Chapter IV, Section Two

LAW No. 19
(of June 11, 1997)

Chapter IV - Vessels and Navigation

Section Two - Damages Resulting from Navigation

Article 63. The Authority, with the exceptions set forth in this Section, shall promptly adjust and pay indemnity for damages to vessels or their cargoes, crew, or passengers, which may arise from their transit of the Canal, whether caused during their passage through the locks or while in the Canal or adjacent areas outside the locks, when the Board of Inspectors determines, as a result of an investigation, that the damage was caused through fault or negligence on the part of the Authority or its workers in the performance and within the scope of their duties and the Authority accepts that determination.

If the fault or negligence of the ship operator or shipowner, the master, crew, or passengers contributed to the injury, the award for damages shall be reduced in proportion to the degree of negligence or fault attributable to the shipowner or ship operator, vessel, its master, crew, or passengers.

The Authority may claim indemnity for damages caused to the Canal, its workers, and properties of the Authority after an investigation conducted by the Board of Inspectors determines that such damages are the result of fault or negligence attributable to the shipowner or ship operator, vessel, master, crew, cargo, or passengers.

The Regulations may establish limits and other conditions to the responsibility referred to in this section.

Article 64. The statute of limitations to submit claims to the Authority in accordance with the provisions of the previous article is two years from the date of the incident.

Article 65. In determining the amount of the damage award for injuries to a vessel, the following factors may be considered:

  1. The actual or estimated cost of repairs.
  2. Charter hire actually lost by the owners or charter hire actually paid, depending upon the terms of the charter party, for the time the vessel is undergoing repairs.
  3. Maintenance of the vessel and wages of the crew, if they are found to be actual additional expenses or losses incurred outside of the charter hire.
  4. Other expenses which are definitely and accurately shown to have been incurred by reason of the accident or injuries.

The shipowner is responsible for promptly performing repairs to the vessel and putting it into service. Claims shall not be allowed for losses incurred as a result of the shipowner's negligence to promptly repair and return the vessel to service.

Every claim shall be accompanied by supporting evidence.

Article 66. No agent fees or commissions or other similar expenses, or any other undefined or undetermined items subject to speculation or conjecture shall be allowed.

If a vessel is not operated under a charter but by the owner directly, evidence shall be secured if available as to the sum for which vessels of the same size and class can be chartered in the market. If the charter value cannot be determined, the value of the vessel to its owners in the business in which it was engaged at the time of the injuries shall be used as a basis for estimating the damages for the detention of the vessel. The ledgers of the shipowners or proprietors showing the actual earnings of the vessel about the time of the accident or injuries shall be considered as evidence of probable earnings during the time of detention. If the books are unavailable, other appropriate evidence shall be furnished.

Article 67. Given the nature and characteristics of the Canal operation, the Authority shall not be responsible for the damages that may result from any excessive time, demurrage, or delays while in transit of the Canal; therefore, it shall not accept claims resulting from the following events or circumstances:

  1. Landslides or other natural causes.
  2. Construction or maintenance work in the Canal, its equipment, or installations.
  3. Obstruction arising from accidents.
  4. Time required for admeasurement of vessels.
  5. Vessel traffic congestion.
  6. Time required for investigation of any accident, provided it is conducted within a 24-hour period from the time of occurrence.

In no case shall the Authority be responsible for damages arising from any other cause not specified in this Law.

Article 68. Notwithstanding the provisions of item 6 of the preceding article, the Authority shall allow awards for demurrage or delays in the transit of the Canal in the concurrence of the following circumstances:

  1. If the investigation of the accident exceeds 24 hours.
  2. If the accident is attributable to the fault or negligence of an Authority employee in the performance of his official duties.

In any case, the compensation to be paid by the Authority shall be limited in proportion to the extent that the employee's actions caused or contributed to cause the accident.

Article 69. The Authority, by mutual agreement, commitment, or transaction, or otherwise, may determine the awards for damages pursuant to the provisions of this section. Acceptance by a claimant of the amount awarded shall be deemed to be in full settlement of such claim.

Article 70. A claimant who is dissatisfied with the determination of responsibility and damages to which this section refers, and who disagrees with the corresponding arrangement made by the Authority, may bring an action in the Panama Maritime Courts, which have jurisdiction throughout the Republic, and exclusive competence to hear it. The period to file this action shall be of one year from the notification to the claimant, or his duly authorized representative, of the final determination on the award made by the Authority, as provided by Regulation.

Article 71. No action, lawsuit, or claim shall proceed against the Authority or an employee for the reasons contemplated in this section which do not conform to the provisions of same.

Article 72. The Panama Maritime Courts, which have jurisdiction throughout the Republic, shall have exclusive and exclusionary jurisdiction over any other national or foreign court of justice to hear all claims, actions, or lawsuits that arise from the events listed in this section without detriment to the intervention by the First Section of the Supreme Court of Justice as a court of appeals.

Article 73. Any award for damages payable by the Authority in accordance with the provisions of this section shall be payable with funds allotted by the Authority for these purposes, pursuant to the Law and the Regulations.

Article 74. No action may be filed for damages under this section unless the following conditions are met prior to the departure from the Canal of the vessel involved:

  1. That an investigation of the accident and the injury caused has been completed according to a procedure that shall include a hearing by the Board of Inspectors of the Authority, as provided in this Law and the Regulation.
  2. That the basis for the claim has been laid before the Authority.

Section Three: Tolls for use of the Canal and Rates for Services