Panama’s supreme court of justice has ruled against Panama Ports Company S.A. (PPC), a member of Hong Kong’s Hutchison Ports and operator of the Balboa and Cristóbal port terminals, declaring law no. 5 of 16 January 1997 “unconstitutional,” among other relevant laws. Panama Ports Company, which runs the two port terminals under the concession contract since the 1990s, said on Thursday that the decision is inconsistent with the relevant legal framework and the law that approved the contract which has been the basis for PPC’s operations at the ports of Balboa and Cristóbal for nearly three decades.

The ruling is diametrically opposed to previous decisions issued by the supreme court regarding contracts similar to the PPC contract, according to the statement.

US ambassador to the United Kingdom Warren A. Stephens said on Friday that he welcomes “the Panama Supreme Court decision to declare unconstitutional CK Hutchinson’s concession of the Balboa and Cristobal ports.”

From his side, the U.S. secretary of state Marco Rubio wrote in a post on X that Washington was encouraged by the recent Panamanian supreme court’s decision to rule port concessions to China unconstitutional.

The court said it came to its decision after “extensive deliberation” but did not provide further details on the next steps.

Over 28 years of operation, the company and its investors have invested more than US$1.8bn in Panama’s infrastructure, technology and talent development.

The decision comes roughly one year after U.S. president Donald Trump threatened to take control of the Panama Canal, saying the critically important waterway was “vital to our country.”

Trump has also made repeated claims that the canal is under Chinese control. Panama has previously rejected the US government’s claims over Chinese control and President José Raul Mulino has said the canal “is and will remain” in his country’s hands.

China also swiftly responded to the ruling from Panama’s top court. A spokesperson for China’s ministry of foreign affairs said on Friday that the decision “is inconsistent with the law of Panama that approved the concession, and the company will reserve all rights including to proceed legally.”

The spokesperson added that Beijing would take all necessary measures to safeguard the legitimate and lawful rights and interests of Chinese companies.

CK Hutchison, a port investor, developer and operator, said the ruling represents the latest development in a campaign by the Panamanian government over more than a year against PPC and its investor. “This is the latest development in a campaign by the Panamanian State impacting PPC and its investor over more than a year, including a range of surprise actions targeting the Concession and PPC,” reads the statement.

“The PPC concession contract was the result of a transparent international bidding process. From that time, PPC has complied with its contractual and legal obligations, including audits conducted by the State, always acting with complete transparency and a full willingness to cooperate,” the company added.

In response to recent developments, PPC and its investors, it said, continue to permanently reserve all rights including recourse to national and international legal proceedings.

The company called for coordination with the government to avoid disruption and safeguard the concession.