Commercial Arbitration

Last verified on Thursday 13th April 2023

Commercial Arbitration: Panama

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1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Panama

Yes. Panama is a signatory party to the New York Convention. The New York Convention was enacted into Panama legislation by means of Law 5 of October 25 of 1983 and has been in force in Panama since that date. Nowadays, provisions of the New York Convention are included in Law 131 of 31 December 2023, which is the only current applicable law in international arbitration.

Panama has not made any declarations or notifications under articles I, X and XI of the New York Convention.

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2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Panama

Yes. In addition to the New York Convention, Panama is a signatory party to the Inter-American Convention on International Commercial Arbitration since 1975, and to the Washington Convention of 1965 since 1996 (Convention Between States and Nationals of Other States (ICSID)).

Panama has not made any declarations or reservations under those treaties.

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3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Panama

Yes. In Panama, Law 131 of 31 December 2023 is the current applicable law in international arbitration and is based on the UNCITRAL Model Law. Additionally, it applies to all arbitral proceedings with their seat in Panama.

Law is available for public consultations here.

Moreover, Panama has a domestic law to rule matters on International Private Law, Law 61 of 2015 that includes a chapter on the recognition and enforcement of international arbitral awards.

The law is available for public consultations here.

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4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Panama

There are two relevant arbitration bodies:  

  • The Arbitration and Settlement Centre of Panama (CECAP) sponsored by the Commerce, Industries and Agriculture Chamber of Panama and other business guilds. This Centre has an arbitrator list with more than 80 national and international professionals from 12 different countries. In addition, CECAP is a member of the International Chamber of Commerce of Panama and the Inter-American Commission of Commercial Arbitration (CIAC). Pursuant to article 15 of the Arbitration Rules, the CECAP may act as an appointing authority in absence of parties’ agreement. The Arbitration Rules are available here.
  • The Center of Dispute Resolutions (CESCON), sponsored by the Panamanian Chamber of Construction, is a non-profit organisation, whose purpose is the advice, administration and development of alternative methods for dispute resolution to all sectors of the economy, including the construction sector. Pursuant to articles 21 and 22 of the Arbitration Rules, the CESCON may act as an appointing authority in absence of parties’ agreement. The Arbitration Rules are available here

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5. Can foreign arbitral providers operate in your jurisdiction?

Panama

Yes. Arbitration centres in Panama are authorised by law and are licensed to operate. There are only two regulated centres (CECAP and CESCON). However, Law 131 of 2013 does not prohibit arbitrations whose seat is in Panama to be carried out using the rules of foreign institutions.

Many international arbitrations actually permanently take place under ICC Rules, including even state instrumentalities as parties.

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6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Panama

There is no specialist arbitration court in Panama. However, pursuant to articles 32, 43, 67 and 70 of Law 131 of 2013, the Fourth Chamber of General Business of the Supreme Court of Justice of Panama is invested with the authority to decide matters such as the recourse of nullity of arbitral awards; Recognition and Enforcement of international arbitral awards. The Supreme Court of Justice of Panama is quite familiar with, supportive of and deferential to international arbitration.

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Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Panama

Pursuant to article 16 of Law 131 of 2013, the arbitration agreement must be in writing. The same article establishes that an arbitration agreement may be deemed in writing when its contents are recorded in any form, whether the arbitration agreement or contract has been concluded orally, by the performance of certain acts or by any other means.

In addition, an arbitration agreement may be deemed in writing where there is an exchange of statements of claim and defence in which the existence of an agreement is affirmed by one party without being denied by the other.

In the same way, a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement in writing and is deemed that such reference implies that the clause is part of the contract.

Finally, pursuant to article 15 of Law 131 of 2013, an arbitration agreement may cover current or future disputes.

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8. Are any types of dispute non-arbitrable? If so, which?

Panama

Pursuant to article 4 of Law 131 of 2013, any dispute over free disposal matters of parties may be subject to an arbitration proceeding. Thus, we deem that pursuant to Panamanian law, matters related to family law and criminal law would not be subject to an arbitration proceeding.

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9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Panama

Yes, a third party can be bound by an arbitration clause. Although Law 131 of 2013 does not rule on this matter, it does not prohibit it. However, the arbitration rules of CECAP provide some rules for this matter.

Pursuant to article 11 of CECAP rules, prior to the constitution of the arbitral tribunal, the parties may request to the General Secretary of Arbitration of CECAP the incorporation of another party or parties to the arbitration proceeding.

The third party shall file an answer and may file claims against any other party within 10 days of the date of its notification. After that, General Secretary of Arbitration of CECAP may access of reject the request for including a third part.

On the other hand, CESCON rules do not regulate this matter; however, they do not prohibit it.

Panamanian courts have recognised the extension of the arbitration clause to non-signatory parties on limited occasions, for example, by applying the group of companies’ theory. The common denominator of those decisions that have allowed such extension to non-signatory parties is associated with the active participation of such third party in a substantial part of the negotiation or execution of the contract.

Regarding whether third parties can participate in the arbitration process through joinder notice, see question 10.

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10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Panama

Yes. Although Law 131 of 2013 does not rule on this matter, it does not prohibit it. However, the arbitration rules of CECAP and CESCON, provide some rules for this matter that would apply if parties agreed in applying them.

Pursuant to article 12 of CECAP rules, any party may request the General Secretary of Arbitration of CECAP to consolidate one or more arbitral proceedings under one or more contracts. In those cases, the General Secretary of Arbitration of CECAP shall consider the progress of the proceedings, the arbitration agreement or agreements entered into by the parties, provided that the compatibility of such agreements is determined; as well as the contract or legal relationship existing between them.

In addition, the General Secretary of Arbitration of CECAP may consolidate one or more arbitral proceedings when there will be a parties’ agreement in that sense.

Moreover, pursuant to article 16 of CESCON rules, when a request for arbitration is filed relating to a legal relationship on which arbitration proceedings already exist, either party may request the arbitral tribunal, once the proceedings have begun, to join the two proceedings. For those purposes, the proceedings must not have been opened yet for the presentation of evidence. When the consolidation will proceed, the new claim shall be incorporated into the previous claim in the state in which it is found, without reinstatement of the process.

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11. Is the "group of companies doctrine" recognised in your jurisdiction?

Panama

The group of companies doctrine has been mentioned by Panamanian courts more than once in some decisions. However, it has not been developed in-depth, nor its standards have been clearly established.

Moreover, arbitration awards have been declared valid based on this doctrine (ie, Case of annulment request by Don Lee International against the award issued by the Arbitral Tribunal constituted for resolving disputes in Violeta SA against Empresas Food Source SA against Don Lee Internacional, SA, of 27 May 2015). In that case, Fourth Chamber of the Supreme Court of Panama applied the group of companies’ doctrine in support to the extension of the arbitration clause to non-signatories’.

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12. Are arbitration clauses considered separable from the main contract?

Panama

Yes. Pursuant to article 30 of Law 131 of 2013, an arbitration clause forming part of a contract shall be deemed to be an agreement independent of the other provisions of the contract. The decision of the tribunal of arbitration that the contract is null and void shall not ipso jure render the arbitration clause null and void. Thus, arbitration clauses are deemed separable from the main contracts.

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13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal's jurisdiction and competence?

Panama

Yes, the principle of competence-competence is recognised in article 202 of the Panamanian Constitution and article 30 of Law 131 of 2013. These articles establish that the arbitral tribunal shall have the power to rule on its own jurisdiction, including any objections relating to the existence or validity of the arbitration agreement.

In addition, pursuant to article 32 of Law 131 of 2012, a party can promote an action for annulment before the Fourth Chamber of the Supreme Court of Justice of Panama, against the decision of competence issued by the tribunal of arbitration. The arbitral proceeding may continue meanwhile a final decision is made.

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14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Panama

No. Pursuant to Law 131 of 2013, the only requirement is that the arbitration clause must be in writing. As with any contract, it is also in the parties’ interest, to state the specific terms of the agreement such as the place of arbitration, language of arbitration, number of arbitrators, method of appointment of arbitrators, applicable rules and institution to administer the arbitration.

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15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Panama

Institutional international arbitration is more common than ad hoc international arbitration. The UNCITRAL Rules are not commonly used in ad hoc international arbitrations; however, they can be used.

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16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Panama

Panamanian law does not establish particular points when drafting a multi-party arbitration agreement. However, in order to appoint arbitrators, pursuant to article 22.3 of Law 131 of 2013, in the event of a plurality of claimants and/or defendants, and when the dispute is to be submitted to the decision of three arbitrators, the claimants shall appoint one arbitrator by mutual agreement and the defendants shall appoint another arbitrator by mutual agreement. The two arbitrators so appointed shall appoint the third arbitrator, who shall preside over the arbitral tribunal.

Whether the parties are unable to jointly appoint an arbitrator or if the two arbitrators are unable to agree on the third arbitrator, or if the parties are unable to agree on the method of constituting the arbitral tribunal, at the request of either party, an arbitration institution may appoint each member of the arbitral tribunal and shall designate one of them to act as chairman.

In addition, article 15 of CECAP rules and article 20 of CESCON rules replicate provisions indicated in article 22 of Law 131 of 2013.

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Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Panama

In the case of institutional arbitrations, pursuant to CECAP rules the arbitration proceeding begins with the arbitration claim (article 7). Furthermore, pursuant to article 13 of CESCON rules, the arbitration proceeding begins with the arbitration request before the Director of CESCON.

In the case of ad hoc arbitrations, pursuant to article 48 of Law 131 arbitral proceedings commence on the date on which the respondent receives the request to submit such dispute to arbitration unless otherwise agreed by the parties.

Regarding limitations periods to commence an arbitration proceeding, Panamanian law does not provide any in that regard. The only limitation to bear in mind will be the statute of limitation of specific legal actions.

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Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Panama

Pursuant to article 56 of Law 131 of 2013, the substantive law applicable will be the law chosen by the parties. In the absence of parties’ agreement, the arbitration tribunal will apply the law that they deem appropriate. In addition, in international arbitrations, the arbitration tribunal shall take into account the Principles of the International Institute for the Unification of Private Law (UNIDROIT) on International Commercial Contracts.

Also, in Panama there is a Code of International Arbitration, Law 61 of 2015, which provides some rules on international law that shall be followed by the arbitrators.

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Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a party's choice of arbitrator?

Panama

No. Pursuant to article 20 of Law 131 of 2013, in absence of parties’ agreement, arbitrators in domestic or international arbitrations may be from any nationality and may be lawyers or not.

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20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Panama

Yes, pursuant to article 20 of Law 131 of 2013, arbitrators may be from any nationality. They are subject to the same immigration requirements that any foreign visitor in Panama and depending on the nationality of the arbitrator. There are no specific requirements related to foreign arbitrators based only on their capacity as arbitrator.

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21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Panama

In the case of ad hoc arbitration, pursuant to article 22 of Law 131 of 2013, in the absence of parties’ agreement, in arbitrations proceedings with three arbitrators, such party will appoint an arbitrator and the two designated arbitrators will appoint the third arbitrator who will preside the tribunal. Whether a party does not appoint an arbitrator, or two appointed arbitrators do not appoint the third arbitrator, the appointment of such arbitrator will be made by an institutional center on national or international arbitration according to their own rules.

In the case of institutional arbitration, in the absence of parties’ agreement, pursuant to article 15 of CECAP rules, each party will appoint one arbitrator and the president will be appointed by the General Secretary of CECAP. If the arbitration tribunal is constituted with a sole arbitrator, it will be appointed by parties’ agreement and in absence of agreement by the General Secretary of CECAP.

The president of the tribunal and the sole arbitrator shall be members of the list of arbitrators of the CECAP.

When there is plurality of claimants and/or respondents, and where the dispute is to be submitted to three arbitrators, each party may appoint one arbitrator by mutual agreement or the respondents shall appoint another arbitrator by mutual agreement.

In the case of an aggregate party that has been joined and the dispute is to be submitted to three arbitrators, the additional party shall, jointly with the claimants or the respondents, appoint an arbitrator.

When CESCON rules will be applicable, pursuant to articles 21 and 22, parties may appoint the arbitrators, preferably but not limited, from the CESCON arbitrators list. CESCON rules provide that since the request of commencement of the arbitration proceeding each party may appoint one arbitrator, and the two appointed arbitrators may appoint the third from the CESCON arbitrators list. In the absence of an agreement, the General Secretary of CESCON will appoint the arbitrators.

Thus, in any case, Panamanian courts do not have any role in appointing arbitrators.

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22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Panama

Panamanian law does not establish any provisions regarding arbitrators’ immunity. Indeed, pursuant to article 49 of the Ethics Code of CECAP, arbitrators acting in arbitration proceedings will be subject to Law 131 of 2013, CECAP or CESCON rules, or other applicable regulations, and to the Code of Ethics for Arbitrators from both institutions.

The Code of Ethics for Arbitrators of CECAP is available here.

The Code of Ethics for Arbitrators of CESCON is available here.

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23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Panama

Panamanian law does not regulate in relation to payment of arbitrator’s fees. Thus, in ad hoc tribunal arbitrations, parties and the tribunal agree the payment conditions and the fees.

Moreover, in the case of institutional arbitrations, Schedule 1 of CECAP Rules; and Administrative Rules of CESCON regulate payments and arbitrators’ fees for those centres.

Finally, in Panama there are no fundholding institutions.

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Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Panama

Pursuant to article 25 of Law 131 of 2013, an arbitrator may be challenged under circumstances that generate justifiable doubts as to his or her impartiality or independence, or if he or she does not meet every qualification agreed by the parties.

A party may challenge an arbitrator appointed by it, or in whose appointment it has participated, only for reasons of which it has become aware after the appointment has been made.

The person to whom his or her possible appointment as arbitrator is communicated shall disclose all circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. The arbitrator shall, from the time of his appointment and throughout the arbitral proceedings, disclose such circumstances to the parties.

Pursuant to article 22 of CECAP rules, challenged arbitrator, as well as the party or other parties, may express their acceptance or non-acceptance of the challenge by writing to the General Secretary of CECAP.

If the other party agrees to the challenge or if the arbitrator withdraws, a substitute arbitrator shall be appointed in the same manner in which the challenged arbitrator was appointed. The resignation of an arbitrator or the acceptance by the other party on the challenge request shall not be considered as an acknowledgment of any of the grounds for challenge.

If the other party does not accept the challenge and the challenged arbitrator does not resign, the decision on the challenge shall be taken by the General Secretary of CECAP, but not before giving the other members of the tribunal the opportunity to submit their comments in writing within seven days of the request.

The General Secretary of CECAP must decide whether the challenge is admissible and, at the same time, on the merits of the challenge. The decision resolving the challenge is final and no appeal may be lodged against it.

Moreover, pursuant to article 26 of CESCON rule, the challenge shall be filed within five days following the notification of the constitution of the arbitral tribunal or within five days following the date on which subsequent facts giving rise to the challenge became known to the party. These time limits shall be 15 days in arbitration proceedings where at least one of the parties or arbitrators is domiciled abroad.

The challenge shall be submitted to the arbitral tribunal, stating the grounds on which it is based and the relevant evidence. Once the arbitration proceedings have been commenced, the tribunal shall notify the parties and the challenged arbitrator so that they may state their position within five days.

After the expiration of this term, the rest of the arbitrators shall decide the challenge within a term not exceeding 10 days. The term for this decision shall be 15 days in proceedings where at least one of the parties or arbitrators is domiciled abroad. If the arbitral tribunal is a sole arbitrator tribunal, the challenge shall be decided by CESCON.

If the other arbitrators declare the grounds for the challenge proven, the challenged arbitrator shall be removed from the proceeding and an alternate arbitrator will be appointed. The decision resolving the challenge is final and no appeal may be lodged against it.

In any case, the challenged arbitrator may accept the challenge, and shall so inform the parties and the court. The challenge request and procedure do not suspend the main arbitration proceedings, except when so decided by the Arbitral Tribunal.

Finally, IBA Guidelines on Conflicts of Interest in International Arbitration are generally taken into account in international arbitrations.

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Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Panama

Panama Law 131 of 2013 provides rules for precautionary measures and preliminary injunctions. Pursuant to article 18 of that law, the measures may be ordered by both, the arbitration tribunal, and the judicial Panamanian courts, either before, during or after the commencement of the arbitration proceeding.

Regarding anti-suit injunctions, there are no Panamanian law provisions to rule them, nor a caselaw from arbitration tribunals or judicial courts where they have been ordered.

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26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Panama

It is not regulated either in local regulations or in the law, but we do not see any impediment for it to be done by an arbitration tribunal. We find it difficult (but not impossible) for a court to order a party to provide security for costs.

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Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Panama

No, in Panama there are no mandatory rules that govern the conduct of the arbitration. Parties are free to determine the proceeding and/or to apply rules from an arbitration institution. In the absence of a parties’ agreement, pursuant to article 46 of Law 131 of 2013 arbitrators have the power to conduct the arbitration proceeding once the tribunal is constituted as they deem appropriate without necessarily applying procedural rules from the seat of the arbitration.

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28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Panama

Pursuant to article 52.2 of Law 131 of 2013, if a respondent fails to participate in arbitration this conduct will deem as a default from the party. In that case, the arbitral tribunal will continue the proceeding. Absence of the party will not be deemed as an acceptance of the allegations from the claimant.

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29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Panama

Pursuant to article 53 of Law 131 of 2013, the arbitral tribunal has the exclusive power to determine the admission, relevance, performance and value of evidence, and to order at any time the production or practice of such evidence as it deems necessary.

In addition, the arbitral tribunal may disregard the evidence offered and not practiced, according to the circumstances of the case.

Moreover, IBA Rules on the Taking of Evidence in International Commercial Arbitration or Prague Rules (the Rules on the Efficient Conduct of Proceedings in International Arbitration) are applied under parties’ agreement or by arbitral tribunal decision.

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30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Panama

Yes. Pursuant to article 54 of Law 131 of 2013 the arbitral tribunal or any party with the approval of the arbitral tribunal may request the assistance of a court of the Panamanian state or of any other state for the practice of evidence. The court may comply with such request within the scope of its jurisdiction and in accordance with the applicable rules of evidence.

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31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Panama

As Panama is a civil law jurisdiction, document production is not as widely used as in common law jurisdictions. However, it is increasingly used and admitted in international arbitration tribunals following the practices created by the IBA Rules on the Taking of Evidence in International Commercial Arbitration.

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32. Is it mandatory to have a final hearing on the merits?

Panama

It is not mandatory. Indeed, pursuant article 51 of Law 131 of 2013, the arbitral tribunal, unless parties’ agreement, may decide whether to hold hearings, or whether conduct evidence and allegations on the basis of documents and other evidence. However, unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at the appropriate stage of the proceedings at the request of a party.

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33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Panama

Yes. Even though this is not regulated, the law does not prohibit conducting hearings and procedural meetings elsewhere.

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Award

34. Can the tribunal decide by majority?

Panama

Yes. Pursuant to article 57 of Law 131 of 2013 when there is more than one arbitrator, the adoption of decisions will be taken following these rules:

  • The arbitral tribunal shall operate with the concurrence of a majority of the arbitrators. All decisions shall be made by majority vote unless otherwise provided by the parties. If there is no majority, the decision shall be made by the chairman of the arbitral tribunal.
  • The chairman of the arbitral tribunal may decide questions of procedure unless otherwise agreed by the parties or the arbitrators.

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35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Panama

No, the law does not impose any sort of limitations on arbitrators regarding remedies or relief that may grant.

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36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Panama

Yes, pursuant to article 60.1 of Law 131 of 2013, an arbitrator may issue a dissenting opinion. In practice, they are not common, but seldomly they are seen in domestic arbitrations.

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37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Panama

Pursuant to article 60 of Law 131 of 2013, the award shall be made in writing and signed by the arbitrator or arbitrators. Where the arbitral is composed of more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall be sufficient, provided that the reasons for the absence of one or more signatures are recorded. In the absence of a majority, the chairman of the arbitral tribunal may sign alone. An arbitrator who does not sign the award or issue a dissenting opinion shall be deemed to adhere to the majority decision or to that of the presiding arbitrator, as the case may be.

In addition, the award of the arbitral tribunal shall state the reasons on which it is based, unless the parties have agreed otherwise, or it is an award made on terms agreed upon by a parties’ transaction.

Furthermore, the award shall state the date on which it was rendered, and the place of arbitration determined. The award shall be deemed to have been made at that place.

Finally, after the award has been rendered, the tribunal or the arbitral institution administering the arbitration shall notify each of the parties, delivering a signed copy by the arbitrators.

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38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Panama

Pursuant to article 55 of Law 131 of 2013, in international arbitration, the dispute must be decided and notified within the time limit established by the parties, by the applicable arbitration rules or, failing this, by the arbitral tribunal.

For domestic arbitrations, the time limit is two months from the date the closing arguments were submitted by the parties.

Furthermore, pursuant to article 38 of CECAP Rules, if the parties have not provided otherwise, it shall be understood that the time limit for rendering the award shall be two months from the date of the closing arguments submitted by the parties. This term may be extended for up to one month by the arbitral tribunal considering the circumstances and complexity of the case to be decided. The extension will be subject to the approval of the General Secretary of CECAP.

Moreover, pursuant to article 46 of CESCON Rules, if the parties have not provided otherwise, it shall be understood that the time limit for rendering the award shall be two months from the date of the closing arguments submitted by the parties. This term may be extended for up to two months by the arbitral tribunal considering the circumstances and complexity of the case to be decided.

The time limits described do not apply to the interpretation and correction of the award.

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Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Panama

Yes, the party requesting costs may obtain them from the opposing party; this is the usual and common practice when parties have not agreed otherwise. The arbitration law does not regulate the imposition of costs; however, most rules do contemplate the decision on costs as a requirement of the arbitral award (ie, article 39.10 of the CESCOP rules and article 45.6 of CESCON rules).

The decision is entirely up to the arbitral tribunal, and in practice, the loser-pays rule applies, unless the parties have agreed otherwise.

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40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Panama

Yes, interest may be included on the principal claim and costs. If requested by the prevailing party the arbitral tribunal may award interest. Pursuant to Panamanian law interest’s party is up to 6 per cent on civil obligations and up to 10 per cent in commercial obligations.

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Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Panama

Appeal is not a recourse available under Panamanian law against arbitral awards.

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42. Are there any other bases on which an award may be challenged, and if so what?

Panama

Pursuant to article 67 of Law 131 of 2013, an award may be challenged only through an annulment request to the Supreme Court (Fourth Chamber) and just under the following circumstances:

  • if one of the parties to the arbitration agreement was affected by some incapacity, or that such agreement is invalid under the law to which the parties have submitted it or, if nothing has been indicated in this respect, under Panamanian law;
  • if it has not been duly notified of the appointment of an arbitrator or of the arbitral proceedings or has not been able, for any other reason, to assert its rights;
  • if the award relates to a dispute not provided for in the arbitration agreement or contains decisions that exceed the terms of the arbitration agreement; provided, however, that if the provisions of the award that relate to matters submitted to arbitration may be separated from those that are not, only the latter may be set aside;
  • if the appointment of the arbitral tribunal or the arbitral proceedings have not been in accordance with the agreement between the parties, unless such agreement was in conflict with a provision of this law from which the parties could not derogate or, in the absence of such agreement, that they have not been in accordance with this law;
  • if the arbitrators have decided on matters not arbitrable; or
  • if the international award is contrary to international public policy.

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43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Panama

A provision in the previous arbitration law (1999), which allowed for the parties to waive the right to file a nullity recourse in international arbitrations, was declared unconstitutional by the Supreme Court in 2005. That is the only case that has been decided on the matter by our courts, so such decision has not changed. The ground for the Court to declare the unconstitutionality was that such advance waiver, violated due process and public order.

The current arbitration law (2013) does not contain any similar provision.

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Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Panama

In Panama, there is no judicial decision where the Supreme Court of Justice has recognised and enforced an award that has been set aside by the courts in the seat of arbitration. However, pursuant to article 72 of Law 131 of 2013, the Court may refuse enforcement of a foreign award when it has been annulled or suspended by a court of the country in or under the law of which the award was made, or the award has been rendered. This rule was included in the same way in article 159 of Law 61 of 2015, Panamanian International Private Law Code.

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45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Panama

Panamanian Supreme Court has always been very favourable to the recognition of foreign arbitral awards. This has been the trend since our first arbitration law in 1999 to date. The restrictive approach to the grounds for non-recognition of foreign arbitral awards, and the ‘pro-enforcement’ bias, are permanent drivers in Panamanian Supreme Court.

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46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Panama

No jurisprudence on the matter is found in Panama. Nevertheless, case law reflects recognition and enforcement on state parties, which means that Panama would have no problem in enforcing judgments or arbitral awards against state parties.

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Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Panama

The law is silent on confidentiality. The different rules of the arbitration centres usually contain provisions regarding the confidentiality to be maintained by the arbitrators, the centres and the parties, in relation to the cases.

This means, pursuant to article 26 of CECAP Rules, the arbitral tribunal, as well as the secretary of the tribunal, must keep all documents forming part of the file strictly confidential and may not give access to these documents to third parties who are not part of the proceedings. In addition, pursuant to article 54 of CECAP Rules, unless a parties’ agreement, the arbitrators, the secretary of the tribunal, the administrative staff or the Board of Directors of CECAP or any person hired by the arbitral tribunal or by CECAP, who has access, in any way, to documents in the file containing an arbitration proceeding or to any information related thereto, have a duty of confidentiality towards third parties.

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48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Panama

In an arbitration administered by a centre whose rules provide for the confidentiality of the file, the information in the file would be confidential. However, it is our opinion that the parties to the proceedings could make use of their own information in other proceedings. Likewise, this information could be made available at the request of a Panamanian judicial authority.

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49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Panama

Panamanian advocacy law does not provide any ethical standards to counsels and arbitrators conducting proceedings. However, CECAP and CESCON have ethical codes applicable to arbitrators.

The ethics codes are available here and here

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50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Panama

No. The most widely used regulations in Panama (CEPAC, ICC, CESCON) contain standard provisions in line with international practice.

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51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Panama

Panamanian rules do not regulate third-party funding. However, recently it is becoming commonly used.

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