PANAMA Law and Practice Contributed by: Jorge Molina Mendoza and Alberto de Urriola Rubio, FABREGA MOLINO
1. General 1.1 General Characteristics of the Legal System The Panamanian legal system is based on civil law tradition. In general terms, it follows an adversarial model, with the exception of family matters, in which the system is openly inquisitorial. The judicial process is conducted through both written submissions and oral arguments. In October 2025, a comprehensive reform of the civil procedure came into effect, giving greater prominence to oral proceedings, in contrast to the previously predominantly written system. 1.2 Court System The structure of Panama’s court system varies across different subject matter jurisdictions, but it generally follows a three-tier model, with trial courts at the bot- tom, appellate courts in the middle and the Supreme Court at the top. Since Panama has a centrist govern- ment, all courts are national, not federal, but some of them, such as the trial courts, only have jurisdic- tion over a specific area. As a general rule, courts are organised by subject matter jurisdiction, including shipping, civil and criminal courts, to name a few. 1.3 Court Filings and Proceedings Court filings and proceedings are open to the public. Files in the Panamanian judicial system are public, unless they contain confidential information or infor- mation restricted by law due to protect the privacy of one of the parties. 1.4 Legal Representation in Court Legal practitioners who appear in Panama’s courts must have a licence to practise issued by the Supreme Court of Justice. The licence is mainly granted to indi- viduals who are Panamanian citizens and have a law degree. Regarding rights of audience, attorneys must have a power of attorney from their clients that author- ises them to appear in court on behalf of their clients. Foreign lawyers cannot conduct cases in Panama- nian courts, since the Supreme Court can only grant a licence to practise to Panamanian citizens.
2. Litigation Funding 2.1 Third-Party Litigation Funding
Panama does not have a regulatory framework that governs third-party litigation funding. There are no restrictions on litigation funding. 2.2 Third-Party Funding: Lawsuits Since Panama does not have a regulatory framework governing third-party litigation funding, any type of lawsuit is available for third-party funding. 2.3 Third-Party Funding for Plaintiff and Defendant Since Panama does not have a regulatory framework that governs third-party litigation funding, third-par- ty funding is available for both the plaintiff and the defendant. 2.4 Minimum and Maximum Amounts of Third-Party Funding Since Panama does not have a regulatory framework that governs third-party litigation funding, there is no minimum nor maximum amount a third-party funder will fund. 2.5 Types of Costs Considered Under Third- Party Funding Since Panama does not have a regulatory framework that governs third-party litigation funding, a third-party funder may consider funding all, some or none of the costs of a case. In Panama, costs are fixed by the court in their final ruling and they must be paid by the losing party to the winning party. 2.6 Contingency Fees Contingency fees are permitted in Panama. In this regard, the Panama Supreme Court approves the minimum legal fees set by the Panama Bar Associa- tion; as a general rule no lawyer may charge less than the minimum legal fees approved by the Supreme Court. Contingency fees are based on the amount of the claim; for example, if the claim is between USD100,001 and USD500,000, the minimum contin- gency fee is of 15% of the amount recovered and cannot exceed 50%.
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