PANAMA CITY, July 31 (Reuters) - Public-private

partnerships could take over two key ports near the Panama Canal

if courts invalidate a contract with Hong Kong-based CK

Hutchison's ( CKHUF ) to operate them, Panama's President Jose

Raul Mulino said on Thursday.

CK Hutchison ( CKHUF ) holds a 90% stake in the local Panama Ports

Company, which had a 25-year concession to operate the Balboa

and Cristobal ports, located at both ends of the canal, renewed

in 2021.

The contract has been at the center of a dispute since

U.S. President Donald Trump this year threatened to take over

the waterway due to China's influence over Panama's maritime

industry. CK Hutchison ( CKHUF ) is trying to sell its stake in the

Panamanian company as part of a

massive global deal

.

Two suits were

filed with the Supreme Court

this week by Panama's Comptroller General's office, aiming

to declare the agreement unconstitutional and to nullify the

contract on the basis the renewal did not follow required legal

steps, including the Comptroller's greenlight.

"I do not at the moment see the continuation of the

Panama Ports contract, amended or not," Mulino told a press

conference. "We will wait for the verdict," Mulino added,

referring to the lawsuits.

The comptroller has openly criticized the contract over

alleged irregularities by the previous government and

insufficient revenue to Panama from the deal, but the full

results of a recent audit by his office have not been revealed.

The legal challenges the contract is facing in Panama

are adding troubles to a diplomatically sensitive plan from a

consortium led by U.S. asset manager BlackRock ( BLK ) to buy a

large portion of CK Hutchison's ( CKHUF ) global ports business, a

possible deal that has been celebrated by Washington but

criticized in China.

The deal has become

increasingly politicized

amid a U.S.-China trade war. Beijing argues it has

significant national interests in the transaction and the

proposed deal would be a betrayal of the country.

Panama's government is also seeing partnerships with the

state as a solution for the operation of a key copper mine

previously operated by Canada's First Quantum Minerals ( FQVLF ),

whose contract was declared

unconstitutional

by the Supreme Court in 2023.

"The idea is still a draft, covering the ports and the

mine through partnerships with the state," Mulino said.