Litigation & Dispute Resolution
Is Panama a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (New York Convention). If so, are there any reservations? Name the domestic law that implements these commitments.
The Republic of Panama is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and did not enter any reservation. It ratified the Convention through Law No. 5, of 25 October 1983.
Is Panama a party to the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, done at Washington on 18 March 1965 (ICSID Convention)? Is there a domestic implementing law? Is the jurisdiction a party to any bilateral investment treaties providing for settlement of investment disputes between a state and a national of another state?
The Republic of Panama is a member of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID Convention). The Convention was implemented through Law 13, of 3 January 1996, which was published in Issue No. 22.947 of the Official Gazette, 8 January 1996, and the ratifying documents were deposited on 8 April 1996.
Is Panama a party to the Inter-American Convention on International Commercial Arbitration, signed in Panama on 30 January 1975 (Panama Convention)? Is there a domestic implementing law?
The Republic of Panama is party to the 1975 Inter-American Convention on International Commercial Arbitration, which was approved through Law Number 11, on 23 October 1975.
What is the source of law for international commercial arbitration within your jurisdiction?
- The Inter-American Convention on International Commercial Arbitration, approved through Law 11 of 23 October 1975.
- Convention on the Recognition and Enforcement of Foreign Arbitral Awards, approved through Law No. 5 of 28 October 1983.
- Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.
- Executive Order No. 5,issued 8 July 1999, “establishing the arbitral regime of conciliation and mediation arbitration regime.”
Does the law contain different rules for domestic and international arbitration?
In Panama there are no significant differences between the rules for domestic and international arbitration.
Are there limitations on the types of disputes that may be arbitrated?
According to Executive Order No. 5, Article 2, the following types of disputes may not be submitted to arbitration.
- Disputes arising with regard to matters not disposable at will by the parties
- Matters on which a court ruling has been issued and that become res judicata.
Does the law specify rules for arbitration or do the parties have autonomy to set their rules?
Article 3 of Law No. 5 stipulates that arbitration may be based on law or on equity. When it is based on law, the issue shall be resolved in accordance with rules of law and when it is based on equity, then it shall be resolved according to the best knowledge and belief of the arbitrator, and not subject to legal rules.
Without prejudice to the foregoing, Article 4 sets forth two scenarios for arbitration, institutionalized or on ad hoc, the article states the following:
- Ad hoc arbitration is carried out in accordance with the rules of procedure expressly set forth by the parties for the particular case, without reference to pre-established rules and at all times in conformity with Executive Order No. 5.
- Institutionalized arbitration is that carried out by an authorized arbitral institution in conformity with Executive Order No. 5 and chosen by the parties in the arbitration agreement or subsequent thereto. This arbitral institution is obliged to administer the agreement, in the manner provided in its by-laws or rules.
What is the role of the courts during an arbitration? May courts intervene prior to or during the arbitration process?
The procedural provisions of the arbitration agreement allow for the court of ordinary jurisdiction to decline jurisdiction in favor of the tribunal of agreed jurisdiction and the immediate submission of the dossier to the arbitral tribunal.
State, municipal or provincial regulating bodies or agencies, as the case may be, that are to take part by settling disputes between the parties should also decline jurisdiction if there is a prior arbitration agreement on the same issues.
Nonetheless, the courts of competent jurisdiction may respond to a request from any of the parties for interim relief to guarantee the results of the process, without this being understood as a withdrawal from the agreed arbitration.
Can the courts grant interim relief pending the outcome of arbitration?
Executive Order No. 5, Article 11, states that courts of competent jurisdiction, at the request of the parties and to ensure the validity of the results of the process, may implement interim relief. A court of law implementing such relief must communicate its ruling to the arbitrators or the established arbitral institution or to the corresponding designated authority, within ten days of executing the order.
Article 24 of Executive Order No. 5, in turn, states that, failing an agreement to the contrary by the parties, the arbitral tribunal, at the request of one of the parties, may adopt the temporary measures or interim relief that it deems necessary to ensure that the objective of the process is fulfilled, for which purpose the support of the sitting circuit judge shall be requested.
Does the law require citizenship or a particular bar membership for participation in an arbitral proceeding, as arbiter or representative of a party?
Executive Order No.5, Article 3, specifies that when the arbitration is based on law, arbitrators must be practicing attorneys. Unless the parties object, foreign arbitrators may be named for distinct types of cases. In any event, for arbitration based on law, a foreign arbitrator must fulfill the requirement of having a degree or a doctorate in law.
Does the law require that the proceedings be conducted in a particular language?
Article 20 of Executive Order No. 5 states that the proceedings shall be conducted in the language agreed on by the parties or in the language chosen in accordance with the applicable procedural rules or, in the absence thereof, in the language determined by the arbitral tribunal. When the parties are Panamanian, the language shall always be Spanish.
Does the law have mandatory choice of law provisions?
The law does any have any mandatory choice of law provisions.
Does the arbitration law prescribe rules for decision making by the arbiters and the form of an arbitration award?
Law No. 5, Article 25, states that the arbitral tribunal shall apply rules of law if the arbitration is based on law and its own free judgment if the arbitration is based on equity. In the case of international commercial arbitration, the procedures outlined in Article 43 of the Executive Order shall be followed; moreover, in all cases the provisions of the contract and business practices considered relevant shall be taken into account.
Regarding rules on form of award, Law No. 5, Article 29, stipulates the minimum form of the award. Regarding arbitration based on law, it states that the awards must be reasoned awards.
Is the confidentiality of arbitral proceedings and awards protected by law?
Executive Order No. 5 makes no mention of the confidentiality of the proceedings. It states that awards shall be notified to the parties in the manner specifically agreed by them in the applicable regulations.
On what grounds will the courts set aside or decline to enforce an award?
Foreign awards shall be recognized and enforced in Panama pursuant to the treaties and conventions to which the Republic of Panama is a party and, in the absence of such agreements, in accordance with the terms set forth in Law No. 5, Chapter VI, which deals with the recognition and enforcement of Awards.
What is the procedure for the enforcement of an award?
A final arbitral award shall be enforced by the Civil Circuit Court Judge with jurisdiction over the place of issuance of the award, through the procedure provided for final judicial judgments.
The written request for enforcement shall be accompanied by a certified copy of the agreement and of the award.
The enforcing judge shall serve notice of this request to the other party and send copies thereof within 15 days. The served party may oppose the enforcement request, although in so doing it may assert only that an appeal for annulment is pending. In such an event, the party in question must present the written appeal or demonstrate the existence of a judgment for annulment, with a certified copy of the judgment.
In the absence of such conditions, the judge shall order that the judgment be enforced. No order issued by the judge in this phase shall be subject to appeal.
If, pursuant to Law No. 5, an award that is issued in Panama is considered to have international force and the parties, either on their own behalf or through the applicable regulations, have waived their prerogative to request an appeal for annulment, the obtainment of the exequatur from the Fourth Court of General Affairs of the Supreme Court of Justice in the manner prescribed for foreign awards (Article 38 of Executive Order No. 5) shall be necessary for the enforcement of the award.
According to Article 42 of Executive Order No. 5 the Fourth Court of General Affairs of the Supreme Court of Justice of Panama shall be the court of competent jurisdiction for the recognition and enforcement of a foreign arbitral award.
A party requesting recognition and enforcement of a foreign arbitral award must submit, in addition to the written request, the following documents:
1. Duly authenticated original or certified copy of the arbitral award.
2. Duly authenticated original or certified copy of the arbitration agreement.
3. Official translation, if the arbitration was conducted in a language other than Spanish.
The above FAQ has been published with permission from the FTAA website.