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Cargo Claims in Panama: General Considerations

Panama's carriage of goods by sea legislation dates from 1916 when the original Code of Commerce was enacted. Since then its carriage of goods chapter has not suffered any amendments.

The Republic of Panama, a strategically located country with a historical tradition for being a passage for the transit of goods and cargo, has elected not to become party to any of the international conventions on carriage of goods by sea. Instead, Panama has preserved the recognition of choice of law clauses and this principle is well established throughout Panamanian civil and commercial legislation and respected in its application, specially by Maritime Court and Supreme Court decisions.

The Panamanian maritime jurisdiction maintains through its Law 8 of 1982 clear rules concerning the applicable laws in connection with claims related to carriage of goods by sea, specifically contained in various sections of Article 557, to wit :

1. Section 3 of Article 557 states that for liens arising from cargo or freight, Panama law will apply, if no choice of law has been agreed .

In this regard, Articles 1510 and 1511 of the Code of Commerce establishes liens against freight and cargo respectively.

Article 1510 states the following liens against freight:

1- judicial recoveries on behalf of creditors
2- recoveries, indemnities, salaries for assistance and salvage for the last trip
3- salaries and indemnities owed to the crew
4- amounts for general average
5- credits on the freight 
6- insurance 
7- amounts owed for capital and interests against freight incurred by the captain 
8- indemnities of freight forwarders and stevedoring services
9- any other debt formally recognized, including ship mortgages.

Article 1511 establishes the following liens against cargo or goods:

1- judicial recoveries on behalf of creditors
2- salaries and indemnities owed to the crew
3- customs and commercial services at the place of delivery
4- freight and carriage of goods costs
5- leases for warehousing of goods
6- general average contributions
7- insurance premiums and ship financings
8- capital and interests for recognized debts incurred by the captain against the cargo
9- any other financing with credit against the cargo, if the creditor acknowledges a bill of lading copy.

2. Section 10 of Article 557 establishes that in absence of a choice of law clause, the applicable law for freight contracts and bill of ladings will be those of the country where goods were loaded.

3. Section 15 of Article 557 states that Panama law will apply to determine the existence and limitation of liability for cargo owners.

It is worth mentioning that limitation of liability is considered from Arts 560 to 585 of Law 8 of 1982. These limitations are available to salvors and shipowners further to Art 560.

Cargo related claims must be presented within a year of their occurrence pursuant to Art 1651 of the Code of Commerce.

Cargo claims are exclusive of the Panama maritime jurisdiction, and they may be carried against the freight, cargo or vessel through in rem or in personam proceedings.

Our firm has a complete Admiralty and Maritime Practice Team ready and able to assist you on litigation and transactional aspects of maritime related activities such as carriage of goods by sea, marine insurance, bunkers, ship repairs, personal injury, maritime labor law and other claims.

For more information about our Admiralty & Maritime Practice, please click here.

Juan J. Espino

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