Panama and China Clash Over Port Arbitration and Ship Detentions

Panama has called on China to respect its national sovereignty following a sharp increase in the inspection and detention of Panama-flagged vessels at Chinese ports. The diplomatic friction follows a legal dispute over the control of strategic port terminals near the Panama Canal.

The tension stems from a late January 2026 ruling by Panama’s Supreme Court, which invalidated the legal framework supporting a 1997 concession. This concession had granted the Hong Kong-based conglomerate CK Hutchison, through its Panama Ports Company, the right to operate the Cristobal and Balboa terminals on the Atlantic and Pacific sides of the canal.

Following the court’s decision, the Panamanian government cancelled the concessions and appointed interim operators. Mediterranean Shipping Company’s (MSC) Terminal Investment Limited and Maersk APM Terminals, both U.S. Subsidiaries, were appointed under 18-month agreements to manage the terminals.

Surge in Vessel Detentions

China has expressed firm opposition to the ruling, characterizing the move to remove CK Hutchison as an act of bad faith. Since March 8, 2026, there has been a marked increase in the detention of ships registered in Panama.

Laura DiBella, chair of the U.S. Federal Maritime Commission (FMC), stated that the FMC is closely monitoring the situation. According to a Lloyd’s List Intelligence report, nearly 70 Panama-flagged vessels had been detained since March 8.

DiBella indicated that these intensified inspections were conducted under informal directives and appeared to be intended to punish Panama following the transfer of the port assets. She noted that because Panama-flagged ships carry a meaningful share of U.S. Containerized trade, these actions could lead to strategic and commercial consequences for U.S. Shipping.

In a related development, the Chinese Ministry of Transport summoned representatives from MSC and Maersk to Beijing for high-level discussions, though the specific details of those meetings were not disclosed.

Strategic and Legal Conflict

The dispute occurs against a backdrop of broader competition between the U.S. And China for influence over global trade routes. The Panama Canal is a critical maritime chokepoint, handling approximately 5% of global maritime trade. The cancellation of the Chinese-linked concessions followed mounting pressure from the U.S. To curb Chinese influence around the canal.

CK Hutchison, which operated the ports for nearly 30 years, has strongly rejected the Panamanian court ruling. The company has accused Panamanian authorities of unlawfully seizing property and has launched an international arbitration case seeking more than $2 billion in damages.

On April 8, 2026, Panama’s Foreign Minister Javier Martinez-Acha addressed the situation during a conference in Asuncion, Paraguay. He linked the spike in ship detentions directly to the court ruling against CK Hutchison and called for China to respect Panama’s sovereignty.

Martinez-Acha stated that Panama respects the legal sovereignty of all countries and requested the same treatment in return. He expressed hope that the level of inspections and detentions, which began in March, would return to historical norms.