Panama Resurrects Equitable ReliefDate: 15/07/2020 Type: Articles Topic: FIRE | International | Author: David M. Mizrachi, B.A., J.D – MDU Legal (Panama)
Panama, which infamous “Panama Papers” have put the country in the limelight for the past four years, is not a traditional offshore jurisdiction. It is more of a traditional Civil Law jurisdiction with a (formerly) notable offshore sector. In the strict Civil Law tradition, Panamanian substantive and procedural laws tend to stress legal remedies over equitable remedies. Thus, its judiciary is not prone to issue equitable relief to the same extent it is issued by its Common Law counterparts in England, the British Commonwealth and the United States of America. Among the few examples of equitable relief in Panamanian civil procedure are the provisional remedies known as “General Conservatory or Protective Measures” found in article 569 of Panama’s Judicial Code. Following the legislative repeal of article 569 in 2013, said interim remedy was reestablished by the legislature in December of 2019 as we shall explain herein.
Up until March 26, 2013, article 569 was part of the Judicial Code. At that time, the provision was struck down, but it was eventually revived on December 10, 2019. That provision read and currently reads as follows:
569. In addition to regulated cases, the person having a justified motive to fear that during the time prior to the judicial recognition of its right it shall suffer an immediate or irreparable harm, may request the judge [to issue] the conservative or protective measures [deemed] more appropriate to provisionally secure, according to the circumstances, the effects of the decision on the merits. The petitioner shall present summary evidence, and also, [post] the corresponding bond for damages.
The petition shall be handled and decided as it is conducive according to the rules of this Title.
As evident from the cited text, article 569 provides provisional relief to litigants applying equitable criteria, similar to that applied when granting a temporary restraining order or other usual provisional Common Law remedies. Among the requirements are 1) providing summary (i.e. prima facie) evidence, 2) posting a bond and showing 3) a justified fear, of a) suffering immediate or irreparable damage, b) to secure the effects of a judgment on the merits. It differs from similar remedies under the Common Law by not requiring the petitioner to show a “likelihood of success on the merits”. Yet it is similar to its Common Law counterparts in the sense that a showing of irreparable harm is required.
It is a very generous provisional remedy which grants the judge the power to issue “appropriate” measures to avoid the harm. Prior to its repeal in 2013, some courts tended to be quite creative and liberal in granting the provisional measures available under article 569. The relief granted ranged from suspending the effects of a transaction, preventing transactions from happening, issuing cease and desist orders and other similar equitable relief. In one particular case, a civil court went as far as ordering all private media outlets in Panama not to publish news about a specific public official. In another, a telecommunications company was temporarily banned from providing a service using a specific technology, even though it had been licensed by the telecommunications regulator.
Thus, given the broadness of the remedy and the lack of guidelines to apply it, it came under constant criticism. Such criticism led to the repeal of the provision on March 26, 2013 through the enactment of Law 19 (2013). Law 19 (2013) plainly stated: “Article 1. Article 569 of the Judicial Code is derogated….Article 2. This Law shall become effective on the day following its promulgation.” It was promulgated on the same day it was enacted. Law 19 did not even have a preamble. https://www.organojudicial.gob.pa/uploads/wp_repo/uploads/2016/11/Ley-19-de-2013.pdf It was enacted following a legislative initiative of the Executive Branch. Among the motives for repealing article 569 of the Judicial Code were the “eminent amplitude and discretional nature” of the remedy, its “excessive use” and them becoming an “open door to the detriment of the defendants’ rights” in opposition to “the principle of procedural equality”. According to its motives, the repeal sought to “eradicate possible practices, supported by the holders of [Judicial] Offices who may be influenced by the plaintiffs for the application of these types of protections.” http://126.96.36.199/apps/seg_legis/PDF_SEG/PDF_SEG_2010/PDF_SEG_2013/PROYECTO/2013_P_565.pdf
In spite of the preceding arguments, it may be said that the repeal of article 569 of the Judicial Code created an equitable relief void, as the rights of litigants could no longer by adequately protected, through “generic” measures. In light of this, Panama’s legislature recently revived article 569 through the enactment of Law 119 (2019). Law 119 (2019) reestablished the validity of article 569 by repealing Law 19 (2013), and became effective on 11 December 2019. https://www.asamblea.gob.pa/APPS/LEGISPAN/PDF_NORMAS/2010/2019/2019_650_3777.pdf
Thus, following the enactment of Law 119 (2019), article 569 of the Judicial Code was restored as previously written, supra. The motives for the enactment of Law 119 (2019) included harmonizing the Judicial Code with other Codes and avoiding “technical-procedural uncertainty” caused by the absence of such measures within the Judicial Code as was the case from March 2013 until December 2019, when Law 119 (2019) was promulgated and article 569 reestablished. https://www.asamblea.gob.pa/APPS/SEG_LEGIS/PDF_SEG/PDF_SEG_2010/PDF_SEG_2019/2019_A_070.pdf
While it is probably too early to assess the effect of the reinstatement of article 569 of the Judicial Code, it is certain that it should be a very useful tool when pursuing asset tracing and recovery matters in Panama.