U.S. Praises Decision Against Chinese Contracts at Panama Canal

U.S. Ambassador to Panama Highlights Court Ruling

U.S. Ambassador to Panama, Kevin Cabrera, made a statement over the weekend regarding Panama’s recent decision to invalidate contracts between the government and Chinese companies linked to canal ports. He emphasized that this ruling is a significant endorsement of the rule of law.

Cabrera noted that the decision illustrates how Panama’s judiciary upholds compliance and public interest, holding private operators accountable. He expressed that this ruling enhances Panama’s national security and creates a more attractive investment landscape. It assures investors that valid contracts will be honored while problematic agreements will be corrected.

The ambassador also mentioned that this decision paves the way for a new transparent process aimed at attracting world-class investors, ultimately boosting Panama’s role as a logistics center.

Recently, Panama’s Supreme Court deemed two contracts signed in 1997 with the Panama Port Company (PPC) unconstitutional. The contracts had authorized PPC, which is a subsidiary of Hong Kong’s Hutchison Port Holdings, a 25-year lease to operate two ports at either end of the Panama Canal. This lease, initially set to renew automatically in 2021, is now invalid.

Concerns over the influence of the Chinese Communist regime on key trade routes have been widely reported. The contentious deal highlighted ongoing discussions surrounding China’s control over the Panama Canal, which became more pronounced around the time of President Trump’s second term.

According to reports, nearly 40% of container traffic using the canal was managed by these two ports. The Supreme Court’s decision stemmed from an investigation that started in February 2025 after Attorney General Luis Carlos Gómez identified multiple violations in the PPC contracts. Gómez suggested declaring them unconstitutional, and subsequent legal actions were initiated against PPC for alleged economic damage to the country.

After a lengthy judicial process, the Supreme Court ruled last week that both the original contract from 1997 and its renewal in 2021 were unconstitutional.

Secretary of State Marco Rubio celebrated the Supreme Court’s decision on social media, indicating that the U.S. feels positive about the ruling concerning contracts linked to China. This stance sharply contrasts with the views of Chinese officials, who have criticized the court’s ruling.

PPC immediately responded to the ruling, claiming it lacks legal grounding and clashes with the foundation of the original contract. China’s Foreign Ministry spokesperson warned that they would take measures to protect the interests of Chinese enterprises in the wake of the ruling.

A spokesperson from the Hong Kong government condemned the judicial decision, arguing it undermines the local business environment and investor confidence, while also possibly harming bilateral relations and long-term economic growth.

Recently, it was announced that APM Terminals, a subsidiary of the Danish shipping company Maersk, will temporarily oversee the management of the two ports until a new lease arrangement is determined.