PANAMA Law and Practice Contributed by: Nadya Price and Joaquín De Obarrio, Patton Moreno & Asvat
by the Panamanian Maritime Chamber and the Pana - manian Maritime Law Association, specialises in mari - time claims. 7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses In proceedings commenced in breach of a foreign jurisdiction or arbitration clause, the defendant may raise incidents or challenges that can lead to an annul - ment of proceedings, such as lack of jurisdiction and lack of competence. Arbitration jurisdiction is recognised at the constitu - tional level in Panama, and Law 131 of 2013 on arbi- tration dictates that, in disputes which include arbitra - tion clauses, a judicial court shall decline jurisdiction in favour of the arbitral tribunal, and shall immediately forward the relevant file to the arbitral tribunal. 8. Ship-Owners’ Income Tax Relief 8.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies The Panamanian tax system is based on the prin - ciple of territoriality. Only income generated in the national territory is taxed, and foreign-source income is exempt. The 2010 amendments to the Tax Code introduced provisions in relation to transportation, and include international transportation in the portion correspond - ing to freight, passengers, cargo and other services, of which the origin or final destination is Panama, as an activity that shall be considered as income obtained from sources within Panama. Notwithstand - ing, it is important to indicate that the amended Tax Code specifies that these activities will be exempt if the international companies have their home port in Panama. Income obtained within Panama from the operations of ships registered abroad will also be exempt if the income obtained by Panamanian-registered vessels in that country is given a similar exemption under the principle of reciprocity. The same applies to income obtained within Panama from operations of ships reg -
istered abroad by foreign persons resident, or not, in the national territory, provided that Panamanian natu - ral or legal entities are given similar treatment in the country of the nationality of that person. The sale of vessels registered under the Panamani - an flag and engaged in international trade shall be exempt from income tax. 9. Implications of Non-Performance, IMO 2020, Trade Sanctions and International Conflict 9.1 Force Majeure and Frustration Force majeure is defined as the situation produced by acts of man which have not been possible to resist, such as acts of authority exercised by public officials, imprisonment by enemies, and the like. The causes for the non-performance of a shipping contract would have to fit the definition provided in order to be con - sidered force majeure. If the non-performance does not conform to this definition, is in any way foresee - able or has been stipulated in the contract, it will be dealt with under ordinary regulations or as agreed between the parties. 9.2 Enforcement of the IMO 2020 Rule Limiting the Sulphur Content of Fuel Oil Panama is a signatory of the International Conven - tion for the Prevention of Pollution from Ships, 1973 (MARPOL) and implemented the IMO 2020 regulations from 1 January 2020. The PMA, through the General Directorate of Merchant Marine, is responsible for the enforcement of the sulphur content limit on vessels flying the Panamanian flag, while the General Direc - torate of Ports is responsible for the enforcement of the sulphur content limit on vessels coming into Pana - manian ports. Limits have been implemented by the PMA in accord - ance with the limit specified under MARPOL Annex VI, which is 0.50% m/m (mass by mass). Currently, no known PSC enforcement actions take place in Panama to enforce the sulphur content limit.
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