipping schedules remain unaffected during this transition period. The situation underscores the ongoing complexities of foreign investment and national sovereignty in the context of global power dynamics.

Tico Times