Panama’s Supreme Court has formally nullified the concession contract for the country’s two largest ports. The definitive ruling against Panama Ports Company was published in the official gazette on Monday, February 23, 2026, stripping the firm of its rights to operate the strategic Balboa and Cristobal terminals.
This action permanently revokes the legal framework that granted the company control over vital Atlantic and Pacific port facilities. The court found the 1997 contract law and its amendments violated multiple constitutional articles, deeming the agreement detrimental to public interest.
Court Cites Fundamental Violations of Public Order
The constitutional court concluded its review by declaring the entire concession legally void. In a detailed document, justices stated the contract directly violated Panama’s constitutional order. They determined the law approving the deal was fundamentally flawed from its inception.
“After examining the contract-law, it is detrimental to the interests of the community,” the court wrote. [Translated from Spanish] The ruling emphasized the effect of this unconstitutionality declaration means the concession simply does not exist.
This decision stems from two consolidated lawsuits challenging Law No. 5 of January 16, 1997. That legislation approved the original agreement between the state and the Panama Ports Company. The court’s final verdict was actually reached during an ordinary session on January 29, 2026, with official publication sealing its enforcement this week.
Legal and Logistical Challenges Lie Ahead
Immediate questions now focus on the transition of port operations. The concession granted PPC comprehensive rights to develop, construct, operate, and manage container, general cargo, bulk, Ro-Ro, and passenger terminals. Legal expert Roberto Ruiz Diaz clarifies the state cannot simply seize company assets.
According to Ruiz Diaz, the government must negotiate to purchase or lease movable property like cranes and equipment. A forced expropriation process represents a last resort. He notes no law prohibits the port activity itself, suggesting a special operating permit could be arranged temporarily.
The legal challenges originated from separate lawsuits. Lawyers Norman Castro and Julio Fidel Macías Hernández filed one constitutional claim. Comptroller General Anel Flores initiated the other following a comprehensive audit of the concession terms.
“Panama Ports Company failed to meet contractual obligations,” Flores alleged. [Translated from Spanish] His office estimated this non-compliance caused nearly one billion dollars in lost state revenue.
This monumental ruling reshapes Panama’s maritime landscape overnight. The affected ports are critical nodes in global trade routes, handling significant volumes of cargo transiting the isthmus. Their operation under a new model will be closely watched by international shipping lines and logistics firms.
The decision underscores increasing judicial scrutiny of long-term privatization deals across Latin America. It also triggers complex negotiations between the Panamanian state and a major ports company with deep operational roots. The government must now establish a temporary management scheme while formulating a long-term strategy for these assets.
Observers expect the panama ports to continue functioning during the transition to avoid disrupting global supply chains. The focus shifts to the Ministry of Public Works and the Panama Maritime Authority. These agencies will likely coordinate interim operations, ensuring port efficiency and workforce stability during the transfer period.