Introduction
In 2013, Panama adopted Law No. 131 (Arbitration Law): “Which regulates national and international commercial arbitration in Panama and issues another disposition.” Since then, the Arbitration Law has been the main body of legislation on matters of arbitration. The Arbitration Law follows the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (1985) to a great extent. It is premised upon Article 202 of the Constitution of the Republic of Panama which states: “The Judicial Branch is made up of the Supreme Court of Justice, the tribunals and the courts which the Law may establish. The administration of justice may also be exercised by the arbitral jurisdiction as the Law may determine. The arbitral tribunals may hear and decide on their own regarding their own jurisdiction.” In general terms, the enforcement of arbitral awards is regulated by the Arbitration Law.
Part I: what can be enforced?
1. What counts as an arbitral “award” that can be enforced?
- An enforceable arbitral award may include a provisional (preliminary or cautionary) measure ordered by an arbitral tribunal seated in Panama under Arbitration Law Art 42 (unless otherwise stated, any reference to “Article” or “Articles” relates to the respective numbered Articles of the Arbitration Law). Such provisional measure is enforceable by any judicial court in Panama.
- A provisional measure issued by an arbitration tribunal seated abroad is enforceable by resorting to the Fourth Chamber of the Supreme Court of Panama under Article 43.
- A final domestic award is enforceable by any competent court in Panama under Article 69.
- A final international award is enforceable by resorting to the Fourth Chamber of the Supreme Court of Panama under Articles 70–73, without prejudice to the international conventions on enforcement of international awards signed by Panama, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (New York Convention) and the Inter-American Convention on International Commercial Arbitration (1975) (Panama Convention).
2. Formal requirements that an award needs to conform with to be enforceable
- To enforce a domestic provisional or preliminary order, a copy of the documents showing the existence of the arbitration proceedings and the provisional order must be presented to the competent domestic court (Article 42).
- For an international provisional or preliminary order to be enforced, the original award (or a certified copy) must be presented to the Fourth Chamber of the Supreme Court of Panama, which may request a Spanish translation if not issued in Spanish (Articles 42 and 71).
- For a final domestic award to be enforceable, a certified (authentic) copy of the award must be provided to the competent court (Article 69).
- For a final international award to be enforceable, the original award (or a certified copy) must be presented to the Fourth Chamber of the Supreme Court of Panama, which may request a Spanish translation if not issued in Spanish (Article 71).
3. Orders on interim measures: enforceability
a. Domestic awards
An enforceable arbitral award may include a provisional (preliminary or cautionary) measure ordered by an arbitral tribunal seated in Panama under Arbitration Law Art 42. Such provisional measure is enforceable by any judicial court in Panama.
b. International commercial arbitration awards
A provisional measure issued by an arbitration tribunal seated abroad is enforceable by resorting to the Fourth Chamber of the Supreme Court of Panama under Article 43.
4. Emergency awards: enforceability
Please see answer to question I(3).
Part II: resisting enforcement
Either a preliminary or provisional order, or a final award, as explained above.
5 a. How are awards set aside?
By filing a set-aside (annulment) action with the Fourth Chamber of the Supreme Court of Panama (Articles 66– 68).
b. Can enforcement be resisted if the respondent has not formally applied to set aside the award?
Yes, during the enforcement proceedings themselves (Article 72 (international awards); Article 69 (domestic awards)). The defences available in case of enforcement of domestic awards are limited to a stay pending a decision of an annulment proceeding.
c. Can non-parties seek annulment?
Article 66 does not specify who may seek annulment. It is thus unclear whether a non-party may seek such relief.
d. Grounds to seek setting aside
- Legal incapacity of a party to the arbitration agreement or illegality of the arbitration agreement (Article 67).
- Lack of proper service or notice or impossibility to assert its rights (Article 67).
- Award deals with a matter not contemplated by the arbitration agreement or exceeding its terms, to the extent they cannot be separated from the remaining part of the award (Article 67).
- If the designation of the panel or the proceedings was not in accordance with the arbitration agreement, except if it would have violated the Arbitration Law (Article 67).
- If the panel decided on matters which are not arbitrable (Article 67).
- If an international award violates international public policy (international public order) or if a domestic award violates Panamanian public policy (Article 67).
e. Timelines to seek setting aside
Set-aside action must be filed within 30 working days from the issuance of the final award (Article 68).
f. Grounds to resist enforcement
If the party against whom enforcement is sought proves one of the following:
- Legal incapacity of a party to the arbitration agreement or illegality of the arbitration agreement under the law chosen by the parties or the law of the arbitration seat (Article 72).
- Lack of proper service or notice or impossibility to assert its rights (Article 72).
- Award deals with a matter not contemplated by the arbitration agreement or exceeding its terms, to the extent they cannot be separated from the remaining part of the award (Article 72).
- If the composition of the panel or the proceedings was not in accordance with the arbitration agreement, except if it would have violated the law of the seat (Article 72).
- If the award is not yet binding upon the parties or has been annulled or stayed in the country in which it was rendered or under the law in which it was rendered (Article 72).
If the Fourth Chamber of the Supreme Court determines one of the following:
- Under Panamanian law the panel decided matters which are not arbitrable (Article 72).
- If an international award violates international public policy (international public order) or if a domestic award violates Panamanian public policy (Article 72).
g. Which court to go to for setting aside?
The Fourth Chamber of the Supreme Court of Panama.
h. Formal requirements before court can grant setting aside
Please see the answer to question II(5)(f).
i. Do courts grant stay on enforcement as an interim measure?
The pendency of the set-aside action alone stays enforcement of a domestic award in a domestic court. For a foreign award, a stay must be sought in accordance with the Judicial Code.
j. What is the appellate mechanism against the decision of the court of first instance?
In the case of domestic awards, Article 69 states that no recourse is available at the domestic enforcement level.
Part III: enforcing foreign awards
6. New York Convention applicability
The New York Convention is applicable as per Law Number 5 (1983).
7. Timelines for enforcement
There is no specific timeframe. As such, the statute of limitations applies. The general limitations period is seven years (Civil Code Art 1701).
8. Which court to go to? Relation with location of assets?
Parties can only go to the Fourth Chamber of the Supreme Court which will rule on enforceability.
9. Can non-parties resist enforcement?
Generally, no.
10. Compelling disclosure of local assets? How to identify assets available for enforcement?
Parties need to resort to the Judicial Code provisions dealing with pre-filing disclosure (Articles 815 and 816).
11. Are third-party funded awards enforceable?
Generally, yes.
12. What interim reliefs are available pending enforcement of awards?
Interim reliefs are available under the general provisions of the Judicial Code, such as Articles 531–580, which deal with cautionary measures. These include asset freezes, stay orders, injunctions, and similar relief. This relief generally requires adequate guarantees to be granted and, in many cases, may be granted ex parte.
13. Which of those reliefs are granted ex parte?
Stay or suspension orders, asset freezes and injunctions.
14. Formal requirements for enforcement application: what documents need to be filed in court?
- the original or a certified copy of the award (New York Convention Art IV s1)
- the original or a certified copy of the arbitration agreement (New York Convention Art IV s1)
15. Enforcing awards that have been annulled/set aside at other courts
These must be proved to the enforcing court under New York Convention Art V s1(e).
16. Enforcing when an annulment application is pending at a foreign court
This does not generally stay the enforcement.
17. Once application for enforcement is allowed, how does the actual enforcement against assets work?
A domestic court may be commissioned to issue embargo orders and foreclose on embargoed assets or, technically, the Fourth Chamber of the Supreme Court can order such embargo.
18. What are the remedies available for tracing assets during enforcement proceedings including for assets disposed of by fraud?
Pre-filing discovery and disclosure requests under Judicial Code Arts 815 and 816.
19. What is the procedure for repatriation of sums awarded after obtaining an order for enforcement?
Panama has no exchange controls. Securities and liquid assets can be ordered to be sent to foreign jurisdictions by the competent courts.
20. Do courts grant orders for security for costs?
Only to the extent a provisional measure or pre-filing evidentiary order is requested, courts will order that they be properly bonded.
21. Exchange control regulations: do they affect payments to foreign award holders?
Panama has no exchange controls.
22. Enforcing awards from non-New York Convention places
The Arbitration Law provisions outlined above must be followed.
23. Enforcing against sovereigns
This is possible as long as there are no sovereign immunity grounds.
24. Appellate mechanism available?
No appeals are available as the enforcement is ordered by the Fourth Chamber of the Supreme Court.
Part IV: enforcing domestic awards
25. Timelines for enforcement
There is no specific timeframe. As such, the statute of limitations applies. The general limitations period is seven years (Civil Code Art 1701).
26. Which court to go to? Relation with location of assets?
Any civil court with jurisdiction over the assets and/or the defendant/respondent.
27. Compelling disclosure of local assets?
Need to resort to the Judicial Code provisions dealing with pre-filing disclosure (Judicial Code Arts 815 and 816).
28. How to identify assets available for enforcement?
Through the public records, vehicle registration, and similar registries or using pre-filing disclosure.
29. Are third-party funded awards enforceable?
Generally, yes.
30. What interim reliefs are available pending enforcement of awards?
Interim reliefs are available under the general provisions of the Judicial Code, such as Articles 531–580, which deal with cautionary measures. These include asset freezes, stay orders, injunctions, and similar relief. This relief generally requires adequate guarantees to be granted and, in many cases, may be granted ex parte.
31. Which of those reliefs are granted ex parte?
Stay or suspension orders, asset freezes, and injunctions.
32. Formal requirements for enforcement application: what documents need to be filed in court?
A certified or authentic copy of the award.
33. Filing for enforcement when application for annulment is pending
It will automatically be stayed as per Article 69.
34. Once application for enforcement is allowed, how does the actual enforcement against assets work?
The court will issue embargo orders against assets belonging to the respondent.
35. What are the remedies available for tracing assets during enforcement proceedings including for assets disposed of by fraud?
The remedies available are interim measures, embargo or criminal actions.
36. Do courts grant orders for security for costs?
Only to the extent a provisional measure or pre-filing evidentiary order is requested, courts will order that they be properly bonded.
37. Appellate mechanism available?
Article 69 states that no recourse is available at the domestic award enforcement phase.
