Panama Supreme Court voids Chinese port firm contracts

Panama's Supreme Court has nullified a Chinese company's long-term contracts to operate two key ports at either end of the Panama Canal. The ruling raises concerns over investment security and geopolitical influence. Alasdair Baverstock reports on how the decision came about and its implications for one of the world's most strategic waterways. 

The Panama Canal: started by the French in the 19th century, completed by the United States in 1914, and following its hand-over to Panama in 1999, open to the world. However, since his return to office, U.S. President Donald Trump has wanted to go back on the deal.

DONALD TRUMP, US President "My administration will be reclaiming the Panama Canal. We gave it to Panama, and we're taking it back."

While Panama controls the canal itself, the ports on either side are operated by private companies, the busiest of them run by a company owned by New York-based U.S. investment firm Blackstone. Two others – the Port of Cristobal on the Atlantic and the Port of Balboa on the Pacific – have been operated by Hong Kong-based Hutchison Ports since the 1990s.

DONALD TRUMP US President "The Panama Canal is vital to our country, it's being operated by China."

Trump's allegations have been dismissed outright by canal officials.

JORGE QUIJANO, Former Panama Canal Administrator "Panama is in control, and there is no reason why the U.S. should be in any way afraid of the Chinese running anything here. Our activity with China is like the activity with anybody else: Holland, the UK, anyone that wants to do business here in Panama, they'll do business."

Nevertheless, with U.S. warships deployed in the South Caribbean as part of Operation Southern Spear, Panama again found itself in a vulnerable position.  

DONALD TRUMP, US President "The Panama Canal was built for our military."

"You are not going to use military or economic coercion?

DONALD TRUMP, US President "I'm not going to commit to that, it might be that you'll have to do something."

Despite weeks of protests in Panama over the threats, in January 2026, Panama's Supreme Court made a ruling to annul Hutchison Ports' contracts, drawing ire from Beijing.

GUO JIAKUN, Chinese Ministry of Foreign Affairs "The ruling contravenes the Panamanian laws that approved the concession. The company will take all necessary legal steps, including litigation. China will do what is necessary to firmly defend Chinese businesses' legitimate and lawful rights and interests."

For observers around Latin America, the decision was a worrying one.

ERICK COYOY, Central American Economic Analyst "Central America's governments are fragile, and more susceptible to external pressures. The U.S. has openly expressed its intention to strengthen its influence in our region, but brings no benefit to our countries or people."

Indeed, private industry leaders say the decision could lead to the canal's further physical deterioration.  

VICTOR FLORES, Mexican Businessman "The Panama Canal is impressive infrastructure, but it's over 100 years old and needs modernization. China is a global expert in ports and has invested across Latin America. We should make the most of that experience to lead major infrastructure projects."

And while Trump touts an effort by American firm BlackRock to buy the port infrastructure developed by Hutchison, economists say securing such investments may be challenging.

ERICK COYOY, Central American Economic Analyst "Investors look for two things: markets and legal security. Decisions like this one weaken that certainty. Today it's the canal, tomorrow it could be another sector. With this level of external pressure, many investors will hesitate to come, fearing future decisions aimed at expanding U.S. influence."

The Panama Canal moves the world's trade, but the politics around it are turbulent. How the country navigates this ruling will define whether legal contracts or geopolitical pressure ultimately guide its future. Alasdair Baverstock, CGTN, Mexico City.