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I. Background
The need to amend the Panamanian maritime legislation, amongst others, came as an effort to incorporate long standing practices that had been developed but were not regulated in our national laws, to promote the registration of vessels in our registry by attracting new tonnage and rewarding both loyalty to the flag and compliance with safety standards of vessels already registered in Panama.
With this view the Panama Maritime Authority and the local community of lawyers worked continuously on this draft bill since 2005, and on 6th August 2008 our National Parliament approved these new laws.
II. Laws and their effective date
Law No. 55 of 6 August 2008 - Maritime Trade Law effective from 7 August 2008.
Law No. 57 of 6 August 2008 - General Merchant Marine Law effective from 7 February 2009
These Laws were both published in our Official Gazette on 7 August 2008 and are in force as from the dates mentioned above.
The Maritime Trade Law replaces in its entirety Book II of our Commercial Code whilst the New General Merchant Marine Law replaces our Law No. 8 of 1925 and its further amendments.
III. Novelties
There are many new provisions that upscale the services granted both to ship owners and financing institutions under the new Laws. We will mention herein those considered to be of most interest along with their main advantages:
1. Registration of an extract of mortgage as opposed to the whole mortgage document
Main advantage: Reduces time required for registration and saves translation and notarisation costs
2. Reglamentary Navigation Documents are valid for up to 5 years instead of for a fixed 4 years period
Main advantage: Allows ship owners one more year of validity without the need to renew the documents therefore saving costs. PMA will determine which vessels will be issued Statutory Navigation documents with less than 5 years validity (vessels over 20 years of built, etc.)
3. Additional time to file the mortgage for permanent registration:
After the 6 months of the preliminary registration of mortgage without the permanent document being filed for registration, the Public Registry will now grant a 30 working day period to file the mortgage document after a 5 working day notice to the mortgagee.
Main advantage: More flexibility by granting additional time to the parties
4. Preliminary registration of Certificate of Consent to Delete at the Public Registry
Main advantage: This will suspend any new registrations of ownership titles or mortgages for its period of validity (30 days).
5. New rank of the mortgage as a maritime lien: the mortgage now ranks 4th in the order of priority of the maritime liens instead of 7th.
Main advantage: Creditors with a registered Panama naval mortgage will be able to collect sums owed with higher priority than all other creditors with maritime liens, except only for court expenses, salvage and seamen wages for the last trip.
IV. Further incentives:
The General Merchant Marine Law has also brought significant incentives for ship owners that wish or have their vessels registered in Panama by widening the criteria of vessels that are entitled to discounts on registration fees and annual taxes along with a significant increase in the percentage of discounts.
These discounts will be applicable to the following:
1. Newly Built Vessels
2. Vessels with less than 5 years of keel laid date
3. MODU’s returning to the flag
4. Vessels with no PSC Detentions for a consecutive period of 24 months
5. Vessels that have remain loyal to the flag
6. Fleet discounts
As the discounts will vary depending on the criteria under which vessels apply for it, these will not be detailed here but please do contact us for further information.
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