Dispute over the Panama Canal? Enter the U.N. Charter

[Alonso E. Illueca is an Associate professor of international law and human rights at Universidad Santa María La Antigua]

In recent weeks the President of the United States of America, Donald Trump has repeatedly asserted that he is going to “take back” the Panama Canal. By doing so and not ruling out the use of force, he has threatened the territorial integrity of Panama. Such statements constitute illegal threats of the use of force against Panama. These threats are based on China’s supposed “control” over the Canal and on an alleged violation by Panama of the Permanent Neutrality Treaty of the Canal. Both claims lack factual and legal basis.

President Trump, in his second term in office, is being more assertive internationally disregarding international law. Such forceful actions are directed against U.S. allies. The case of the Panama Canal illustrates this and merits an analysis on multiple angles. This blogpost analyzes the current crisis from the perspective of international law and multilateral diplomacy. 

The 1977 Panama Canal Treaties

It was precisely through the means of international law and multilateral diplomacy that Panama was able to retake its Canal. After decades of negotiations, the 1977 Panama Canal Treaties, also known as the Torrijos-Carter Treaties, provided a legal framework for the handover of the Canal to Panama. The 1977 treaties included the Panama Canal Treaty, which provided for a provisional framework and an escalatory process for the joint operation of the Canal, which was set to expire by midday December 31^st, 1999, the date in which the handover of the Canal took place. Afterwards, the Canal has been governed by the Permanent Neutrality Treaty, which establishes a neutrality regime for the Canal with a multilateral component that up-until today has almost 40 member States (including all P5, but China). 

The U.S. claims that by allowing China to “operate” the Canal, Panama has breached the Permanent Neutrality Treaty. This supposed breach – according to the U.S. – would allow them to take back the Canal. This claim is based on a condition and a unilateral understanding attached to the U.S. ratification instrument of the treaties. The condition stresses that “if the Canal is closed, or its operations are interfered with, the United States of America and the Republic of Panama shall each independently have the right to take such steps as each deems necessary, in accordance with its constitutional processes, including the use of military force in the Republic of Panama, to reopen the Canal or restore the operations of the Canal, as the case may be”. For its part, the unilateral understanding states that “either of the two Parties to the Treaty may, in accordance with its constitutional processes, take unilateral action to defend the Panama Canal against any threat, as determined by the Party taking such action”. 

Does the Neutrality Treaty Allow Military Intervention?

Aside from any merit that the U.S. determination of a threat may have, the condition and the unilateral understanding should be narrowly construed. First, a condition and a unilateral understanding are just that – an understanding by one of the parties to the treaty – and does not amount to an amendment or a reservation. Any additional value given to such a condition or an understanding would contravene the basic law of treaties. An alternative argument would be to equate the condition and the unilateral understanding to conditional interpretative declarations. 

The U.N. International Law Commission in its “Guide to Practice on Reservations to Treaties” defines conditional interpretative declarations as “a unilateral statement formulated by a State or an international organization when signing, ratifying, formally confirming, accepting, approving or acceding to a treaty, or by a State when making a notification of succession to a treaty, whereby the State or international organization subjects its consent to be bound by the treaty to a specific interpretation of the treaty or of certain provision thereof”.

This type of declaration is intended to produce legal effects on the application of certain treaty provisions, which must be interpreted in the specific way provided. Conditional interpretative declarations are subject to the same rules of form and substance as those applicable to reservations, even though they do not have the same definition. In that regard, practice requires the government making the declaration to notify its counterparty of its intent to file such a declaration at least prior to the exchange of ratification instruments. This provides the counterparty with the opportunity to accept, reject or otherwise express its views in respect to the declaration’s content. In that sense, Panama filed an understanding/declaration rejecting the U.S.’ condition and its unilateral understanding, thus annulling any potential legal effect of those two.  

Second, as a matter of law, a treaty or a condition and a unilateral understanding –and even a conditional interpretative declaration– cannot allow for an open-ended authorization of the use of force against the territorial integrity or political independence of another State, in this case Panama. This would constitute an act of aggression – independently of the content and scope of the condition, understanding or declaration – and a breach of the U.N. Charter. At the very best, for the aforementioned condition and understanding to remain applicable, they should be construed in line with articles IV and V of the Neutrality Treaty, establishing some sort of mutual defense pact to protect the Canal. This was Panama’s position when exchanging the instruments of ratification. At that time, Panama filed its own unilateral understanding/declaration, which rejected the U.S.’, reaffirming “positive rules of public international law”, such as the one contained in article 2.4 of the U.N. Charter. It also stressed that any measure taken by either of the parties to the Treaty should be consistent with the principles of mutual respect and cooperation. 

Third, and in any event, even if such a right to take unilateral action existed, it would be in breach article 2.4 of the U.N. Charter. Hence, it would create a conflict between the obligations acquired under the treaty and those under the U.N. Charter, making the latter prevail under its article 103. The ICJ addressed the normative value of article 103 in the jurisdictional phase of Nicaragua (paragraphs 102 and 107) and the preliminary objections of Lockerbie (paragraph 42). Moreover, the peremptory character of the prohibition on the use of force would also deem null and void the claimed right to take unilateral military action.  

Can the U.N. Charter Be Applied to the Present Crisis? 

Furthermore, the situation between Panama and the U.S. over the Panama Canal amounts to a dispute within the meaning of the Mavrommatis case. It also fits into the definition provided by the Interim Committee of the U.N. General Assembly. This determination should be made by the U.N. Security Council. Hence, the existence of an ongoing dispute allows for another legal analysis, one tied to the U.N. Charter. On January 21^st, 2025, one day after President Trump’s inaugural speech, in which he threatened Panama yet again, the Permanent Mission of Panama to the U.N. sent a letter to the U.N. Secretary General in which it referred to Trump’s remarks against Panama’s territorial integrity and to the prohibition on the threat of the use of force. Given that the dispute has continued to evolve and the threats have been reiterated, the Secretary General can bring the matter to the attention of the Security Council as it may threaten international peace and security, in accordance with article 99 of the U.N. Charter.

Any dispute brought to the U.N. Security Council’s attention whose continuance may endanger international peace and security shall be solved by peaceful means, allowing the Council to recommend appropriate procedures or methods of adjustment. To that end, the Council should adopt a resolution under Chapter VI. Notwithstanding that Panama is currently an elected member of the Council, the eventual adoption of a Chapter VI resolution seems unlikely given the probability of a U.S. veto. 

However, by invoking article 27.3 of the U.N. Charter, UNSC member States could preclude the U.S. from exerting its veto. This article provides that “in decisions under Chapter VI [of the U.N. Charter], and under paragraph 3 of Article 52, a party to a dispute shall abstain from voting”. 

In the Namibia advisory opinion, the ICJ noted that article 27.3 had remained unchanged after the amendment of the U.N. Charter in 1965, which evidences that it “has been generally accepted by Members of the United Nations and evidences a general practice of the Organization”. Moreover, the ICJ established that the only prerequisites for the application of the said article are the existence of a “dispute” and not of a “situation”, and that “certain members of the Council are involved as parties to such a dispute” (see paragraphs 25 and 26).  

The claim to “take back” the Canal because of Chinese “control” amounts more to a dispute, a legal one, than to a situation. By claiming that Panama is in breach of its Permanent Neutrality Treaty obligations, the U.S. is recognizing the existence of a dispute within the meaning of Mavrommatis, i.e.  a disagreement on a point of law or fact, a conflict of legal views or of interests (see paragraph 19). It also allows Panama to claim the existence of a dispute in accordance with the definition provided by the Interim Committee of the U.N. General Assembly, which reads as follows: 

Whenever the State or States bringing the matter before the Security Council allege that the actions of another State or States in respect of the first State or States constitute a breach of an international obligation or are endangering or are likely to endanger the maintenance of international peace and security, or that such actions demonstrate preparation to commit a breach of international obligations or to endanger the maintenance of international peace and security, and the State or States which are the subject of these allegations contest, or do not admit, the facts alleged or inferences to be drawn from such allegations.

Therefore, given the existence of a dispute between Panama and the U.S., both current members of the UNSC, allows for the application of article 27.3. The UNSC would be then authorized to conduct a dispute determination and recommend the appropriate means of settlement under Chapter VI.  

Although article 27.3 has rarely been applied, State practice of the parties to the present dispute (Panama and the U.S.) favors its application. In 1976, Panama, then an elected member of the UNSC, questioned the casting of a veto by France in the context on the question of Comoros’ independence referendum. In doing so, Panama’s Permanent Representative emphasized on the need to distinguish between a situation from a dispute. In 1978, the U.S. abstained from a resolution on Southern Rhodesia. In explaining his vote, the U.S.’ Permanent representative asserted “Since we are a party to this particular matter, and acting in the spirit of Article 27, paragraph 3, of the Charter, the United States has abstained”. 

Considering that both parties to the dispute over the Canal are currently in the Security Council, their abstention, aside from comporting with State practice, would also mean that reaching the nine votes threshold would require ample political consensus among the other UNSC members.  

The O.A.S: A Chance for Diplomacy and Multilateralism

Under such circumstances, the U.N. Security Council should adopt a Chapter VI resolution – with Panama and the U.S. abstaining – calling for the peaceful settlement of the dispute over the Panama Canal. In that event, Panama should aim for the application of articles 35.1. and 52.3 of the U.N. Charter. This would allow a referral of such settlement to a regional agency or arrangement such as the Organization of American States (O.A.S.), to which both Panama and the U.S. are member States. 

Moreover, the O.A.S. has an important role to play in the current dispute. The organization is the depositary of the 1977 Panama Canal Treaties, which means it has a legal interest in protecting the integrity of the treaties and preserving the neutrality regime of the Canal. The good offices of the Secretary General of the O.A.S together with the assistance of the other member States of the neutrality regime, would mean giving multilateralism and diplomacy a chance. 

This procedure would also provide an opportunity for Panama to reinforce the neutrality regime of the Canal by inviting other States to join its protocol. 

Conclusion

President Trump represents an existential threat to the international legal order. In facing such challenges, small States–who lack the economic weight to exert countermeasures and reprisals against potential sanctions, as is the case of Panama– must resort to international law and multilateral diplomacy, particularly when dealing with threats against their own territorial integrity and political independence. In situations such as this, time is of the essence. 

Photo attribution: “In the Panama Canal, 1994” from Family collection of Infrogmation of New Orleans is licenced under CC BY-SA 4.0