The decision was published Monday in the country’s official gazette, giving legal effect to a Supreme Court ruling issued last month that declared the long-standing concessions for the Balboa and Cristobal terminals unconstitutional, News.Az reports, citing CNBC.
The facilities had been operated for more than two decades by Panama Port Company (PPC), a unit of CK Hutchison.
Following the ruling, the Panamanian government assumed formal control of the port infrastructure, including cranes, vehicles, computer systems, and related software. The move was enacted through an executive decree designed to guarantee uninterrupted port operations while authorities prepare to award a new concession within 18 months.
Under the temporary arrangement, APM Terminals — a subsidiary of Maersk — will manage the Balboa terminal on the Pacific side of the Panama Canal. Meanwhile, Terminal Investment Ltd., MSC’s port-operating arm, will oversee operations at the Cristobal terminal on the Atlantic side.
Shares of CK Hutchison declined 0.9% at Tuesday’s market open, although the stock remains up more than 20% since the beginning of the year.
In comments to CNBC on Tuesday, CK Hutchison confirmed that PPC ceased all operations at both terminals on Monday. The company characterized the executive decree as “unlawful” and said it would continue consulting legal advisers regarding both the court ruling and the government’s takeover.
The dispute has evolved into a broader geopolitical confrontation between Washington and Beijing, placing Panama at the center of rising tensions.
Last year, U.S. President Donald Trump claimed that China was “running the Panama Canal,” prompting CK Hutchison to negotiate a $23 billion agreement with a consortium led by BlackRock to divest its non-Chinese port assets. Beijing reacted strongly, accusing the company of “kowtowing” to U.S. pressure and contributing to a delay in the transaction.
After last month’s court decision, CK Hutchison initiated arbitration proceedings against Panama. On February 12, the company warned that any steps taken by Maersk or its subsidiaries to operate the ports without its consent could lead to legal action.
Chinese authorities also cautioned that Panama would “pay a heavy price both politically and economically” if it failed to reconsider its position.
The Panamanian court’s decision has been widely interpreted as a strategic win for the United States, as the White House has prioritized efforts to limit China’s influence over critical global trade routes, including the Panama Canal.
According to Bloomberg, China has instructed state-owned enterprises to suspend discussions on new projects in Panama and has encouraged shipping companies to explore alternative routes through other ports.
