Advantages of Panama as an International Arbitrations Venue

I. Introduction

Arbitration as an alternative method of conflict resolution represents an advantage for all types of natural persons and legal entities at the international level and Panama as a logistics center and as an international maritime transit country, with a privileged geographical position, faces the challenge of responding accordingly. effectively to the demand of disputes that arise as a consequence of international trade. So much so that in our essay we will analyze the advantages and some basic rules and characteristics before our ideal to become the main venue of international arbitrations.

Being clear that currently, in the Panamanian jurisdiction, arbitral justice finds its reason for subsisting and its foundations in the autonomy of the will of the signatory parties of a bilateral agreement or contract to freely establish the competent forum in case of possible conflicts, the type of arbitration, the formalities, procedures and rituals that the court of arbitration must observe to conduct the process, then, it will be easy to understand the reasons why the Panamanian arbitral jurisdiction is attractive for international legal transactions relations of a multiplicity. of natures (infrastructure, technological, maritime, etc.).

II. Some Advantages of Panama as an International Arbitrations Venue.

a. Symmetry in Jurisprudence.

In Panama there is abundant and symmetrical jurisprudence regarding the limited judicial intervention that exists around arbitration decisions, the absence of procedural rigor, the absence of appeals, reviews, or challenges against actions of the courts of arbitration, as has been recognized and developed. expressly our Supreme Court of Justice in Plenary by Ruling of July 31, 2017, and then through its ruling of May 3, 2019, through which they recognized the constitutionality of arbitration justice in Panama, its nature as an external conflict resolution process to the judicial system itself and the binding, mandatory and final effect of arbitration awards.

b. Demarcated Separation with the Judicial Body.

Furthermore, there is a marked and respected separation of the arbitration instance from the judicial instance, since judicial intervention is limited solely and exclusively to the review of the award for the reasons established in article 67 of Law 131 of December 31, 2013. , which regulates national and international commercial arbitration in Panama and dictates another provision (hereinafter “Arbitration Law”).

c. Constitutional Rank of Arbitration.

The entire regulatory framework of arbitration in Panama, which as we will explain has constitutional status, broadly guarantees that the parties are guaranteed the effectiveness of the process and legal certainty regarding the execution of the arbitration award.

Notwithstanding the above , understanding that it is always correct and that it is a core part of Due Process to guarantee the principle of double instance or review of the decisions of the dispensers of justice, the Arbitration Law establishes in its Chapter IX, article 66, the possibility to challenge the arbitration award under the figure called “Appeal for Nullification”, which can only be filed for reasons determined by that body of regulations.

The most important prerogative or element that favors the Panamanian jurisdiction as the venue of national and international arbitrations is that arbitral justice is recognized at the constitutional level, all of which means that no legal norm issued by the legislative body, or a Decree, Resolution, Order or similar issued by the Executive Body may be above it. A recent case, which comes in handy to demonstrate the supremacy of constitutional norms in Panama, is the case of Law 406 of 2023, through which the mining concession contract signed between the State and Minera was approved. Panama, SA, which a few days after being sanctioned and enacted, suffered the loss of its legal effects as it was declared unconstitutional by the Supreme Court of Justice of Panama, through its ruling of November 27, 2023.

In this order of ideas, it should be known that in Panama arbitration was elevated to constitutional status in 2004, when arbitral jurisdiction was incorporated into the Political Constitution as part of the administration of justice in accordance with the provisions of its article 202, “ The Judicial Branch is made up of the Supreme Court of Justice, the courts and tribunals established by Law. The administration of justice may also be exercised by the arbitral jurisdiction as determined by law. The courts of arbitration may know and decide for themselves about their own jurisdiction.”

d. Kompetenz Kompetenz .

Regarding the last sentence of the aforementioned article 202, which establishes that ” Arbitration courts may know and decide for themselves about their own jurisdiction.” As the jurist Juan Pablo Fábrega Polleri points out in his work “Panama as an International Arbitrations Venue”, Fabrega editorial , Molino, year 2023, page 18, “ by giving constitutional status to the arbitral institution with the recognition of the arbitral jurisdiction as part of the administration of justice, and conferring on the arbitrators the ability to decide for themselves on their jurisdiction, the arbitration was guaranteed autonomy and independence from the ordinary jurisdiction, so that both jurisdictions are on a level of equality with respect to the exercise of their powers ”.

This characteristic, which from the point of view of the writer is an advantage with respect to the forum of other jurisdictions, comes to be known in international doctrine as the figure of the “ Kompetenz Kompetenz ”, or the power to decide on their own jurisdiction, which once again seeks to eradicate the belief that arbitrators cannot resolve questions about their own jurisdiction because, since that same competence is in question, it is necessary that they a judicial court confirms it, as a prior step to any other decision, all of which, if it did not exist, would surely make Panama less attractive in terms of international arbitration forum or justice.

e. The Arbitration Clause as an Independent Agreement

This characteristic or legal quality is known as the principle of separability, through which, in Panama, the arbitration agreement is considered to be a separable act and distinct from the contract in which it is contained. The purpose of this separation is that the vices, defects and/or conditions that affect the validity or effectiveness of the Contract do not affect the arbitration agreement, so that, even if a contract with an arbitration clause is declared null, the arbitration court may continue to hear disputes arising under such instrument due to this principle, or what is the same, the arbitration clause subsists above the declaration of nullity of the main contract.

III. Conclusions

• Currently Panama is a very attractive forum in matters of arbitral justice.
• Panama has marked advantages in terms of arbitral justice with respect to other arbitration forums or jurisdictions.
• The jurisprudence in Panama has been symmetrical in recognizing the constitutionality of arbitral justice in Panama, its nature as a conflict resolution process external to the judicial system itself and the binding, mandatory and final effect of arbitration awards.
• Due to respect for due process in arbitration processes in Panama, judicial intervention is limited solely and exclusively to the review of the award for the reasons established in article 67 of Law 131 of December 31, 2013.
• In Panama, arbitration was elevated to constitutional status in 2004.
• Contentious Administrative Human Rights Claims are only viable against resolutions issued by Authorities with Command and Jurisdiction throughout the National Territory.
• It becomes a prerogative in terms of attracting international arbitrations, which in Panama, the arbitration agreement is considered to be an act that is separable and distinct from the contract in which it is contained.