In brief: enforcing and challenging arbitral awards in Panama
First published by Lexology
Authors: Ebrahim Asvat and Joaquin De Obarrio
Proceedings subsequent to issuance of award
Interpretation and correction of awards
Does the arbitral tribunal have the power to correct or interpret an award on its own or at the parties’ initiative? What time limits apply?
Generally, any of the parties can request that the arbitral tribunal correct any error in calculation, typographical errors and other errors of a similar nature. The arbitral tribunal can also correct such errors on its own. The parties can agree to request that the arbitral tribunal provides an interpretation of a specific section or part of the award. Any of the parties can request that the arbitral tribunal issue an additional award with respect to claims formulated during the arbitral proceedings but omitted in the award. The terms to formulate these petitions and the arbitral tribunal’s term to reply (or extend their term to reply) are provided by the law on arbitration: 30 calendar days after service of the award is effected on the parties, 30 days for the arbitral tribunal to correct errors or provide interpretations, and 60 days for the tribunal to issue an additional award. The relevant arbitration centre’s rules usually provide considerably shorter terms, in the range of five days following service of the award to formulate the party petition, and 10 days for the arbitral tribunal to respond.
Challenge of awards
How and on what grounds can awards be challenged and set aside?
An arbitral award can only be challenged through a petition for annulment before the Fourth Chamber of the Supreme Court of Justice on any of the following grounds:
one of the parties to the arbitration agreement was under some incapacity under the law applicable to it, or the said agreement is invalid pursuant to the law to which the parties subjected it or, if no provision was made in this regard, pursuant to Panamanian law;
the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was unable, for whatever reason, to exercise its rights;
the award refers to a dispute that was not contemplated in the arbitration agreement or contains decisions exceeding the scope of the arbitration agreement; however, if the provisions of the award that refer to the matters submitted to arbitration can be separated from those that have not been submitted to arbitration, only these can be annulled;
the constitution of the arbitral tribunal or the arbitral proceedings did not conform to the agreement entered into between the parties, except when such agreement was in conflict with a provision of the law on arbitration that may not be disregarded by the parties, or in absence of such agreement, that such proceedings did not follow the law on arbitration;
the arbitrators have ruled over matters not subject to arbitration; or
the award breaches international public policy. In the case of a domestic award, the public policy to consider will be Panamanian public policy.
This petition must be filed within the 30 days after receiving service of the award.
Levels of appeal
How many levels of appeal are there? How long does it generally take until a challenge is decided at each level? Approximately what costs are incurred at each level? How are costs apportioned among the parties?
Appeal is not available during the course of arbitration proceedings nor during the course of the petition for annulment.
Recognition and enforcement
What requirements exist for recognition and enforcement of domestic and foreign awards, what grounds exist for refusing recognition and enforcement, and what is the procedure?
Domestic and international awards rendered in Panama are enforced before the civil circuit courts through judgment enforcement proceedings. An application must be filed before the civil circuit courts together with a certified copy of the arbitral award. The application must also include the general documents filed with judicial complaints, such as power of attorney and certificate of legal existence of the parties, as well as evidence of the Supreme Court ruling dismissing the challenge of annulment (when feasible). The defendant is granted a 15-day term to answer the complaint. Its only defence is the existence of the challenge of annulment, in which case the defendant will have to produce a copy of the challenge filed with the Fourth Chamber of the Supreme Court of Justice or a certified copy of a favourable decision; in the absence of such evidence, the circuit court shall order enforcement. No remedies are available at this stage of the proceedings.
Foreign arbitral awards are recognised and enforced in Panama in accordance with either the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), the Inter-American Convention on International Commercial Arbitration (Panama, 1975) or any other treaty ratified by Panama on the recognition and enforcement of arbitral awards. The petition for recognition is filed before the Fourth Chamber of the Supreme Court of Justice.
Enforcement can be denied on either of the following grounds:
when the party against which the award is issued invokes the Supreme Court, which finds that:
one of the parties to the arbitration agreement was under some incapacity under the law applicable to it, or the said agreement is invalid pursuant to the law to which the parties subjected it or, if no provision was made in this regard, the law where the award was rendered;
the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was unable, for whatever reason, to exercise its rights;
the award refers to a dispute that was not contemplated in the arbitration agreement or contains decisions exceeding the scope of the arbitration agreement; however, if the provisions of the award that refer to the matters submitted to arbitration can be separated from those that have not been submitted to arbitration, enforcement can be given in the case of the first;
the constitution of the arbitral tribunal or the arbitral proceedings did not conform to the agreement entered into between the parties or, in absence of such agreement, that such proceedings did not conform to the law where the arbitration took place; or
the arbitration award is not yet mandatory, or has been annulled or stayed by a court of the place where the award was rendered. In these cases, the Fourth Chamber of the Supreme Court may adjourn its decision, and at the enforcing party’s request, order the defendant to consign proper guarantees; or
if the Fourth Chamber of the Supreme Court finds that:
in accordance with Panamanian law the arbitrators have ruled over matters not subject to arbitration; or
the award breaches Panamanian international public policy.
These rules apply in absence of a treaty, or when such treaty exists, these rules shall also apply if they are more favourable in whole or in part to the party petitioning acknowledgment and enforcement.
The procedure for recognition of international arbitral awards involves the following stages: submission of the application by local counsel together with the original award or a certified copy; resolution on admission of the application by the Fourth Chamber of the Supreme Court; and service of the order of admission of the application on the defendant and the attorney general, who will have 15 days to submit their reply.
Documents issued abroad must be legalised through the Panamanian consulate or apostille. Documents in foreign languages must be translated to Spanish, through a locally certified translator. The application must also include general documents of judicial complaints, such as power of attorney and certificates of legal existence of the relevant entities.
Once the Fourth Chamber of the Supreme Court issues its ruling acknowledging the foreign arbitral award and its enforcement, the claimant can commence judgment enforcement proceedings before the civil circuit courts.
Time limits for enforcement of arbitral awards
Is there a limitation period for the enforcement of arbitral awards?
This matter is not regulated by the law on arbitration. A party against whom an arbitral award is being executed may only oppose said execution on the basis of a pending challenge for annulment or the annulment granted on said award.
Enforcement of foreign awards
What is the attitude of domestic courts to the enforcement of foreign awards set aside by the courts at the place of arbitration?
This situation constitutes grounds for dismissal of the enforcement and acknowledgment application. The Fourth Chamber of the Supreme Court is generally expected to refrain from granting such application.
Enforcement of orders by emergency arbitrators
Does your domestic arbitration legislation, case law or the rules of domestic arbitration institutions provide for the enforcement of orders by emergency arbitrators?
Enforcement of orders by emergency arbitrators is not specially considered by the law on arbitration or the leading domestic arbitration institutions. The claimant can, however, prior to the formation of the arbitral tribunal, access the judiciary and request precautionary measures such as seizures or petition preliminary orders.
Cost of enforcement
What costs are incurred in enforcing awards?
No mandatory legal costs apply. The claimant can petition legal costs set by the bar tariff as part of its enforcement application. Legal fees are agreed between counsel and client.