The Supreme Court of Justice of Panama has declared the foundational contract with Panama Ports Company, S.A. (PPC) unconstitutional. This landmark ruling, delivered this week, also nullifies a 25-year extension granted to the operator in 2021. Legal representatives for the plaintiffs argue the contract repeatedly prioritized private interests over public good, violating at least 13 constitutional articles.
The decision directly impacts the long-term operations of a major terminal operator at the panama ports. It sends a powerful message about the enforcement of constitutional principles in state agreements. Officials now face the complex task of determining the operational and financial aftermath of the judicial order.
Lawyers Detail Systemic Constitutional Flaws
Julio Macías, one of the lawyers who filed the suit, described the court’s action as a necessary correction. He emphasized that every state concession must fundamentally serve the public interest, a standard he claims the PPC agreement failed. The court’s exhaustive constitutional review found the contract’s terms disproportionately favored the corporate entity.
“The Court has indicated that the Panama Ports contract privileged particular interests,” Macías stated. [Translated from Spanish] He explained the ruling’s core purpose was to “expel the contract from the legal system” due to its fundamental conflicts with Panama’s highest law.
Fellow plaintiff attorney Norman Castro characterized the contract as structurally unfair. He detailed a pattern of excessive benefits granted to the operator, including sweeping tax exemptions on remittances, stamps, and profits. Castro portrayed the agreement as tailor-made for the company at the nation’s expense.
“The Constitution was violated from the beginning,” Castro asserted. [Translated from Spanish] “According to us, it violated 15 articles, according to the attorney general, 25 articles, according to the court, 13 articles. It is truly a contract that did not provide legal security.”
Nullity Versus Unconstitutionality and the Path Forward
Macías clarified a key legal distinction in the court’s approach. A declaration of nullity would have examined whether the contract followed existing legislation at its signing. The finding of unconstitutionality, however, required a direct confrontation with the supreme law of the land itself. This broader, more fundamental analysis led to the contract’s invalidation.
“What is born wrong, ends wrong,” Castro underscored, affirming the violations stemmed from a custom-built contract. [Translated from Spanish] He pointed to multiple private benefits that came at the direct detriment of the Panamanian public’s interest.
The 2021 extension granted under former President Laurentino Cortizo’s administration was struck down for similar reasons. The court found the Panama Maritime Authority failed to secure improved conditions for the state during the renegotiation process. This failure to renegotiate better terms compounded the original agreement’s flaws.
Attention now turns to potential accountability. Castro referenced Article 18 of the Constitution, which obliges both private individuals and public officials to respect the law. They are liable for their infringements, omissions, and illegal acts. The ruling from the supreme court opens the door to examining responsibilities for the contract’s approval and extension.
A Precedent for State Contracts and Legal Security
Beyond the immediate case, the lawyers see a critical lesson for future governance. Castro insisted the state must contract correctly, respect the Constitution, and ensure public assets generate the greatest benefit for the Panamanian people. He recalled other cases, like a major mining contract, where rulings did not immediately halt activities, highlighting the need for consistent enforcement.
Macías addressed frequent concerns about sending negative signals to investors. He argued the true foundation of legal security rests on respect for the constitutional order, not on preserving flawed agreements. The contract itself, he noted, submitted to Panamanian law, which inherently includes constitutional control.
“The message of the ruling is clear,” Macías said. [Translated from Spanish] “The legal security of a company cannot be above the legal security of Panamanians. The Court has sent a clear message that in Panama the Constitution and the law must be respected.”
The ruling is expected to scrutinize other major contracts inherited from the 1990s. Its immediate effect is the juridical elimination of the PPC contract and its extension. The practical transition and the future management of the affected port terminals remain to be resolved by the state authorities involved.