This information is derived from the State Department's Office of Investment Affairs' Investment Climate Statement. Any questions on the ICS can be directed to EB-ICS-DL@state.gov
Last Published: 11/14/2016

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts
Panama is transitioning from the civil to the accusatory system with the goal of simplifying and expediting criminal judicial cases. The system has been implemented in six provinces, though it has yet to be implemented in the commercial centers of Panama City and Colon. Fundamental procedural rights in civil cases are broadly similar to those available in U.S. civil courts, although some notice and discovery rights, particularly in administrative matters, may be less extensive than in the U.S. Judicial pleadings are not always a matter of public record, nor are the processes always transparent.

Bankruptcy
Commercial law is comprehensive and well-established. The World Bank 2016 Doing Business currently ranks Panama 132/189 for resolving insolvency because of the antiquated law, slow court systems, and complexity of the process. A new bankruptcy law was approved in 2015 and is expected to improve some of these deficiencies.

Investment Disputes
Resolving commercial and investment disputes in Panama can be a lengthy and complex process. Despite protections built into the U.S.-Panamanian trade agreements, investors have repeatedly struggled to resolve investment issues in courts. There are frequent claims of bias and favoritism in the court system and complaints about the lack of adequate titling, inconsistent regulations, and a lack of trained officials outside of the capital. The World Economic Forum – Global Competitiveness Index 2015-2016 report ranks the independence of Panama’s judicial system 119 out of 140 countries. Politically connected businesses have benefited from court decisions, and there have been allegations that judges have “slow-rolled” dockets for years without taking action. Many Panamanian legal firms suggest writing binding arbitration clauses into all commercial contracts.

International Arbitration
The GOP accepts binding international arbitration of disputes with foreign investors. Panama is a party to the 1958 New York Convention as well as to the 1975 Panama Convention. Panama became a member of the International Center for the Settlement of Investment Disputes (ICSID) in 1996. Panama adopted the UNCITRAL model arbitration law as amended in 2006. Law 131 regulates national and international commercial arbitrations in Panama.

ICSID Convention and New York Convention
Panama is a Party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention and the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Duration of Dispute Resolution – Local Courts
Resolving disputes through the Panamanian court system can take years, depending on the issue, the location, the court calendar or the judge. There are often reports of corruption, bribery, inconsistent treatment and a lack of transparency. The lack of judicial transparency in Panama is consistently cited by investors as a deterrent to doing business in the country. Most foreign investors rely on binding international arbitration clauses to resolve disputes.

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