Public Land and Private Ownership in Panama

By means of  Court Judgment dated December 23, 2013, issued by the Panamanian Supreme Court of Justice, it was declared unconstitutional the phrase “given in concession” of Numeral 3 of Article 2 of Law 31 of June 18, 2010, which creates the Horizontal Property Regime that could possibly contemplate the privatization of the commonly known public areas of the nation, such as: beaches, soil and subsoil of our territorial sea.

This dispute on the control of these areas has been increasing the attention of the public and environmentalists, especially because of the numerous real estate projects that are emerging to build on the shores and riversides of the city of Panama and adjacent areas.

By means of public complaint, a legal action requesting the unconstitutionality of the legal disposition which established that may belong to the Horizontal Property Regime “the edifications or projects constructed over land properties of one or more persons, or given in concession, authorizing the use of the land to be incorporated to the Horizontal Property Regime.

The plaintiff party emphasized that the referred provision of the law allows individuals to establish and enjoy the horizontal property regime even in the case of assets given in concession. The petitioner maintains that the latter term loses its essence to become a simulated alienation of public property.

Article 258 of the National Constitution establishes that: it belongs to the State and are of public use, and consequently, cannot be subject of private appropriation 1. The territorial sea, lake and river waters, beaches and riversides thereof and of the navigable rivers and harbors and estuaries.  All of these assets are of free and common use, subject to the regulations established by law.

As a consequence of the above, based in other previous judgments about the topic of public assets, the Supreme Court of Justice concluded: a. that the enforcement of the Horizontal Property Regime in a real estate project implies the ownership of the property by private and common title; b. that the administrative concession involves the usufruct of the assets owned by the State and in no case, it can involve the ownership or acquisition of the property by the concessionaire, this is the case of the Project´s Sponsor and/or subsequently the “co-owners”.  As a consequence of this, the Supreme Court declared the unconstitutionality of the phrase “given in concession” contained in Numeral 3 of Article 2 of Law No. 31 of June 18, 2010.

Now the consequences of this judgment means that property of the public use for the free enjoyment of all people like territorial sea, lake and river waters, beaches and riversides, national parks etc… belongs to the state and it cannot be alienated, sequestrated o privatized whatsoever by individuals. According to the Supreme Court, this rule has been reiterative and categorically maintained in previous and numerous cases in Panamanian Tribunals related to administrative concessions of public land.

Therefore, in this sense, nobody in actual days or before can hold private ownership title of this land by any means even if it has been given by administrative concessions or by way of incorporating Horizontal Property Regime based on law 31st of June of 2010, Numeral 3, Article 2., because that law became opposed from its promulgation to our National Constitution, Article 258, even though the “law`s formal and express unconstitutional declaration” has come later.

Notwithstanding the above, it is possible to see a third solution that might satisfy both the private and public interests now in conflict. There is a possibility that Numeral 3, Article 2 of the law mentioned was aiming not to alienate public land, but just to widen the scope of the so called “governmental concessions” allowing it to be implemented in Horizontal Property Regime in this type of land for the first time.

Then, if it were the initial purpose of the law, it would be possible that owners of any real state project build over land of public use can arrange with government to pay “royalties” for the usufruct of the land in a lapse of time.

We really do not see any strong objection to this option if never ever those areas destined for the benefit of the public may be subject to individual appropriation, for example,  in other countries with the same controversial dispute the public land could be leased to private entities for up to 75 years in certain cases (Portugal, Spain etc.)

Then, the future of these debates over so conflictive matter would be seen and the new government elected ready in charge carries the burden to promulgate a new law over it or to issue a governmental decree defining properly the scope of the actual law which creates the Horizontal Property Regimen in Panama to accomplish both the interest of the public property, the private ownership and the investment in our economy.

Lic. Jorge Pulido