ADMIRALTY LAW IN PANAMA

Transcription

1 ADMIRALTY LAW IN PANAMA Pardini & Associates ATTORNEYS AT LAW Panama-Tokyo-Geneva

2 GENERAL INFORMATION ABOUT THE REPUBLIC OF PANAMA'S LAWS RELATED TO LEGAL DISPUTES INVOLVING SHIPS I. THE PANAMA MARITIME COURT A. Background First-time visitors to Panama often find it anomalous that the Canal's Atlantic terminus lies to the west of the Pacific one. From a legal standpoint, it is scarcely less anomalous that, although Panama has substantial coastlines on both oceans, its courts have had few if any maritime cases during the first 80 years of the Republic existence. This anomaly is, of course, attributable to the fact that the country's two main deep water ports, Cristobal and Balboa, at either end of the Canal, were for so long under the jurisdiction of the United States. The U. S. District Court for the District of the Canal Zone was the only competent forum to handle cases against the Panama Canal Company and also dealt with the enforcement of privileged maritime liens, personal injuries, and other, basically due to the effectiveness and adequate protection provided by the U. S. Federal Rules of Civil Procedure and the Supplemental Admiralty Rules. Under the new Panama Canal Treaties of 1977, the U. S. District Court for the District of the Canal Zone was to be closed on 1st April 1982 and Panama enacted Law Nº 8 of 30 th March 1982, whereby the Maritime Courts are created and rules of procedure are enacted (hereinafter called the "Maritime Law"). It should be noted that the draftsmen of the Maritime Law relied to a great extent on the U. S. Federal Rules of Civil Procedure and the Supplemental Admiralty Rules. B. Jurisdiction and Functioning of the Court To date, only one Maritime Court has been established under s. 3 of the Maritime Law. This court is open 24 hours a day, every day of the year, including holidays. It has exclusive jurisdiction over cases arising from or connected with maritime trade and navigation occurring within the territory of the Republic of Panama, its territorial sea, the navigable waters of its rivers and lakes and the Panama Canal waters. Under s. 17 the Maritime Court is also competent to take cognizance of actions derived from commercial and maritime transport activities occurring outside the areas mentioned above, in the following cases: 1. When the respective claims are directed against the vessel of her owner and as a consequence thereof the vessel is arrested within Panamanian jurisdiction. 2. When the Maritime Court has attached other assets of the defendant although said party is not domiciled within the Republic of Panama. 3. When the defendant is within Panamanian jurisdiction and has been personally notified of any claims filed at the Maritime Court. 4. When one of the vessels involved is a Panamanian flag vessel, or Panamanian substantive law becomes applicable under the contract or due to the provisions of Panamanian law, or the parties subject themselves expressly or impliedly to the jurisdiction of the Panamanian Maritime Court. Labor lawsuits concerning workers on board Panamanian flag vessels will be in the competence of the Labor Court. Notwithstanding the foregoing, claims for damages arising from occupational risks due to fraud, fault or negligence imputable to the employer or to third parties are within the competence of the Maritime Court.

3 II ARREST OF VESSELS PURSUANT TO PANAMA LAW A. Arrest of Vessel Deriving from Privileged Maritime Liens The process for initiating an action in rem, including obtaining of jurisdiction over the property and establishing the parameters within which either release or judicial sale of the res takes place, are chiefly found in the Maritime Law, as implemented by Law Nº 8 of 30 th March Process In Rem The condition sine qua non of the in rem jurisdiction necessary to execute the lien is the physical presence of the res within the jurisdiction of enforcement. As a consequence and as mentioned before, Ordinal 2 of Art. 526 of the Maritime Law, in prescribing the special formal requirements for action in rem to enforce privileged maritime liens, requires a statement that the property subject to the action is within the jurisdiction of the Maritime Court or will be during the pendency of the action. However, the actual presence of the rem is not a prerequisite to filing an in rem action and initiating the process. The plaintiff interested in the expeditious execution of the warrant or order of arrest must be prepared in advance to enable its legal counsel in Panama to constitute a security for an amount of US$ 1,000 for damages caused by the arrest of the vessel or other property at the moment of filing the initial pleading, and a monthly amount of US$ 2,500 for custody and maintenance expenses of the property during the pendency of the arrest. The said amount is always US$ 2,500 in the case of vessels. However, the Marshal may require additional sums to cover the projected expenses of custody and maintenance of the res. Order of Arrest In cases of vessels or other property located within the Panamanian jurisdiction, the order or warrant for the arrest of the vessel or other property will usually be issued by the Maritime Court and delivered to the Marshal on the same day that the complaint and the petition for arrest are filed, provided that all security and initial maintenance expenses have been covered by the plaintiff. Execution of Process Upon receipt of the complaint and the petition for arrest and the constitution of the pertinent security, the arrest proceeds without notice to the defendant and the Marshal is directed by Art. 168 of the Maritime Law to execute the order at the place where the vessel or other property is located and to serve process on the person in charge of the property. The Marshal will thereafter affix the order in the pilot house in the event of vessels, cargo, or both, or in a conspicuous place in case the cargo is not on board the vessel. With respect to the arrest of Panamanian vessels or other property recorded at the Public Registry of Panama, the clerk of the Maritime Court will instruct the Public Registry to refuse to make any further registrations concerning the arrested vessel or other property after the service of the order of arrest by the Marshal to the person in charge of said property or its custody. Within the arrest proceedings, the Marshal and the custodian of the property prepare and sign a record of the inventory of the arrested property. In the case of a vessel, the Marshal will require the master or other officer in charge to submit all documents listing the parts and assets of the vessel and her cargo, which documents are annexed to the Marshal's record. Notice Within the scope of the Maritime Law, a key element to the concept of privileged maritime liens and their enforcement is that adequate personal notice of the complaint to the defendant is accomplished by the execution of the order of arrest. It has been brilliantly pointed out that this theory rests on the concept

4 that it is the res that is the concept of secrecy of maritime liens, which, by definition, renders it impossible to know, and therefore to give actual notice to other lienors. Accumulation of Process or Joinder Due to the international character of maritime trade and commerce operations, it often happens that maritime lienors other than the original plaintiff will also seek to proceed against the vessel, as a means of establishing the ranking and priority of their respective liens. Their effective participation within the process in rem depends on their timely knowledge of the existence of such process. There are basically two alternative courses of action: (a) to file an independent action in rem against the vessel or other property, followed by a motion for accumulation pursuant to Arts. 114 et seq. of the Maritime law, or (b) to intervene in an existing process based on Arts. 38 et. seq. of the same corpus legis. Custody and Maintenance The Marshal is appointed by Art. 174 of the Maritime Law to be the custodian of the vessel or other property subject to the arrest. Among other obligations, he must take all necessary measures to provide adequate maintenance of the vessel or other property, supervise the repatriation of the officers and crew upon their request, take out insurance, keep accounting records, and render accounts to the Maritime Court. The owner of the vessel or other property, or its representative, is entitled to supervise the proper maintenance and administration of the res. Nevertheless, in cases of perishable property, the Marshal with previous authorization from the Maritime Court and with the participation of the interested party, may arrange for an interlocutory judicial sale, the proceeds of which are deposited in the National Bank of Panama. Release of arrest Usually, the ship is the object of the maritime lien. The ship is subject to liens in favor of all types of third parties, including her crew, stevedores, charterers, cargo, owners, and anyone with whom she may come into contact, through collision or otherwise. The sins of her former owners, pilots, masters, and crew may follow even though she may, in all good faith, have been transferred for cash into the hands of a subsequent owner who is not personally responsible for these prior transgressions. Given the length of the particular topic, it has been deemed prudent only to mention the alternatives available to forestall a vessel's judicial sale under the Maritime Law: (a) payment of the claim; (b) establishing other security to substitute for the vessel or other property; (c) waiver of the privileged maritime lien by reliance on other security; (d) loss of the lien by expiration of the applicable statute of limitations; or (e) request by the Marshal, upon default by the plaintiff in the provision of additional funds for the custody and maintenance of the res, or by request by the plaintiff. Enforcement of foreign judgments The Maritime Law regulates the enforcement of foreign judgments, arbitration awards, interlocutory judgments and judicial decrees of precautionary measures, such as the arrest of a vessel. The governing principles for the acceptance and enforcement are those established by the respective treaties or, in the absence thereof, according to the rule of reciprocity.

5 Judicial sale The sale of a vessel by the Marshal in an in rem proceeding gives title good against the entire world and extinguishes all previous liabilities of the vessel. Only the Maritime Court acting in rem has the power to divest liens by a judicial sale. This is valid even if the maritime lien holder had no notice of the in rem proceedings. It has been said that here we should expect to find the winds of litigations at their most turbulent. But, just as at the eye of the hurricane the air is undisturbed, so here the law exists as in a vacuum, its purity undefiled by controversy and dispute. The judicial sale will be executed by the Marshal on the date previously determined by the Maritime Court. This sale cannot take place within less than 15 days after the last publication of the notice. Notice of the judicial sale is given by three consecutive publications in a local newspaper. There are no restrictions on who may purchase at a judicial sale. A 5% deposit is required and bidding is opened with the Marshal acting as auctioneer. The vessel may be released by the payment of the claim and the court's expenses even after the beginning of the sale, but of course before final award to the highest bidder. Upon sale, the Maritime Court will deduct the Marshal's expenses ( since there are no Marshal's fees) and thereafter proceed to subtract the amounts advanced by the plaintiff for the maintenance and custody of the vessel, and to distribute the fund to all participating maritime lien claimants within the process in accordance with their respective priorities. B. Precautionary Arrest of Vessels Deriving from Maritime Transactions Not Considered as Privileged Maritime Liens Under Panamanian Law The precautionary arrest is a judicial measure intended to prevent the sale or dilapidation of an asset to insure that the results of a lawsuit will not be illusory. To secure a precautionary arrest of a vessel, the plaintiff must request its seizure by the Maritime Court and must deposit in the registry of the court, a guarantee bond to secure the owner of the asset against any damages arising from the arrest. Said bond must be made in cash or in Panama government securities in an amount which will fluctuate from 20% to 30% of the amount sued for, as determined by the Court. An amount of US$2,500 monthly must be provided to the court in concept of custody and maintenance expenses of the property during the pendency of the arrest. The main differences between this type of measure and the action in rem for maritime liens are: (1) the debtor can post a bond to secure the release of the vessel and in typical actions in rem such action is not allowed; (2) there are no special proceedings as to the actions in rem. Should the vessel be released by way of a posted bond, the litigation will continue following the proceedings established by the court and Law Nº 8.

6 III. Measures Available To Claims Against Panamanian Vessels Not Transiting In Panamanian Jurisdictional Waters. It is a common thing to find that vessels waving the Panamanian flag do not necessarily include Panama as one of their routes of commerce. Consequently the possibilities of executing an arrest in Panama are limited to the approximately 13,000 ships that cross the Panama Canal every year. Through Art. 203 of the Maritime Code of Panama, it is permitted to a claimant "with a reason to believe that during the time prior to a judicial recognition of his rights, he will suffer imminent or irreparable danger may request from the judge the most appropriate conservatory or protective measure which will provisionally guarantee depending on the circumstances, the effect of a judgment on the merits. One of the most effective measures, if not the most effective measure is to inform the Panama Shipping Bureau and the Panama's Public Registry of the claim. This measures working together will impede the sale of the vessel, the registration of mortgages or other liens. The idea is to compel the shipowner to satisfy the claim without taking the situation to the Courts. Indirectly, other lienors (ie. mortgages) may react to the measure and influence the shipowner to solve the debt. The sole fact that all certifications coming from the Public Registry will show the measure ordered by the Maritime Court, will handicap the business opportunities that the vessel may encounter. The claimant must present his petition accompanied by preliminary evidence, and corresponding security for damages. For this type of cases, the Court will establish a bond for damages fluctuating between 20% to 30% of the amount in controversy; the security will be returned to the claimant once the precautionary measures are no longer needed. IV International Law Principles Applicable to Matters Subjected to The Jurisdiction of the Panama Maritime Court A. According to Art. 557 of the Law Nº 8 of 1982, (a) the Law of the country of registry of the vessel will apply with regards to: 1) to provisions related to the property of the vessel 2) to maritime liens over the vessel 3) with regards to the extinction of maritime over the liens, be them common or privileged maritime liens. 4) to everything related to the internal affairs of the vessel and the rights, powers, obligations and attributions of the captain, the officers and the crew. 5) to torts, injuries and damages claims, caused to or by the shipowner, the captain, officers and the crew; 6) the determination of type of damage affecting the vessel or the cargo and the proportion to which each must contribute. This principle can be ruled out by a choice of law clause 7) in cases of collisions only when the vessels belong to the same registry and the collision has occurred in international waters 8) to charterpartees, be them voyage or time charters; this principle can be ruled out by a choice of law clause

7 9) to services and necessaries provided to the vessel or its cargo in International waters 10) to the existence and limitation of responsibility of the shipowner B. The laws of the Republic of Panama will apply: 1) to privileged maritime liens over the freight or the cargo. This principle can be ruled out by a choice of law clause 2) to the rules of extinction of maritime liens (common or privileged) over the freight or the cargo 3) to collisions that have occurred in International waters between vessels belonging to different registries. 4) to the existence and limitation of responsibility of the cargo owner; C. The Lex fori or the law of the place where the contract or service is to be or was performed or where an accident has occurred will apply to: 1) claims from stevedores and other port workers as well as to other third parties providing services to the vessel, provided they are related to the maritime business or that they are temporarily on board the vessel when the vessel is in port. This principle can be ruled out by contract. 2) to collisions occurring in the jurisdictional waters of a country. 3) the effects of a bill of lading or transportation of passengers, the place where the cargo was loaded or where the passengers where boarded. This principle can be ruled out by a choice of law clause. 4) to insurance contracts, the place of their business domicile or where they have an operating representative office. This principle can be ruled out by a choice of law clause. 5) to services provided to the vessel or its cargo, and necessaries, the place where the service was performed. 6) to contract formalities, the place where the contract is executed. 7) with respect to prescription, the law of the country where the rights and obligations here acquired.

8 MARITIME LIENS UNDER PANAMA'S MARITIME LAW PROVISIONS Under Panamanian Law, maritime liens are classified as common and privileged. 1. Common maritime liens are all those liens which are not listed as privileged liens, and whose origins derivate from the maritime commerce. 2. Privileged Maritime liens. Panama's Code of Commerce in its Title IV related to "Maritime Credits and its privileges" has qualified privileged maritime liens with regards as to the vessel (or hull), as to the cargo and as to the freight. The ranking and priority of the privileged maritime liens is also established: "Article The following shall constitute PRIVILEGED MARITIME LIENS ON THE VESSEL, and shall share in the proceeds thereof in the order set forth in this article: (1) The court's costs incurred in the common interest of the maritime lienors; (2) The expenses, indemnities and wages for assistance and salvage incurred in the last voyage; (3) Wages, compensations and indemnities owed to the master and members of the crew for the last voyage; (4) Wages and salaries owed to the stevedores and longshoremen directly engaged by the owner, ship manager or master of the vessel for loading and unloading during the last arrival at port; (5) Indemnities which should take place for damages by fault or negligence; (6) Amounts owed as contribution in cases of general average; (7) Ship mortgages; (8) Amounts due by virtue of obligations contracted for the supplies and necessaries of the vessel; (9) Amounts of bottomry loans on the hull of the vessel and her tackle, for stores, rigging and equipment, if the contract was executed and signed before the vessel sailed from the port where such obligations were contracted; and the insurance premiums due for the last six months; (10) Wages of pilots, watchmen and other expenses incidental to the maintenance and custody of the vessel, her rigging and bunkers after the last voyage and arrival in port; (11) The indemnities owed to shippers and passengers due to the lack of delivery of the cargo for damages caused to it attributable to fault of the master or the crew in the last voyage; (12) The price of the last purchase of the ship and the interest accrued thereon during the last two years". "Article The following shall constitute PRIVILEGED MARITIME LIENS ON THE FREIGHT and shall share in the proceeds in the order set forth in this article: (1) Court costs incurred in the common interests of the lienors; (2) Expenses, indemnities and wages for assistance and salvage incurred in the last voyage; (3) Wages, compensations and indemnities owed to the master and members of the crew for at the voyage in which the freight was earned; (4) Amounts owed as contribution in case of general average; (5) Bottomry loans on the freight earned; (6) Insurance premiums;

9 (7) The principal and accrued interests owed by virtue of obligations contracted by the master on the freight, with the legal formalities; (8) Indemnities owed to shippers or charteres for lack of delivery of the cargo or the damages to it attributable to fault of the master or the crew in the last voyage; (9) Any other debt secured with a bottomry loan or by ship mortgage or pledge on the freight, when duly recorded". "Article The following shall constitute PRIVILEGED MARITIME LIENS ON THE CARGO and shall share in the proceeds in the order act forth in this article: (1) The costs incurred in the common interest of the lienors; (2) Expenses, indemnities and wages of assistance and salvage incurred in the last voyage; (3) The commercial taxes or fiscal duties owed for the same at the place of unloading; (4) The costs of loading and transportation; (5) The rental price of warehouses for the unloaded cargo; (6) The amounts owed as contributions in case of general average; (7) Bottomry loans and the insurance premiums; (8) The principal and accrued interests owed by virtue of obligations contracted by the master on the cargo, with the required formalities; (9) Any other loan for which the cargo was pledged, if the lender holds the bill of lading". Privileged maritime liens have preference and priority over the common maritime liens. "Article Code of Commerce. Liens from the latest voyage will precede previous liens." "Article Code of Commerce." a) Common and Privileged Maritime Liens will extinguish as follows: 1. Prescription. If the right to request payment is extinguished by time. Article 1651 establishes that maritime liens, common or privileged, precribe in one (1) year, from the moment they become payable. 2. Judicial Sale. Article 1090 provides that all credits against the vessel extinguish from the date of the judicial sale. 3. Private Sale. Liens extinguish in a period of six (6) months, from the date of recording of the change of ownership permanently.

10 ANATOMY OF AN ARREST IN PANAMA Background First-time visitors to Panama often find it anomalous that the Canal's Atlantic terminus lies to the west of the Pacific one. From a legal standpoint it is scarcely less anomalous that, although Panama has substantial coastlines on both oceans, its courts have had few if any maritime cases during the first 80 years of the Republic's existence. This anomaly is, of course, attributable to the fact that the country's two main deep-water ports, Cristobal and Balboa, at either end of the Canal, were for so long under the jurisdiction of the United States. The U.S. District Court for the District of the Canal Zone was the only competent forum to handle cases against the Panama Canal Company and also dealt with the enforcement of privileged maritime liens, personal injuries, and others, basically due to the effectiveness and adequate protection provided by the U.S. Federal Rules of Civil Procedure and Supplemental Admiralty Rules. Under the new Panama Canal Treaties of 1978, the U.S. District Court for the District the Canal Zone was to be closed on 1 st April 1982 and Panama enacted Law No. 8 of the 30 th March 1982, whereby the maritime Courts are created and rules of procedure are enacted, hereinafter called the "Maritime Law". It should be noted that the draftsmen of the Maritime Law relied to a great extent on the U.S. Federal Rules of Civil Procedure and the Supplemental Admiralty Rules. Powers and functions of the Maritime Court To date only one Maritime Court has been established under s. 3 of the Maritime Law. This court is open 24 hours a day, every day of the year, including holidays. It has exclusive jurisdiction over cases arising from or connected with maritime trade and navigation occurring within the territory of the Republic of Panama, its territorial sea, the navigable waters of its rivers and lakes and the Panama Canal waters. Under s. 17 the Maritime Court will also be competent to take cognizance of actions derived from commercial and maritime transport activities occurring outside the areas mentioned above, in the following cases: 1. When the respective claims are directed against the vessel or her owner and as a consequence thereof the vessel is arrested within Panamanian jurisdiction. 2. When the Maritime Court has attached other assets of the defendant although said party is not domiciled within the Republic of Panama. 3. When the defendant is within Panamanian jurisdiction and has been personally notified of any claims filed at the maritime Court. 4. When one of the vessels involved is a Panamanian flag vessel, or Panamanian substantive law becomes applicable under the contract or due to the provisions of Panamanian law, or the parties subject themselves expressly or implied to the jurisdiction of the Panamanian Maritime Court. Labor lawsuits concerning workers on board Panamanian flag vessels will be in the competence of the Maritime Court or the labour courts at the option of the worker. Notwithstanding the foregoing, claims for damages arising from occupational risks due to fraud, fault or negligence imputable to the employer or to third parties are within the competence of the maritime Court.

11 Applicable law Since foreclosure of a privilege maritime lien may be accomplished only under the maritime Court's jurisdiction and only by means of a proceeding in rem directed against the res itself as defendant, this brief discussion will cover only those aspects connected therewith. The process for initiating an action in rem, including obtaining of jurisdiction over the property and establishing the parameter within which either release or judicial sale of the res takes place, are chiefly found in the maritime Law, as implemented by Law No. 8 of 30 th March 1982 and supplementary provisions of the Judicial Code of the Republic of Panama. Additional guides as to the substantive nature of a particular claim may be found in the Code of Commerce and the Labour Code, and their amendments. Procedural considerations Some considerations in respect of certain important components of the process in rem are necessary within the scope of the Maritime Law. The complaint The process in rem against a vessel, cargo or freight (or a combination thereof) subject to a privileged maritime lien is initiated by filing a complaint prepared by the plaintiff which should (a) describe with particularity the circumstances from which the claim arises, the property that is the subject of the action and stating that it is within the jurisdiction of the court or will be during the pendency of the action; (b) contain a statement identifying the claim as an enforcement of a privileged maritime lien; and (c) include a petition for arrest of the property in question. Besides the foregoing requirements, the complaint must contain all other information required by Art. 55 of the maritime Law for ordinary complaints. Legal counsel Only lawyers qualified to practice law in Panama may represent parties at Panamanian courts. The English system of distinction between barrister and solicitors does not exist in Panama. The appointment of legal counsel in Panama must be effected by means of a power of attorney in his favour. Said power must be duly notarized and authenticated by the respective Panamanian Consulate or, in default thereof, by that of a friendly nation. Nevertheless, in certain situations where the time factor requires immediate action and the power of attorney has not been received by the Panamanian legal counsel, he may act as a de facto agent of the plaintiff under a special civil law institution, naturally, provided that the formal document is submitted as soon as reasonably possible. Evidence of claim Generally, any available evidence should be attached to the complaint. All foreign documents must be authenticated by the respective Panamanian Consulate and, in default thereof, by that of a friendly nation. It is presumed by the fact of the authentication that the respective document has been issued in accordance with the laws of the country of its execution, unless evidence to the contrary is submitted by the interested party. All documents in a foreign language must be translated into Spanish. Process in rem The conditio sine qua non of the in rem jurisdiction necessary to execute the lien is the physical presence of the res within the jurisdiction of enforcement. As a consequence and as mentioned before, Ordinal 2 of Art. 526 of the Maritime Law, in prescribing the special formal requirement for actions in rem to enforce privileged maritime liens, requires a statement that the property subject to the action is within the jurisdiction of the Maritime Court or will be during the pendency of the action. However, the actual presence of the res is not a prerequisite to filing an in rem action and initiating the process.

12 The plaintiff interested in the expeditious execution of the warrant or order of arrest must be prepared in advance to enable its legal counsel in Panama to constitute a security for an amount of U.S. $1,000 for damages caused by the arrest of the vessel or other property at the moment of filing the initial pleadings, and an amount not exceeding U.S. $2,500 for custody and maintenance expenses of the property during the pendency of the arrest. The said amount is always U.S. $2,500 in the case of vassels. However, the Marshal may require additional sums to cover the projected expenses of custody and maintenance of the res. Order of arrest In cases of vessels or other property located within the Panamanian jurisdiction, the order or warrant for the arrest of the vessel or other property will usually be issued by the Maritime Court and delivered to the Marshal on the same day that the complaint and the petition for arrest are filed, provided that all security and initial maintenance expenses have been covered by the plaintiff. Execution of process Upon receipt of the complaint and the petition for arrest and the constitution of the pertinent security, the arrest proceeds without notice to the defendant and the Marshal is directed by Art. 168 of the Maritime Law to execute the order at the place where the vessel or other property is located and to serve process on the person in charge of the property. The Marshal will thereafter affix the order in the pilot house in the event of vessels, cargo, or both, or in a conspicuous place in case the cargo is not on board the vessel. With respect to the arrest of Panamanian vessels or other property recorded at the Public Registry of Panama, the clerk of the Maritime Court will instruct the Public Registry to refuse to make any further registration concerning the arrest vessel or other property after the service of the order by the Marshal to the person in charge of said property or its custody. Within the arrest proceedings, the Marshal and the custodian of the property prepare and sign a record of the inventory of the arrested property. In the case of a vessel, the Marshal will require the master or other officer in charge to submit all documents listing the parts and assets of the vessel and her cargo, which documents are annexed to the Marshal's record. Accumulation of process or Joinder Due to the international character of maritime trade and commerce operations, it often happens that maritime lienors other than the original plaintiff will also seek to proceed against the vessel, as a means of establishing the ranking and priority of their respective liens. Their effective participation within the process in rem depends on their timely knowledge of existence of such process. There are basically two alternative courses of action: (a) to file an independent action in rem against the vessel or other property followed by a motion for accumulation pursuant to Arts. 114 et seq. of the Maritime Law, or (b) to intervene in an existing process based an Arts. 38 et seq. of the same corpus legis. Custody and maintenance The Marshal is appointed by Art. 174 of the Maritime Law to be the custodian of then vessel or other property subject to the arrest. Among other obligations he must take all necessary measures to provide adequate maintenance of the vessel or other property, supervise the repatriation of the officers and crew upon their request, take out insurance, keep accounting record, and render accounts to the Maritime Court.

13 The owner of the vessel or other property, or its representative, is entitled to supervise the proper maintenance and administration of the res. Nevertheless, in cases of perishable property, the Marshal with the participation of the interested party, may arrange for an interlocutory judicial sale, the proceeds of which are deposited in the National Bank of Panama. Release of arrest Usually the ship is the object of the maritime lien. Then ship is subject to liens in favour of all types of third parties, including her crew, stevedores, cargo owners, and anyone with whom she may come into contact, through collision or otherwise. The sins of her former owners, pilots, masters and crew may follow even though she may, in all good faith, have been transferred for cash into the hands of a subsequent owner who is not personally responsible for these prior transgressions. Given the length of the particular topic, it has been deemed prudent only to mention the alternatives available to forestall a vessel's judicial sale under the Maritime Law: (a) payment of the claim; (b) establishing other security to substitute for the vessel or other property; (c) waiver of the privileged maritime lien by reliance on other security (d) loss of the lien by expiration of the applicable statute of limitations; or (e) request by the Marshal, upon default by the plaintiff in the provision of additional funds for the custody and maintenance of the res, or by request by the plaintiff. Enforcement of foreign judgements The Maritime Law regulates the enforcement of foreign judgements, arbitration awards, interlocutory judgements and judicial decrees of precautionary measures, such as the arrest of a vessel. The governing principles for the acceptance and enforcement are those established by the respective treaties or, in the absence thereof, according to the rule of reciprocity. Judicial sale The sale of a vessel by the Marshal in an in rem proceeding gives title good against the entire world and extinguishes all previous liabilities of the vessel. Only the Maritime Court acting rem has the power to divest liens by a judicial sale. This is valid even if the maritime lien holder has no notice of the in rem proceedings. It has been said that here we should expect to find the winds of litigation at their most turbulent. But, just as at the eye of the hurricane the air is undisturbed, so here the law exist as in vacuum, its purity undefiled by controversy and dispute. The judicial sale will be executed by the Marshal on the date previously determined by the Maritime Court. This sale cannot take place within less than 15 days after the last publication of the notice. Notice of the judicial sale is given by three consecutive publications in a local newspaper. There are no restrictions on who may purchase at a judicial sale. A 5% deposit is required and bidding is opened with the Marshal acting as auctioneer. The vessel may be released by the payment of the claim and the court's expenses even after the beginning of the sale, but of course before final award to the highest bidder. Upon sale, the Maritime Court will deduct the Marshal's expenses (since there are no Marshal's fees) and thereafter proceed to subtract the amounts advanced by the plaintiff for the maintenance and custody of the vessel, and to distribute the fund to all participating maritime lien claimants within the process in accordance with their respective priorities.