Registration of Ships Vessels and Yachts in Panama

1- Competitive Advantages of the International Register of Ships, Vessels and Yachts in Panama

Since 1917, the Republic of Panama has been characterized by being the first international registry of ships, vessels and yachts in the world (Law 63 of December 15, 1917) and since 1993 the Panamanian registry has achieved leadership in the registries with a Panamanian flag.

There are currently nearly 8,000 registered international merchant ships, representing 18% of the world's merchant fleet. Many other vessels and yachts are also registered, which underlines the strength of the Panamanian flag.

The Panamanian flag, as a registry, is recognized by financial and insurance institutions around the world, which has allowed the country to become a member of the IMO and appear on the white list of this organization, being elected several times to be a member of its board of directors.

2- Preliminary Registration of Ships, Vessels and Yachts in Panama

Panamanian legislation allows for the registration or registration of contracts concluded on ships, vessels or yachts that are part of the Panamanian merchant navy for a period of six (6) months, during which time the applicant may certify these documents in a public deed and submit them to the General Directorate of the Public Registry of Ship Ownership for final registration.

The document that needs to be registered or provisionally registered can be sent by e-mail through private merchant navy consulates or, similarly, it can be submitted locally, to the Directorate-General of the Public Registry of Ship Ownership.

3- Final Registration of Ships, Vessels and Yachts in Panama

Once the preliminary registration of the ship, vessel, or yacht has been obtained, the final registration will require the protocolization of the documents that will be registered, before they are formalized in a public act and presented to the General Directorate of the Public Registry of Ship Ownership.

4- Titles of Ownership for Ships, Vessels, and Yachts in Panama

In accordance with the Laws and Regulations of the Republic of Panama, the title of ownership of ships, vessels, and yachts must be in writing, in a private document, duly signed by the grantors, whose signatures must also be duly authenticated by a public notary or by a Consul of the Republic of Panama.

The Title Deed of a Ship, Vessel, or Yacht may consist of the Purchase and Sale Contract, or the Certificate issued by the builder, or other documents such as the previous Flag Cancellation Certificates, or documents justifying Judicial or Extrajudicial Sales, among others.

5- Maritime Litigation and Naval Arbitration in Panama

Maritime claims can arise from various causes (collisions, cargo claims, oil spills, personal injuries, maritime hijackings, marine insurance claims, and foreclosures of ship mortgages), whether due to breaches of agreements or contracts, or due to accidents occurring on a vessel, ship, or yacht. The resolution of these disputes can take place in maritime courts or through commercial arbitration in one of the country's Arbitration Chambers.

In the case of the Maritime Court of Panama, we can say that it is available 24 hours a day, 365 days a year, for the international maritime community, and vessel arrests can be carried out throughout the year.

6- Naval Mortgages in Panama for Ships, Vessels, and Yachts

The Laws and Regulations of the Republic of Panama contemplate and permit the inscription or registration of the Naval Mortgage contract, granted within or outside the territory of the Republic, executed in any language and in writing.

A mortgage executed by private document must have the signatures of the grantors authenticated by a public notary or by a Consul of the Republic of Panama.

However, a naval mortgage contract granted outside the territory of the Republic of Panama must be granted in accordance with the formalities required in the country where it was granted.

For the registration of a naval mortgage, the procedure is simple, but always seeking to protect the interests of shipowners and banking institutions.

It is also possible to register a Fleet Mortgage of ships, vessels, and yachts. The Public Registry of Panama can carry out the preliminary registration of fleet naval mortgages or it can be done through the Special Consulates of the Merchant Marine and/or definitively through the registration of the corresponding Public Deed.

When several vessels are mortgaged to guarantee a single credit, the amount or proportion of the amount corresponding to each ship, vessel, or yacht for which they could be liable within the total credit may be limited. If such limitation of liability is not made, the mortgagee may claim the entire guaranteed sum against any of the ships, vessels, or yachts, individually or against all of them jointly.

1. NAVAL MORTGAGES IN PANAMA ON VESSELS UNDER CONSTRUCTION: The Panamanian Ship Registry allows the registration of naval mortgages on vessels under construction, for which it will be essential that the title of ownership of the vessel to be mortgaged is registered with the General Directorate of Public Registry of Ship Property, using for this purpose the construction certificate issued by the corresponding shipyard.
2. CANCELLATION OF NAVAL MORTGAGES IN PANAMA: Any Naval Mortgage can be cancelled, for which the document issued by the mortgage creditor will be required, through which it declares and acknowledges the extinction of the existing real property right of mortgage on one or more vessels.
3. DOCUMENTS DERIVED FROM NAVAL MORTGAGES IN PANAMA: Similarly, all documents that modify, add to, or amend mortgage credits may be registered with the Public Registry of Panama, provided that the Naval Mortgage that originates the change is duly registered, such as:
   • Addendum
   • Amendment
   • Addition
   • Change of Mortgage Creditor
   • Assignment of Mortgage Credits
   • Merger of Mortgage Creditors

   • Incorporation of new Mortgage Creditor
   • Assumption of Mortgage
   • Agreement between Mortgage Creditors
   • Equity Agreement
   • Coordination Agreement
   • Subordination Agreement

7- Maritime Court Proceedings in Panama

Maritime court proceedings in Panama are regulated by a specific legal framework that addresses various issues related to maritime law, especially Law 8 of 1982 which creates the Maritime Courts and Procedure.

Law No. 8 of March 30, 1982, which creates the Maritime Courts and dictates the Rules of Maritime Procedure, with the amendments, additions and deletions adopted by Law 11 of May 23, 1986 and Law 12 of January 23, 2009. This are the legal statutes that regulate maritime judicial matters in Panama.

1. JURISDICTION AND COMPETENCE: Panamanian courts have jurisdiction over maritime disputes occurring within its territorial waters or acts performed or to be performed from, to or through the Republic of Panama. Jurisdiction can vary depending on the type of dispute and the parties involved.

   Article 19: The Maritime Courts shall have exclusive competence in the cases arising from the acts relating to the maritime trade, transport and traffic, occurring within the territory of the Republic of Panama, in its territorial sea, in the navigable waters of its rivers, lakes and in those of the Panama Canal. These causes shall include claims arising out of acts performed or to be performed from, to, or through the Republic of Panama. Claims involving the Panama Canal Authority must comply with the provisions of its Organic Law.

   The Maritime Courts shall also have exclusive competence to hear actions arising from the acts referred to in the preceding paragraph, occurring outside the territorial scope indicated above, in the following cases:

   • When the respective actions are directed against the vessel or its owner, and the vessel is seized within the jurisdiction of the Republic of Panama, as a result of such actions.
   • When the Maritime Court has seized other property belonging to the defendant, even if it is not domiciled within the territory of the Republic of Panama.
   • When the defendant is within the jurisdiction of the Republic of Panama and has been personally notified of any actions filed in the Maritime Courts.
   • When the vessel or one of the vessels involved is of the Panamanian flag, or the substantive Panamanian law is applicable by virtue of the contract or the provisions of the Panamanian law itself, or the parties expressly or tacitly submit to the jurisdiction of the Maritime Courts of the Republic of Panama.
2. VESSEL SEIZURE: A common process in maritime law is vessel seizure, which is used as a precautionary measure to secure maritime claims. This can include debts for repairs, crew wages, or collision damage.

   Seizure in general

   Article 166: The seizure decreed by the Maritime Courts shall have the following purposes:

   • To prevent the process from being illusory in its effects and that the defendant transposes, alienates, worsens, encumbers or dissipates assets susceptible to such a measure.
   • To assign, to the jurisdiction of the Panamanian Maritime Courts, the jurisdiction of cases that arise outside the national territory, as a result of facts or acts related to navigation when the defendant is outside its jurisdiction, and in cases that arise within the national territory when the plaintiff chooses to seize an asset of the defendant in order to notify him of the lawsuit. In both cases, the seizure constituted in accordance with the provisions of this paragraph shall have the effects of personal notification of the claim; however, the plaintiff must also comply with the procedure established in the last paragraph of Article 403.

     The defendant is considered to be outside Panamanian jurisdiction when his effective and real domicile of business is outside the Republic of Panama, even if the company is Panamanian or foreign, is registered in Panama, or has branches or subsidiary companies in Panama, or the vessel is registered in Panama.

   • Physically seizing assets susceptible to seizure in order to enforce preferential maritime claims, maritime encumbrances or any claim that, according to the law applicable to the case, allows the claim to be directed directly against them. The seizure will have the effects of personal service on the property demanded.
3. PREVENTIVE EMBARGO: Similar to the seizure of vessels, the preventive embargo is used to secure maritime claims and prevent the vessel from leaving the port until the dispute is resolved.

   Seizure and Sale of Ships (Law 55 of 2008)

   Article 272: The vessel affected by the enforceable maritime credit may be seized and sold, judicially, in the port in which it is located at the request of the legitimate creditor. The master will represent the owner in the respective trial.

   The agreement that empowers the mortgagee to sell, out of court, the mortgaged warehouse in the event of default by the debtor, will be valid. The owner of the vessel may grant an irrevocable mandate to the mortgagee for this purpose.

   The extrajudicial sale of the warehouse will be subject to the following rules:

   • The creditor must notify the owner that he intends to sell the ship at least twenty calendar days before the date on which the sale is to be made. If there are other registered mortgages, such notification must also be made to the registered mortgage creditors.
   • The mortgagee shall be liable for the damages caused by the exercise of this mandate.
   • The ownership of the ship sold, out of court, in the manner prescribed in this article, shall be transferred to the buyer with its debts and encumbrances, except for the mortgage lien that gave rise to the sale, which shall be extinguished.
4. COLLISION CLAIMS: In the event of collisions between ships, Panamanian courts can determine liability and order compensation for damages.
5. CREW CLAIMS: Seafarers can file claims with Panamanian courts for unpaid wages, unsafe working conditions, or wrongful termination.
6. MARINE POLLUTION: Courts can handle cases involving marine pollution, including oil spills and other forms of pollution, and order corrective action and compensation.
7. MARITIME CONTRACTS: Disputes related to maritime contracts, such as chartering, transportation of goods, and marine insurance, are also resolved in Panamanian courts.
8. MARITIME RESCUE: Maritime rescue cases, where one vessel assists another in distress, are governed by specific laws that determine the appropriate compensation for rescue services.
9. MARITIME ARBITRATION: In addition to the courts, Panama also has arbitration centers specialized in maritime disputes, which offer a faster and more confidential alternative for conflict resolution.

   Article 20 (Law 8 of 2008): The Arbitration Tribunals shall also have jurisdiction to hear the maritime cases provided for in the preceding article, when the parties have agreed, in an arbitration clause, to submit to an Arbitration Tribunal any differences arising from their contractual relationship, or when, after such differences have arisen, expressly and in writing, they agree to submit their decision to an Arbitration Tribunal. In these cases, the Maritime Tribunal shall decline to hear the case in favor of the corresponding Arbitral Tribunal within the Republic of Panama, and may require guarantees from any of the parties to ensure their appearance before said Arbitral Tribunal, under the same terms provided for in Article 19 of this Law.

   Article 567: The agreement of the parties by virtue of which they undertake to submit to arbitration the disputes that may arise, or that have arisen between them, in relation to maritime matters is valid provided that such agreement is in writing and has been negotiated between all the parties.

   Article 568: The parties may submit the arbitration to the rules of procedure of their choice and, in the absence of these, the arbitration rules established by Panamanian law shall apply; however, the appointment of foreign arbitrators and the conduct of the arbitration in a language other than Spanish is valid, when so agreed by the parties.

   Article 569: In the absence of express agreement between the parties, the arbitration shall be conducted in accordance with the rules of procedure contained in Decree-Law 5 of 1999 and in this Law.
10. ENFORCEMENT OF JUDGEMENTS: Once a judgment is issued, Panamanian courts may order the enforcement of the judgment, which may include the sale of seized vessels to satisfy claims.