Government authorities

Relevant authorities

What are the relevant government agencies or departments with authority over projects in the typical project sectors? What is the nature and extent of their authority? What is the history of state ownership in these sectors?

Project sectors are primarily regulated and supervised by central government authorities. Municipal authorities have specific regulatory and supervisory roles as well, usually connected to property use. Projects in the areas of energy, oil, gas, minerals, natural resources in general, ports, telecommunications and transport require special licences, concessions or permits to operate. Further, extant environmental legislation requires the environmental authority, or the Executive Branch in certain cases, to review and authorise virtually all types of new project activity or development.

The main authorities involved in typical project sectors are as follows:

  • the National Authority of Public Services: responsible for regulating and supervising:
    • generation, transmission and distribution of energy;
    • transmission and distribution of natural gas;
    • telecommunications;
    • radio and television; and
    • water works, distribution, and services;
  • the National Environmental Ministry (NEM): responsible for approving all types of environmental impact studies; authorising the use of river waters; supervising compliance of environmental regulations; and regulating and supervising the use of all natural resources;
  • the Maritime Authority of Panama (AMP): responsible for managing and regulating the use of marine resources and coastal areas along with the NEM. The AMP also authorises, supervises and regulates port operations, development and related activities;
  • the Transit and Transportation Authority (ATT): responsible for planning, directing, supervising the operation and control of land transport. The ATT has the authority to issue concessions and permits to operate public transport;
  • the Civil Aeronautic Authority: responsible for the overall supervision of airports and air transport;
  • the Secretary of Energy: overall authority over hydrocarbons; and responsible for granting all permits and licences in connection to the operation of fuel storage and distribution free trade zones and all activities related to the storage, commercialisation and processing of hydrocarbons;
  • the Mining Resources Department, Ministry of Commerce and Industry: responsible for authorising, supervising and controlling the use of mining resources in conjunction with the NEM; and
  • the Waste Management Authority (WMA): responsible for collecting and managing waste nationwide. However, the WMA currently only controls the collecting and managing of waste in the municipality of Panama City. The WMA may grant concessions to private companies in connection with collection and management of waste.

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.

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.

Environmental, health and safety laws

Applicable regulations

What laws or regulations apply to typical project sectors? What regulatory bodies administer those laws?

The following are the main regulations and institutions regulating typical project sectors:

  • fuel and hydrocarbons: Cabinet Decree No. 36 of 2003, as amended, sets the national policy for hydrocarbons; and Law No. 8 of 1987, as amended, and Law No. 39 of 2007 regulate all activities related to hydrocarbons. The National Secretary of Energy is responsible for overseeing compliance and the enforcement of these laws;
  • minerals: Mineral Resources Code, as amended. The National Department of Mineral Resources of the Ministry of Commerce and Industry is responsible for its enforcement and overseeing compliance;
  • water: Law Decree No. 35 of 1966, as amended. The National Environmental Authority and the National Authority of Public Services are responsible for its enforcement and overseeing compliance;
  • power generation: Law No. 26 of 1996, Law No. 6 of 1997 and Law No. 43 of 2011, as amended, created the regulatory and institutional framework for the electricity market and for the generation, transmission and distribution of electricity. The National Authority of Public Services and the National Secretary of Energy are responsible for ensuring compliance and enforcement; and directing the national electricity policy, respectively;
  • ports: Law No. 56 of 2008, the General Law of Ports, as amended. Oversight and compliance are the responsibility of the Maritime Authority of Panama (AMP). Port concessions are also governed by their respective enabling laws and agreements;
  • telecommunications: Law No. 26 of 1996 and Law No. 31 of 1996, as amended, are the main statutes regulating telecommunications. The National Authority of Public Services has the authority to regulate and oversee compliance within the entire sector; and
  • environmental: Law No. 41 of 1998, as amended, created the National Environmental Ministry (NEM) and sets environmental policies, principles and guidelines for the entire country. The NEM is responsible for ensuring compliance and enforcement of environmental rules and requirements for all project sectors.

Law stated date

Correct on

Give the date on which the information above is accurate.

The information provided was verified between May and July 2020.