CLAIMS ARISING FROM ACCIDENTS DURING TRANSITS OF THE PANAMA CANAL

APRIL 8, 2008

GABRIEL R. SOSA III

DE CASTRO & ROBLESScotia Plaza

51st & Federico Boyd StreetsP. O. Box 0834-02262

Panama, Republic of PanamaPhone (+507) 263-6622

Fax (+507) 263-6594Mobile (+507) 6670-0711

sosa@decastro-robles.comwww.decastro-robles.com

I. CLAIMS AGAINST THE PANAMA CANAL

Pilot in CommandBoard of Inspectors Claims Procedure

II. CLAIMS FROM THE PANAMA CANAL

LOUPHYSICAL/ECONOMIC DAMAGESOIL SPILLS

III. CONCLUSIONS

• Article 90: Pilotage is compulsory in Canal waters. The Authority shall determine the number of pilots assigned to each vessel navigating in Canal waters, including the ports of Cristobal and Balboa, pursuant to the provisions of the annex.

• … • Article 92: The pilot assigned to a vessel shall

have control of the navigation and movement of such a vessel.

• 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, … 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.

• …• 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 ….

The PCA will allow:• repair costs, • loss of earnings, • and in general all costs related to

the repair itself.

The PCA will not allow claims for • agents’ fees, • attorneys’ fees, • telephone conversations, • and the like.• Further, costs that would have been incurred

by the vessel regardless of the accident are not allowed.

The PCA requires proof that every item being claimed was:

1)related to the accident; and 2)paid for (this is shown by presenting the PCA

with copies of cancelled checks, bank wire transfers, or any other affirmative proof of payment)

LOU WORDING …In consideration of the Panama Canal Authority

consenting to the release from detention or arrest of the M/V “…………………” …., we THE P&I CLUB, hereby undertake to pay to you on first written demand such sums as may be determined by the administrator of the Panama Canal or other competent bodies within the Panama Canal Authority or on final recourse therefrom to the competent body or court, or as may be agreed with us to be recoverable from the M/V “…………..” in respect of the said incident, including interest and costs provided that our liability hereunder shall not exceed the sum of USD ……… U.S.DOLLARS.

LOU WORDING

… Should the amount established in this letter of undertaking prove to be insufficient in relation to the purpose of this guarantee as established herein, the Panama Canal Authority can request the issuer to exchange this document for one that covers more adequately the responsibilities herein.

LOU WORDING

This undertaking is executed by ____________ of ___________________ for and on behalf of THE P&I CLUB, pursuant to authority received from them on _______ , within the limitations contained in this letter and it is understood and agreed that this letter shall not be binding upon _____________ or _______, but be binding only upon THE P&I CLUB.

LOU - Discussion points

1-Non-negotiability, administrative arrest2-Issuance of invoice.3-Damages. Claims for manpower. Claims for

cost of investigation. 4-“competent bodies within the PCA”5-not-binding on agent?

SIMPLIFIED FACTS:

1. Two PCA linehandlers allegedly slipped and fell onboard.

2. No investigation was held by the Board of Inspectors.

3. The linehandlers are temporarily unable to work.

PCA sends invoice:

• Incapacity of linehandlers• Medical expenses• Ambulance• Miscellaneous

Points for discussion:

1. No investigation.2. claim vs. invoice.3. actual damage to the PCA.

-social security covers incapacity, medical expenses and ambulance.

OIL POLLUTION CLAIMS

• The Panama Maritime Authority (PMA)

• The Panama Canal Authority (PCA).

OIL POLLUTION CLAIMSArticle 151: A negligent act or omission in violation

of the provisions on the safety of navigation in Canal waters of the Organic law and the Authority regulations, relating to the use of the Canal and its facilities, traffic administration, and pollution prevention in Canal waters, shall be considered an administrative offense.

…Article 158: Offenses related to maritime safety

and pollution are considered violations of the provisions on safety of navigation in Canal Waters. ….

OIL POLLUTION CLAIMS• Article 166: The proceedings shall be initiated

through a formal statement containing, as a minimum, the following information:

• 1. Identification of the alleged offender(s). • 2. The reasons justifying the proceeding, …. • 3. Designation of the investigating official, …• 4. Reference to the Regulation assigning

jurisdictional competency….• 5. Any temporary measures taken to ensure the

effectiveness of the investigation, …• 6. Indication of the alleged offender’s right to

make allegations within ten working days, following his notification.

OIL POLLUTION CLAIMS

Article 179: The resolution concluding the proceedings shall set forth the reasons for such a decision, and shall address all the issues presented by the offenders, and derived from the proceedings. …., and the corresponding sanction.

The resolution shall also contain a statement of the offender’s appeal rights, the authority to which he may appeal, and the time allowed for the appeal.

OIL POLLUTION CLAIMS

Discussion Points:1. The same issues with the LOU arise (LOU

issued to Risk Management);2. PMA issues a fine;3. PCA issues a fine as per above procedure—

through the General Counsel’s Office;4. PCA does not return the LOU because Risk

Manager has an invoice:

OIL POLLUTION CLAIMS

PCA INVOICE INCLUDES:1.Labor2.Equipment3.Miscellaneous4.Environmental degradation

OIL POLLUTION CLAIMS

a. No investigation. No one determined “fault”. No right of action by either party.

b. Labor in payrollc. Miscellaneous? This is the equivament of

“undefined or undetermined items subject to speculation” when vessels claim.

d. “environmental damage”? No authority. Disguised “third” fine.

CONCLUSIONS1. I believe the PCA is the finest governmental

institution in Panama. 2. What I criticize is the lack of procedure for

claims against the vessels. 3. Procedure does not guarantee due process

to the vessel owners4. As a Panamanian it bothers me because the

very few cases per year that this happens, taint for no reason the otherwise impeccable image of the PCA.

THANKS FOR LISTENING