Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

Under Panamanian law, project finance transactions generally do not need governmental approvals, except in the case of a transaction involving a governmental concession or regulated activity. Therefore, no fees or charges related to such approvals apply.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

Financing documents do not need to be registered with any government authority, except for mortgages on certain assets and certain filings or governmental authorisations to perfect some types of collateral (see question 2).

However, in the event that project documents should be submitted to any administrative authority or Panamanian court, the project documents must be translated into Spanish by a licensed Panamanian translator, and if the documents have been executed outside Panama, the signatures on the documents should be authenticated by a diplomatic or consular officer of the government of Panama in the jurisdiction of execution or pursuant to the 1961 Hague Convention on the legalisation of documents (apostille).

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

Panamanian courts recognise contractual provisions binding parties to international arbitration and enforce international arbitration awards. However, international arbitration awards must meet certain requirements to be enforceable in Panama. An international arbitration award will not be enforceable if:

  • the parties did not have legal capacity when the agreement subject to international arbitration was made;
  • the agreement subject to international arbitration is void under Panamanian law;
  • the losing party, or its agent, were not properly served in connection with the appointment of the arbitrator or the arbitration proceedings, or were unable, for any reason, to participate in the arbitration proceedings;
  • the award includes the resolution of an issue or dispute not covered by the agreement submitted to international arbitration. A Panamanian court will only enforce award resolutions related to matters covered by the agreement made by the parties;
  • rules for the appointment of arbitrators and arbitration procedures agreed by the parties were not followed;
  • the award has been suspended or annulled by the corresponding state authority in the jurisdiction issuing the award;
  • the recognition of the award is against Panamanian public policy; or
  • the dispute submitted to arbitration deals with matters that cannot be resolved through arbitration pursuant to Panamanian law, such as consumer, criminal, or domestic law disputes.

Panama is a member of the ICSID Convention and the New York Convention of 1958.

There are no disputes under Panamanian law that would be subject to automatic domestic arbitration.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Under Panamanian law, and as a general rule, parties are free to select the law of their choice in all commercial transactions, as long as such selection is not made with the intention to avoid the application of another law.

Foreign financial agreements involving Panamanian projects are frequently governed by the laws of New York State or other jurisdictions commonly used and favoured for international financial transactions. Whenever assets that are mortgaged, pledged or held as security are located in Panama, Panamanian law should govern.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

Submission to a foreign jurisdiction and a waiver of immunity are indeed generally effective and enforceable under Panamanian law. A Panamanian court would recognise a judgment issued in a foreign jurisdiction, without reconsideration of the merits, provided that:

  • such foreign court grants reciprocity to the enforcement of judgments of Panamanian courts;
  • such court has jurisdiction over the matter;
  • the party against whom the judgment was rendered, or its agent, was personally served in such action;
  • the judgment arises out of a personal action against the defendant and it is a final decision;
  • the foreign judgment is properly authenticated by a Panamanian consul or pursuant to the 1961 Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents;
  • the obligation in respect of which the judgment was rendered is lawful in Panama and does not contradict the public policy of Panama; and
  • a copy of the final judgment is translated into Spanish by a licensed translator.