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Privileged Maritime Credits in Panamanian Law

Originally published on: Legal Industry Reviews

Privileged maritime credits are an important mechanism to ensure compliance with obligations that a ship may incur during a maritime business. The Supreme Court of Justice of Panama has defined them as "a type of credit that the law of each country stipulates in a hierarchical way, to give special treatment to credits originated mainly in legal relationships that are essential to enable navigation".

In Panamanian positive law, privileged maritime credits are recognized in Law 55 of August 6, 2008, on Maritime Commerce, which states “Who, for maritime traffic and for their own sale, will use a foreign ship, whether it is directed by itself or through another, it will be considered in its relations with third parties, as its owner. The true owner may not oppose the rights that third parties acquire as creditors of the ship and as a consequence of its use, unless they justify the illegitimacy of this and the bad faith of the creditor.”

Thus, those credits that affect the ship due to its use and navigation are recognized, establishing a clear order of priority in the Maritime Trade Law as follows:

Legal costs incurred in the common interest of maritime creditors.

  1. Expenses, indemnities and salaries for assistance and rescue.

  2. Salaries, compensation and indemnities owed to the captain and to individuals of the crew.

  3. The ship mortgage.

  4. Credits in favor of the Panamanian State for fees and taxes.

  5. Salaries and stipends owed to stevedores and dockers hired directly by the owner, operator or captain of the ship to load or unload it.

  6. The indemnifications that may arise for damages caused by fault or negligence.

  7. The amounts owed by way of contribution in common damages.

  8. The sums owed by virtue of obligations contracted for the needs and provisioning of the ship.

  9. The amounts taken from the bulk on the ship's hull and tackle for stores, weapons and preparations, and insurance premiums.

  10. The salaries of pilots and guardians and the expenses of conservation and custody of the ship, its rigging and supplies.

  11. Compensation owed to shippers and passengers for non-delivery of the things loaded or for damage to them, attributable to the captain or the crew.

  12. The price of the last acquisition of the ship and the interest due.

In this sense, the Law of Maritime Procedure allows the sequestration of goods to make effective maritime credits privileged with an advantageous security of US$1,000 to answer for the damages that said sequestration could cause. This advantage is evident when comparing the guarantee of 20% to 30% of the amount for actions that do not arise from privileged maritime credits.

Privileged maritime credits are a useful tool to guarantee compliance with obligations contracted in the course of navigation or in the execution of a maritime business. The recognition of these credits both in our national legislation and in jurisprudence, allows the Republic of Panama to be a favorable forum for maritime disputes.


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