Panama's government physically seized two strategic ports at the Panama Canal's entrances yesterday, ending nearly three decades of operation by a Hong Kong-based company. Authorities from the Panama Maritime Authority entered the Balboa terminal on the Pacific side and the Cristóbal terminal on the Atlantic side, removing employees of Panama Ports Company (PPC), a subsidiary of CK Hutchison Holdings, and assuming control of all assets including cranes, vehicles and computer systems.

The move followed publication in Panama's official gazette of a January 29 Supreme Court ruling declaring unconstitutional Law No. 5 of 1997, which had granted PPC the concessions originally awarded that year, along with a 2021 extension. President José Raúl Mulino issued an executive decree authorizing the "occupation" for reasons of urgent social interest, emphasizing it was not an expropriation but a temporary measure to maintain operations while determining asset values.

PPC employees were instructed not to contact the company and threatened with criminal prosecution if they resisted, forcing the firm to cease operations immediately, CK Hutchison said in a statement. "The takeover... is a culmination point of the unlawful campaign that the State launched a year ago targeting PPC, its investors and its concession contract," the company stated, vowing national and international legal action.

To ensure continuity, Panama granted up to 18-month temporary licenses to APM Terminals Panama, a Maersk subsidiary, for Balboa, and TIL Panama, part of Mediterranean Shipping Company (MSC), for Cristóbal. Officials guaranteed job stability and seamless port functions, with a new competitive bidding process planned.

Hong Kong lodged "stern protests" with Panama, expressing strong dissatisfaction and urging respect for contracts and a fair business environment. China had previously decried the court ruling as "absurd" and "shameful." The action disrupts CK Hutchison's planned $23 billion sale of global port assets, including these terminals, to a BlackRock-led consortium with MSC.

The dispute unfolds amid U.S. pressure to limit Chinese influence over the canal, which handles 5% of global maritime trade and significant U.S. container traffic. President Donald Trump and officials like Marco Rubio have criticized Beijing's regional sway, though Panama insists the canal remains neutral and fully sovereign. CK Hutchison shares fell 1.9% in Hong Kong trading today.