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Procedure for the Judicial Sale of Arrested Ships in Panama

When ordering the judicial sale, the court will instruct the Marshal to carry out the sale procedure. The court will appoint a surveyor to survey the vessel and determine her market value. The plaintiff must pay the surveyor professional fees.

The court order fixing the judicial sale dates must be published at least twice a week until the sale is completed, in national newspapers and any other specialised publications that the parties deem convenient.

Bids and counter-bids will be received in writing by the Marshal. On the same date, the oral bidding and counter-bidding process will begin. Bids that have been submitted to the Marshal will be announced and the vessel will be provisionally adjudicated to the bidder with the highest price.

The successful bidder must pay the full purchase price within three working days after the provisional adjudication of the vessel. Payment must be made in cash, or by a certified cashier’s cheque in the name of the Maritime Court. On the date of the sale, the Marshal will issue a Provisional Adjudication Certificate in favour of the successful bidder.

After the full purchase price has been paid by the successful bidder, the court will issue a Statutory Adjudication Certificate in favour of the purchaser. This document will constitute the legal title of the vessel and will state that the vessel has been acquired in a judicial sale free from any encumbrances.

The sums collected from the judicial sale of the vessel will be consigned with the court by the Marshal and will be deposited in a special account maintained by the court. The Marshal must apply to the court for payment of his or her fees and expenses of arrest, custody and sale.

Once the sale proceeds have been paid into the court, any party who has obtained a judgment in rem against the vessel or her sale proceeds may apply to the court for determination of priorities, if necessary, and for payment of their claim.

Notice of such an application will be given by the court to all parties who have actions filed against the vessel, warning them to lodge their claims. If claimants do not reach an agreement with respect to the distribution of the sale proceeds, the court will appoint an administrator to determine the order in which to pay the privileged maritime lien-holders. The naval mortgage will rank fourth in priority.

The Marshal’s claim against the sale proceeds for his or her fees and expenses has the highest priority and until he or she has been paid in full, the court will always reserve sufficient funds in court for that purpose. The plaintiff will also be reimbursed for the sums that he or she supplied to the Marshal for the arrest, custody and conservation of the vessel, before payment is made to any maritime lien-holder. The order of priorities in which the sale proceeds will be paid will be determined by the applicable substantive law.

Further information, please contact our Maritime Law and Shipping Litigation Team

PANAMA: María Teresa Diaz ( | Belisario Porras ( | Nadya Price ( | Joaquín de Obarrio (

UK: Enrique Sibauste (

- An extract of the Panama Shipping Guide 2021, originally published by Chambers & Partners


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