China Moves to Penalize Panama for Court Ruling Against CK Hutchison
The Chinese government has reportedly forced a pause on infrastructure deals in Panama in retaliation for a Panamanian court's decision to suspend CK Hutchison's seaport operations contracts, according to Bloomberg. The development comes as Hong Kong-based Hutchison launches an arbitration process against Panama over the cancelation.
Last week, the Panama Supreme Court ruled that contracts that allowed Hutchison to operate two container ports near the Panama Canal were "unconstitutional." Hutchison - which has been trying to sell the operating rights for the two ports as part of a giant package deal for its global portfolio - disputes this finding, and has accused Panamanian authorities of disregarding its communications during the trial. For now, the terminals remain in the firm's operational control, it says.
In response to the ruling, Hutchison has initiated arbitration proceedings in Hong Kong against the Panamanian government. The arbitration process could take years; if successful, it would likely result in a compensation payment, legal analysts say.
The Panamanian court ruling against Hutchison followed nearly a year of pressure from the Trump administration over alleged Chinese influence in the Panama canal zone. The White House, without evidence, has accused China of "running" the canal; it initially threatened to take action to "take back" the canal from Panamanian control. Secretary of State Marco Rubio recently told Panama that China's presence near the canal "is unacceptable," and could prompt the U.S. to take unspecified measures to "protect its rights under the treaty" that transferred control from the U.S. to Panama in 1999.
Hutchison's giant plan for a $23 billion port portfolio sale would have handed its two Panama port leases to an American company, BlackRock, a favorable development for U.S. interests. Everything else would be sold to Terminal Investment Limited (TIL), the ports division of the Aponte family's shipping empire - if the deal can be concluded.
Against this backdrop of U.S. pressure, the government of China has accused Panama's supreme court of giving in to "hegemonic powers" by ruling against Hutchison. In a statement, Beijing's Hong Kong affairs office - responsible for the jurisdiction where Hutchison is headquartered - called the ruling "utterly ridiculous," and threatened "a heavy price both politically and economically" for Panama if it is not reversed.
That cost is already being imposed, according to Bloomberg and Reuters. Chinese state companies have been instructed to pause all talks over new infrastructure projects in Panama - a serious threat, given China's prominent role in Panama's construction sector. Chinese customs officials are also reportedly applying additional scrutiny to Panama's agricultural exports. Possible further actions could include rerouting cargo to other seaports, depriving Panama of revenue.
So far, Panama's leaders have been unequivocal in resisting Chinese pressure. President Jose Raul Mulino said Wednesday that Panama's government respects the independence of the judiciary, and as a "country of laws," it has no interest in overriding the court system.
Top image courtesy Roger W / CC BY
By AFP
February 4, 2026
The Panama Canal is at the center of a hot dispute between the United States and China, with the latter accusing Washington of pressuring Panama into evicting a Hong Kong company from two canal port concessions - Copyright AFP/File MARTIN BERNETTI
Panama’s President Jose Raul Mulino on Wednesday rejected China’s threat to make the Central American country pay a “heavy price” after a Hong Kong company was evicted from two ports on the Panama Canal.
Writing on X, Mulino “strongly” rejected the threat from the Beijing office overseeing affairs in semi-autonomous Hong Kong, which came after Panama’s Supreme Court invalidated CK Hutchison’s port concession.
US President Donald Trump has piled pressure on Panama to cancel Hutchison’s contract by threatening to reclaim the US-built waterway over what he claimed was China’s outsize influence on the canal.
Last week, Panama’s Supreme Court ruled that the concession was “unconstitutional” and found it had “a disproportionate bias in favor of the company” without “any justification” and to the “detriment of the State’s treasury.”
The United States hailed the ruling but China reacted angrily.
On its WeChat account, China’s Hong Kong and Macao Affairs Office accused Panama of buckling to outside pressure, Bloomberg reported.
“Panamanian authorities must recognize the situation and correct their course,” the office was quoted as saying.
“Persisting in this misguided path will result in a heavy price, both politically and economically,” it added.
Mulino condemned the threat, insisting that Panama was a country that upholds the rule of law “and respects the decisions of the judiciary, which is independent of the central government.”
He added that the foreign ministry would issue a statement on the matter “and adopt the corresponding decisions.”
The Panama Canal, which connects the Atlantic and Pacific oceans through Central America, handles about 40 percent of US container traffic.
– ‘Cold War mentality’ –
Since 1997, Hutchison has managed the ports of Cristobal on the interoceanic canal’s Atlantic side and Balboa on the Pacific side.
The concession, which reflected the growing inroads of Chinese companies into Panama’s economy, was extended for 25 years in 2021.
After Trump threatened last year to seize the canal, Panama’s independent comptroller general reviewed Hutchison’s contract and subsequently recommended it be annulled.
The Supreme Court backed the comptroller’s view that the terms of the concession ran counter to Panama’s interests.
Following the ruling, the Panamanian government tapped Danish company Maersk to temporarily take over management of the port terminals until a new concession is awarded.
Hutchison’s port concession has come to symbolize the battle for influence and trade between the United States and China in Latin America.
Beijing’s foreign ministry spokesman Lin Jian on Wednesday reiterated that China would “firmly defend the legitimate and lawful rights and interests” of Chinese companies.
Accusing the United States of a “Cold War mentality and ideological bias,” he said: “It is quite clear to the world who exactly is seeking to forcibly own the Panama Canal and eroding international law in the name of the rule of law.”
The Supreme Court ruling came amid Hutchison’s stalled effort to sell the ports.
In March, it announced plans to transfer its stake in the Panamanian terminals to a group of companies led by the US firm BlackRock, as part of a package valued at $22.8 billion.
That deal was initially seen as favorable in Washington, but interests cooled after China warned the agreement could harm its global interests and urged parties to proceed with “caution” or face legal consequences.
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