PANAMA Law and Practice Contributed by: Jorge Molina Mendoza and Alberto de Urriola Rubio, FABREGA MOLINO
1. General 1.1 Prevalence of Arbitration
3. The Arbitration Agreement 3.1 Enforceability
Arbitration as a method of dispute resolution prevails over litigation in ordinary courts in Panama in the con - text of high-level commercial relationships, such as those involving states and international companies or consortiums for the development of international trade, and those agreed upon between the State and foreign physical or legal entities for public works development or investment. 1.2 Key Industries The construction industry of public works by foreign consortiums or companies has been subject to more international arbitration activity in recent years than most other industries in Panama. 1.3 Arbitration Institutions The Panama Center for Conciliation and Arbitration (“Cecap”) administers international arbitrations as permitted by Panama’s arbitration legislation (Law 131 of 2013, “the Arbitration Law”). The Conflict Resolu - tion Center (“Cescon”) and the International Chamber of Commerce have also been established in Panama. 1.4 National Courts There is no specific court in Panama designated to hear disputes related to international or domestic arbi - tration. The Fourth Chamber of General Business of the Supreme Court of Justice (the “Fourth Chamber of the Supreme Court”) may review arbitral awards on due process and public order grounds.
For an arbitration agreement to be enforceable in Panama, it must be in writing, and it must be agreed upon by individuals capable of binding themselves with a lawful purpose. 3.2 Arbitrability According to Panama’s Arbitration Law, only matters that are freely disposable by the parties according to the law, and those matters that the law or a treaty specifies may or should be submitted to arbitration, are arbitrable. 3.3 National Courts’ Approach The parties are free to agree on the law governing the arbitration agreement. Agreements that meet the requirements established by law are enforceable. 3.4 Validity An arbitration clause may be considered valid even if the rest of the contract in which it is contained is invalid, as Panama applies the rule of separation or autonomy of arbitration clauses contained in an inva - lid agreement.
4. The Arbitral Tribunal 4.1 Limits on Selection
As a general rule, there is no limit on the parties’ autonomy to determine the number of arbitrators, as long as the number is odd. In the absence of an agreement, there will be only one arbitrator. If one of the parties is a State or a State entity, however, there
2. Governing Legislation 2.1 Governing Law
must be three arbitrators. 4.2 Default Procedures
Law No 131 of 2013 regulates national and interna - tional arbitration in Panama. This law is 90% based on the Uncitral Model Law. 2.2 Changes to National Law As indicated above, Panama’s latest legislation in this respect dates from 2013 and has not undergone any changes to date.
If the parties to an arbitration are unable to appoint an arbitrator or arbitrators, Panamanian law provides formulas for appointment. Default appointment rules also apply for multi-party arbitrations. In the absence of an appointment, it is understood that there will be only one arbitrator.
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