Conducting litigation in Panama

An extract from Lexology


This Q&A covers the procedures and practical considerations of litigation in Panama, including limitation issues, case management, submission of evidence and available remedies.


Authors: Khatiya Asvat and Joaquin De Obarrio


Litigation


Court system

What is the structure of the civil court system?

At the first level are the municipal courts with jurisdiction on matters not exceeding US$5,000 and certain case-specific matters (for example, eviction proceedings). The municipal courts have jurisdiction over a municipality. Appeals against decisions of the municipal courts are heard by the circuit courts, where three circuit judges act as appellate court, one of them serving as main appellate judge.


Next are the circuit courts with jurisdiction on matters exceeding US$5,001 and certain case-specific matters (for example, oral proceedings related to challenges against resolutions of corporations and claims involving land). The circuit courts have jurisdiction over a province, except for the province of Panama, where three groups of circuit courts hold jurisdiction over a series of municipalities.


The provinces are distributed in what is known as judicial districts. For civil matters, the Republic of Panama has four judicial districts headed by a Superior Court: the First Judicial District, formed by the provinces of Panama, Colon, Darien, San Blas and Panama Oeste; the Second Judicial District, formed by the provinces of Coclé and Veraguas; the Third Judicial District, formed by the provinces of Chiriquí and Bocas del Toro; and the Fourth Judicial District, formed by the provinces of Los Santos and Herrera. Appeals against decisions of the circuit courts are heard by the Superior Courts or courts of appeals of the relevant province’s judicial district.


The Superior Courts or courts of appeals generally serve as appellate courts for appeals against decisions of the circuit courts, as well as first instance courts for constitutional challenges against actions of public officials with jurisdiction over a province, and other matters. The Superior Court is composed of five magistrates for the First Judicial District and three magistrates for the other judicial districts. The magistrates act as an appellate court consisting of three magistrates, each alternating as the main magistrate on different cases, pursuant to case distribution rules.


Challenges against decisions of the Superior Courts are heard before the Civil Chamber of the Supreme Court of Justice, in particular, the writ of cassation. Three Supreme Court justices form the Civil Chamber.


Matters related to constitutional challenges are heard by the Plenary Assembly of the Supreme Court of Justice. The Supreme Court comprises nine justices overseeing four chambers, each chamber composed of three justices; namely the First Civil Chamber, the Second Chamber for criminal matters, the Third Chamber for administrative matters and labour litigation, and the Fourth Chamber for general matters.


Other special courts exist, such as the courts of commerce, composed of three (two active) circuit-level commercial courts of the first judicial circuit of Panama, and a Superior Commercial Court, part of the First Judicial District. In addition, special insolvency courts are to be incorporated into the civil court system, to eventually operate at the circuit court level, overseen by a Superior Insolvency Court, part of the First Judicial District. There are also two maritime courts with nationwide jurisdiction and a maritime court of appeals.


Judges and juries

What is the role of the judge and the jury in civil proceedings?

In civil matters, the burden of proof is borne by the plaintiff. Therefore, the judge’s role consists of verifying and analysing the evidence produced by the parties in the proceedings, and forming their own concept, based on personal knowledge and experience, the applicable law and principles, and the rules for admission of evidence. This process is known as critical analysis. When conducting this critical analysis, the judge can request the production of evidence, including the assistance of experts; however, this analysis cannot make up for or supplement deficiencies of the parties, in particular as it relates to the plaintiff’s burden of proof duties. Juries are not involved in civil proceedings. Civil proceedings are mostly of a written nature.


Limitation issues

What are the time limits for bringing civil claims?

Different time limits apply depending on the nature of the claim.


The general time limit provided by the Civil Code for the filing of a personal claim for actions that do not have a particular time limit is seven years.


The general time limit for the filing of a claim for tortious damages is one year.

Real estate claims have a 15-year time limit.


The time limit for claims to seek payment of overdue leases is five years.

Claims to seek payment of civil services rendered by lawyers, notaries, experts, custodians, interpreters, arbitrators, services provided by pharmacists, medical doctors, engineers, chemists, teachers and professors, as well as lodging and food, and the sale of provisions to non-merchants or those merchants practising in another activity, are limited to two years.


It is not permitted for the parties to agree to suspend time limits; however, individuals with the capacity to dispose of assets can waive the acquired time limit.

The above are Civil Code-governed claims.


Note that civil proceedings also include claims governed by the Code of Commerce, where the default time limitation is five years.


Claims governed by the Code of Commerce subject to civil procedure include: claims for retail sales, claims for agents’ wages, claims for transportation contracts, broker’s liability claims and insurance claims where the time limitation is one year.


Claims related to corporations and resulting relations and liabilities between shareholders or partners, as well as with regard to the company, liability of liquidators or managers of corporations, interest due on leases when charged yearly or lesser periods, for collection of negotiable instruments, wholesale activity, financial leasing and banking facilities, have a time limitation of three years.


Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

Considering the formal nature of civil proceedings, the plaintiff must verify that documents serving as evidence comply with the requirements of the governing law as well as for their admissibility (for example, signatures have been acknowledged before a notary, documents granted abroad have been legalised, documents have been signed by individuals with authority, certificates have been obtained within the legal timeline for their validity, etc).


The plaintiff can try to secure or produce evidence that may otherwise not be available during the proceedings, through pre-judicial petitions that may include witness statements, inspections of places, objects or documents with the assistance of experts, special disclosure of accounting or financial records, and reports from private or public institutions. A security deposit (in the range of US$100 to US$1,000) for damages is generally required for the order to be effected.


A plaintiff can try to secure the claim through the pre-judgment attachment of assets, such as cash in banks, movable assets, property recorded with the Public Registry, credits, inventories and others. A security bond for damages that may be caused, representing an estimated 25–40 per cent of the attachment amount or claim amount (the attachment amount cannot exceed the claim amount), is required, in the form of cash deposited with the National Bank in the relevant court’s account, insurance or bank guarantees, mortgages or public debt instruments; the amount is set by the court at its discretion. The pre-judgment attachment is an ex parte application; once the order has been effected, the plaintiff has to file the complaint within the following six days and serve the defendant with proceedings within the following three months; otherwise, the complaint may be dismissed.


Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?