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Precautionary Measures in Panama for a Foreign Arbitration Process

According to Panama Arbitration Law, the rules established on itself will only apply to Arbitrations handled at Panama Arbitration Courts. Nonetheless it has an exception which comprehends a few articles that will also apply to cases that are or will be handled at a foreign Arbitration Court.

Among this exception, we will be able to find an article that grants the power, to the Panamanian Judicial Courts, to know and to be competent to handle precautionary measures that would take effect in Panama, against a Panamanian persons or company, or assets located in its territory.

This article, establishes that the Courts, will make no difference, to the Precautionary Measures, applied for Arbitration Process outside their jurisdiction (Foreign Arbitration Courts), than the process applicable for the Precautionary Measures requested to secure the results of Judicial Process disputed at their jurisdiction (Panamanian Judicial Courts).

Although it establishes a small condition that obligates, the party that executes the Precautionary Measure, to properly notify the Foreign Arbitration Court, that is handling the case about the resolution issued by the Panamanian Judicial Court that ordered to seize assets or inform any other Precautionary Measure taken by this resolution.

The notification that the previous paragraph explains, must be done in a period no longer than 10 days, after the execution of the Precautionary Measure in Panama, ordered at the so mentioned resolution.

Having said that, we must go back to the ordinary rules, for request and execution of Precautionary Measures in Panama performed at common Panamanian Judicial Process.

These rules are comprehended at our Judicial Code, Second Title, Chapter I, titled Precautionary Measures. This article, basically establishes 11 conditions that will rule over every Precautionary Measure, that we will briefly explain:

  1. In Non Contentious Process, will only be applicable precautionary measures, explicitly established by law.
  2. Every precautionary measure must be handled without the awareness of the defendant, in a separate file, that will be a part of the principal one.
  3. The motion to request the precautionary measure will only require the mention of the parties, the measure requested, the object of the claim, the amount claimed. (Nonetheless, the Judges require much more than this few requirements to grant a precautionary measure.)
  4. The precautionary measures will be requested before the Judge that will be competent to know about the principal process. (Not on our case, due to the so mentioned exception).
  5. The Judge will procure to avoid any possible unnecessary damages to the defendant. Even granting the substitution of the precautionary measure as long as the plaintiff interests are ensured. 
  6. In order to guarantee the coverage of possible damages caused by the precautionary measure, the Judge will request the executor party to place a caution, to (in the scenario of losing the case, and been punished with a penalty due to losing it) cover the damages caused to the defendant by the precautionary measure.
  7. Except on those cases, in which the object of the claim is a land properties, the precautionary measure, can be replaced as long as the plaintiff interest are protected. 
  8. Every motion to oppose the execution of a precautionary measure, will be solve orally at the moment of execution of the precautionary measure, but also can be solved after at the Court, depending on the Judges opinion.
  9. The Judge is totally empowered to adopt any decision that he deems necessary to enforce the execution of the precautionary measure.
  10. The resolution that grants or deny precautionary measures are appealable, but the appeal of this resolution, will not interrupt the execution of the measure.
  11. Except on previously mentioned special cases, all precautionary measure will be lifted on the following scenarios:
    • If the Plaintiff fails to submit its claim within the next six business days, after the execution of the precautionary measure.
    • If the Plaintiff fails to properly notify the defendant of the resolution that admits his claim, within a period the
      subsequent 3 months, after the day in with the claim was filed before the Court.

Once we have understood the basics parameters of the Precautionary Measures in Panama, we will now be able to understand the process of requesting it and its execution.

To request a Precautionary Measure, we will require to submit before the Court, a Power of Attorney that allows us to do so (This document must be properly legalized), also we must submit a motion to execute precautionary measures, that will contain the details already mentioned in point No. 3, as well as the arguments that support at least an apparent applicable right in favor of the plaintiff against the defendant, Law articles that support those rights, as well as evidence that persuade the Judge that apparently this claim has bases to be discussed.

This package will be filed before an entity of the Panamanian Judicial System, called Unique Entrance Registry that will randomly select a competent Judge, to empower him to handle the whole process.

This Judge will receive the Precautionary Measure motion, and will first of all issue a resolution admitting the Power of Attorney granted admit the requested measure and then establish an amount for the plaintiff to pay as the caution, previously mentioned on point No. 6.  

Once the plaintiff complies with the requested caution, the Court will execute the precautionary measures, generally by issuing notes to the authorities that the Court order to execute the measures, or by issuing resolution to set judicial diligence to practice at the defendants offices or properties.

Once this resolutions or notes are issued the plaintiff must deliver the so mentioned notes, or attend the so mentioned diligence, in order to properly execute the Precautionary Measure requested.

Lic. Juan Raúl Sevillano

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