Alternative dispute resolution methods provide efficient and expedited alternatives to traditional judicial processes. These methods -negotiation, conciliation, mediation, and arbitration in Panama- are crucial within the country’s legal system.
Arbitration in Panamá is determined by Law 131 of December 31, 2013, numeral 1, article 5, as “A dispute resolution method in which any person with the legal capacity to bind themselves submits disputes that have arisen or may arise with another person, to the judgment of one or more arbitrators. The arbitrators make a final decision using an award with the effect of res judicata, complying with the provisions of this Law. In addition, arbitration means any arbitration, whether or not it is administered by a permanent arbitral institution, following Article 12.”
In essence, the arbitrator is an impartial third party who issues a conclusive decision mandatory to the parties involved in a dispute. It is recognized as an alternative method because it is a more efficient approach to court litigation and offers other advantages such as saving time, money, and even the confidential treatment of conflicting.
However, there are limits to traditional arbitration. These restrictions are the possible presence of bias during the arbitrator’s selection process and the financial implications caused by hiring expert arbitrators, among others. Despite these disadvantages, the scalability and flexibility make it a superior solution for many cases.
Panama promotes alternative dispute resolution methods such as negotiation, conciliation, mediation, and arbitration. It also promotes alternative methods in matters related to labor disputes and those arising from public contracts, insurance, reinsurance, and consumer protection, among other matters.
Arbitration is advantageous because it is easier to substantiate and is usually more expeditious than a court case.
On the other hand, the parties may agree on the procedure for selecting the arbitrator or arbitrators.
In addition, it is often more informal and less aggressive, making it easier for the parties involved to discuss their respective positions.
Although mediation and conciliation are synonymous with arbitration, they are different methods.
Panama approved on July 8, 1999, the first law specialized in arbitration, conciliation, and mediation. This Decree-Law No. 5 articles 44 and 45 states that the parties in conflict may voluntarily resort to an extrajudicial conciliation method, defined as “a method of peaceful conflict resolution, through which the parties manage the solution of their conflicts with the intervention of an impartial facilitator, called conciliator.”
On the other hand, Decree-Law No. 5 article 52 defines mediation as “an alternative method for resolving conflicts in a non-adversarial manner, whose purpose is to seek and facilitate communication between the parties through the intervention of a third appropriate party, called mediator, to reach an agreement between the parties that definitively solve the conflict or controversy.”
The three methods of conflict resolution seek to facilitate the reaching of agreements and use a neutral third party (arbitrator, mediator, or conciliator). However, they have different implications.
Regardless of the alternative dispute resolution method, the parties choose to explore, the legal counsel must ensure that the interests of all parties are adequately protected given the characteristics of the dispute, the dynamics between the parties, and the complexity and importance of the matter under consideration.
At Monica Castillo – Despacho de Abogados, we have the experience necessary to effectively navigate complex legal processes, present evidence, make arguments, and understand the implications of arbitration in Panama to accelerate dispute resolution and reduce costs through establishing transparent communication and understanding of the parties’ interests.
Our team is here to serve you with integrity and professionalism on a continuous and permanent basis.