In a unfolding turn of events that might affect global infrastructure investment, Panama’s Supreme Court is about to decide a historic constitutional case that might put at risk several public-private ventures, including a multibillion-dollar port transaction with U.S. asset manager BlackRock.
The dispute revolves around a 2021 ports concession granted to BlackRock via its infrastructure investment vehicle. The deal permitted BlackRock to operate and develop Panama’s most important port activities under a 20-year contract. Yet, a pending court case challenges the constitutionality of Panama’s Law 122 legislation that facilitated such alliances without complete congressional consent.
What’s at Stake?
If the court declares Law 122 unconstitutional, it may unravel current deals, disrupt current infrastructure projects, and send a chilling message to foreign investors. BlackRock, with its reputation for global coverage in financial markets and infrastructure, may suffer serious setbacks in its port expansion plan in Latin America.
Panama’s ports are vital trade gateways, and any interruptions could ripple throughout worldwide shipping routes, particularly those linking the Pacific and Atlantic Oceans through the Panama Canal.
A Wider Impact on PPPs
Public-private partnerships (PPPs) have been a primary way to develop infrastructure in emerging economies for decades. They are criticized for lacking adequate transparency and monitoring, but their supporters point to their capacity to attract foreign investment and technical know-how.
A ruling against Law 122 would also put pressure on Panama’s government to renegotiate or void signed contracts, triggering legal uncertainty among other multinational companies with infrastructure interests in the area.
BlackRock’s Reaction
To date, BlackRock has said nothing publicly. Insiders in the industry believe the firm is following the case very closely but are confident that the Panamanian government will rule in favor of protections for foreign investors.
Nevertheless, this case is a warning to institutional investors across emerging markets: constitutional and local law changes can radically transform the game even for giants like BlackRock.
Though the court’s ultimate ruling is still pending, the result would have far-reaching implications for the future of foreign infrastructure investment in Panama and elsewhere. Until then, BlackRock and other international investors wait with billions potentially on the line.