Two attorneys in Panama have initiated a lawsuit in the nation’s supreme court aimed at nullifying a concession granted to a Hong Kong-based firm for the operation of two ports located at either end of the Panama Canal. Their legal action was taken just after remarks from U.S. Secretary of State Marco Rubio urged Panama’s president, José Raúl Mulino, to diminish China’s influence over the canal.
The suit claims that the concession agreement is unconstitutional. Should the court accept the case and side with the plaintiffs, this could result in a rapid cancellation of the contracts. Such an outcome might be seen as a significant win for Donald Trump’s initiatives to counteract Beijing’s foothold in Central America.
The ports have been under the management of a CK Hutchison Holdings subsidiary, led by billionaire Li Ka-shing, since winning the bid in 1997. Julio Macías, one of the legal representatives, stated their decision to pursue a lawsuit was based on thorough scrutiny of the concession agreement.
In a related incident in 2023, the supreme court declared a similar action against a contentious mining operation following extensive public demonstrations. The Panamanian government faces pressure to avoid potential U.S. intervention regarding the canal or significant alterations to the current fee structure, which applies uniformly to vessels from all nations and is influenced by market dynamics.
In December, Trump declared intentions to “take back” the canal, which sparked outrage among Panamanian officials. Shortly after, the nation’s comptroller general initiated an audit of the port contracts, with findings anticipated in March. Following Rubio’s discussions with President Mulino, agreements were reached to impose stricter measures on unauthorized migration through the Darién Gap, discontinue membership in China’s Belt and Road Initiative, and reportedly ensure the unrestricted passage of U.S. military vessels.
Despite these agreements, Trump expressed dissatisfaction with the concessions and indicated plans to speak with Mulino again soon. The potential revocation of the concession could expose Panama to international arbitration, as such an action might be interpreted as politically motivated expropriation.
Additionally, if Mulino consents to guaranteed passage for U.S. military ships, he could confront further legal complications. Attorney Alonso Illueca pointed out that such a decision could be considered preferential treatment, contravening the canal’s established commitment to neutrality and potentially leading to additional legal challenges.