Panama is one of the most transited maritime routes in the world. For almost a hundred years, it has been an obliged passage for vessels.
Over 14,000 vessels cross the Panama Canal every year. During the last few years, Panama has become a mayor transshipment centre at any of the four (4) state-of-the-art container ports, located at both entrances of the Canal. Panama for its maritime tradition ,geographical position and obliged passage route represents a reliable option when considering where to arrest a vessel.
For the first 80 years of Panama s republican existence, the U.S. District Court for the District of the Canal Zone was the only competent forum to handle cases against the Panama Canal Company and also dealt with the enforcement of privileged maritime liens, personal injuries, and others, basically due to the effectiveness and adequate protection provided by the U.S. Federal Rules of Civil Procedure and the Supplemental Admiralty Rules.
Under the new Panama Canal Treaties of 1978, the U.S. Court for the District of the Canal Zone was closed on 1st. April 1982 and Panama enacted Law No. 8 of 30th March 1982, whereby the Maritime Courts are created and rules of procedure are enacted, hereinafter called the "Maritime Law". It should be noted that the draftsmen of the Maritime Law relied to a great extent on the U.S. Federal Rules of the Civil Procedure and the Supplemental Admiralty Rules.
Powers and Functions of the Maritime Court
To date, two Maritime Courts have been established under Maritime Law. The Second of these Courts was just created two months ago. These courts are open 24 hours a day, everyday of the year, including holidays. They have exclusive jurisdiction over cases arising from or connected with maritime trade and navigation occurring within the territory of the Republic of Panama, its territorial sea, the navigable waters of its rivers and lakes and the Panama Canal waters.
Under s. 17 * the Maritime Court will also be competent to take cognizance of actions from commercial and maritime transport activities occurring outside the areas mentioned above, in the following cases:
When the respective claims are directed against the vessel or her owner and as a consequence thereof the vessel is arrested within Panamanian jurisdiction.
When the Maritime Court has attached other assets of the defendant although said party is not domiciled within the Republic of Panama.
When the defendant is within Panamanian jurisdiction and has been personally notified of any claims filed at the Maritime Court. When one of the vessels involved is a Panamanian flag vessel, or Panamanian substantive law becomes applicable under the contract or due to the provisions of Panamanian law, or the parties subject themselves expressly or impliedly to the jurisdiction of the Panamanian Maritime Court.
Labour lawsuits concerning workers on board Panamanian flag vessels will be in the competence of the Maritime Court or of the labour courts at the option of the worker. Notwithstanding the foregoing, claims for damages arising from occupational risks due to fraud, fault or negligence imputable to the employer or to third parties are within the competence of the Maritime Court. 
Claims may be presented invoking:
The law of the flag of a vessel
Choice of law agreements, or the place where a connection can be established. To this point, Art. 557* of Law No. 8 establishes general guidelines as to the applicable law in a number of general situations.
Arrests may be executed based on in rem or in personam claims, as per Art. 168** considerations. For both types of claims procedure and execution of arrest is similar.
The process in rem against a vessel, cargo or freight (or a combination thereof) subject to a privileged maritime lien is initiated by filing a complaint prepared by the plaintiff which should (a) describe with particularity the circumstances from which the claim arises, the property that is the subject of the action and stating that it is within the jurisdiction of the court or will be during the pendency of the action; (b) contain a statement identifying the claim as an enforcement of a privilege maritime lien or an in personam claim; and (c) include a petition for arrest of the property in question. Besides the foregoing requirements, the complaint must contain all other information required by Art. 55 of the Maritime Law for ordinary complaints.
Only lawyers qualified to practice law in Panama may represent parties at Panamanian courts.
The appointment of legal counsel in Panama must be effected by means of a power of attorney in his favor.
In situations where the time factor requires immediate action and the power of attorney has not yet been received by the Panamanian legal counsel, he may act as a de facto agent of the plaintiff 7 under a special civil law institution, provided that the original Power of Attorney is submitted as soon as reasonably possible (normally within 3 months following arrest). Said power must be duly notarized and authenticated by the respective Panamanian Consulate or, in default thereof, by that of a friendly nation.
Evidence of Claim
Generally, any available evidence should be attached to the complaint. Initially photocopies will suffice to support the claim as prima facie evidence. For foreign companies, proof of existence of the companies and the authority of their representative must be provided.
Process In Rem
The conditio sine qua non of the in rem jurisdiction necessary to execute the lien is the physical presence of the res within the jurisdiction of enforcement. As a consecuence and as mentioned before, Paragraph 2 of Art. 526 of the Maritime Law, in prescribing the special formal requirements for actions in rem to enforce privilege maritime liens, requires a statement that the property subject to the action is within the jurisdiction of the Maritime Court or will be during the pendency of the action. However, the actual presence of the res is not a prerequisite to filing an in rem action and initiating the process.
Arrest expenses must be paid in advance to enable its legal counsel in Panama to constitute a security for an amount of' U.S.$1,000 for damages caused by the arrest of the vessel or other property at the moment of filing the initial pleadings, and U.S.$2,500 for custody and maintenance expenses of the property during the pendency of the arrest. The said amount is always U.S.$2,500 in the case of vessels.  However, the Marshal may require additional sums to cover the projected expenses of custody and maintenance of the res, especially if the vessel remains in their custody for prolonged periods.
Order of Arrest
In cases of vessels or other property located within the Panamanian jurisdiction, the order or warrant for the arrest of the vessels or other property will be issued by the Maritime Court and delivered to the Marshal on the same day that the complaint and the petition for the arrest are filed, provided that all security and initial maintenance expenses have been covered by the plaintiff. 
Execution of Process
Upon receipt of the complaint and the petition for arrest and the constitution of the pertinent security, the arrest proceeds without notice to the defendant and the Marshal is directed by Art. 168 of the Maritime Law to execute the order at the place where the vessel or other property is located and to serve process on the person in charge of the property. The Marshal will thereafter affix the order in the pilot house in the event of vessels, cargo, or both, or in a conspicuous place in case the cargo is not on board the vessel.
With respect to the arrest of Panamanian flagged vessels or other property located or recorded at the Public Registry of Panama, the clerk of the Maritime Court will instruct the Public Registry to refuse to make any further registrations concerning the arrested vessel or other property after the service of the order of arrest by the Marshal to the person in charge of said property or its custody.
Within the arrest proceedings, the Marshal and the custodian of the property prepare and sign a record of the inventory of the arrested property. In the case of a vessel the Marshal will require the master or other officer in charge to submit all documents listing the parts and assets of the vessel and her cargo, which documents are annexed to the Marshal's records.
Within the scope of the Maritime Law, a key element to the concept of privileged maritime liens and their enforcement is that adequate personal notice of the complaint to the defendant is accomplished by the execution of the order of arrest.
Custody and Maintenance
The Marshal is appointed by Art. 174 of the Maritime Law to be custodian of the vessel or, other obligations he must take all necessary measures to provide adequate maintenance of the vessel or other property, supervise the repatriation of the officers and crew upon their request, take out insurance, keep accounting records, and render accounts to the Maritime Court.
The owner of the vessel or other property, or its representative, is entitled to supervise the proper maintenance and administration of the res. Nevertheless, in cases of perishable property, the Marshal with previous authorization from Maritime Court, and with the participation of the interested party, may arrange for an interlocutory judicial sale, the proceeds of which are deposited in the National Bank of Panama. 
Release of Arrest
The alternatives available to forestall a vesselÃ¢â‚¬â„¢s judicial sale under the Maritime Law: (a) payment of the claim; (b) establishing other security to substitute for the vessel or other property(including P&I letters of agreement);  (c) waiver of the privileged maritime lien by reliance on other security;  (d) loss of the lien by expiration of the applicable statute of limitations;  or (e) request by the Marshal, upon default by the plaintiff in the provision of additional funds for the custody and maintenance of the res, or by request by the plaintiff. 
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