Two Panamanian lawyers have lodged a lawsuit with the country’s supreme court in an attempt to cancel a Hong Kong-based company’s concession to operate two ports at either end of the Panama canal.

Their complaint – filed a day after the US secretary of state, Marco Rubio, told Panama’s president, José Raúl Mulino, to reduce China’s alleged influence on the canal – argues that the contract for the two ports is unconstitutional.

If the case is admitted by the court – and the argument is accepted – it could lead to the swift revocation of the contracts, and a victory for Donald Trump’s campaign to push back against Beijing’s presence in the Central American country.

A subsidiary of CK Hutchison Holdings – owned by the Hong Kong billionaire Li Ka-shing – has operated two of the canal’s five ports since it won the tender in 1997.

“After a detailed analysis of the contract … we decided that an action for unconstitutionality was the appropriate means” to challenge the concession, Julio Macías, one of the lawyers behind the suit, told AFP.

In 2023, the supreme court made a similar argument to close down a contentiouus copper mine, following major protests.

Panama’s government is anxious to avoid a scenario in which the US takes the canal by force – or obliges them to meaningfully change the fee structures which are applied equally to ships of all countries and based on market conditions.

In December Trump vowed to “take back” the canal, prompting widespread indignation in Panama – but within days of his threat Panama’s comptroller general announced an audit of the ports contract – the results of which are expected in March.

Following Rubio’s visit on Sunday, President Mulino agreed to tougher restrictions on irregular migration through the Darién Gap, that he would not renew Panama’s membership in China’s “Belt and Road” infrastructure initiative, and, according to US sources, to the free transit of US military vessels.

Tension and defiance in Panama after Trump threatens to ‘take back’ canal

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The following day, however, Trump said he was still not happy with the concessions and said he would speak to Mulino on the phone on Friday.

But if the contract is revoked, it would probably open Panama to international arbitration on the basis that the move was a politically motivated expropriation.

Furthermore, if Mulino does agree to free passage for US military vessels, he could face further legal jeopardy, said Alonso Illueca, a lawyer specializing in international law. “That would amount to preferential treatment and be a clear violation of the canal’s commitment to neutrality,” he said.