PANAMA CITY – In a significant legal decision, Panama’s Supreme Court has declared the concession held by a subsidiary of Hong Kong-based CK Hutchison Holdings, which operates ports at both ends of the Panama Canal, as unconstitutional. This ruling aligns with U.S. efforts to curb Chinese influence over this critical maritime passage.

The court’s decision follows a thorough audit conducted by Panama’s comptroller, which uncovered alleged irregularities in the 2021 agreement granting a 25-year extension of the concession.

The initiative to restrict Chinese influence over the Panama Canal has been a focal point for the Trump administration. Marco Rubio, during his tenure as U.S. Secretary of State, prioritized Panama as his first international visit to stress this issue.

Despite assurances from Panama’s government and the canal authority that China’s involvement is minimal, Rubio emphasized that the U.S. perceives the management of these ports as a matter of national security. President Donald Trump even suggested that Panama should revert control of the canal back to the United States.

The brief statement from the court offered no clarity on the future management of the ports following this ruling.

Last year, CK Hutchison Holdings announced plans to sell its majority stake in the Panamanian ports, along with other global assets, to an international consortium that includes BlackRock Inc. However, the deal has stalled due to objections from the Chinese government.

In parallel, Panama’s comptroller audited the concession to the Panama Ports Company, which had held the contract to operate the ports since 1997. The concession was renewed in 2021 for 25 years, during the prior Panamanian administration.

Comptroller Anel Flores said the audit found payments that were not made, accounting errors and the apparent existence of a “ghost” concessions operating within the ports since 2015. The company denied those allegations.

The audit determined that the irregularities had cost the government about $300 million since the concession was extended and an estimated $1.2 billion during the original 25-year contract.

Flores also said the extension was granted without the required endorsement of his office.

On July 30, the comptroller challenged the Panama Ports Company’s contract to operate the ports before the Supreme Court.