Crew Claims - Vessel Arrests in Panama

June 1999

In recent years shipowners have faced considerable problems in Panama following the arrest of a substantial number of vessels. The majority of these arrests have involved claims brought on behalf of Filipino crewmembers who have suffered injury or illness. In some cases the claims have been brought by their dependants.

The vessels have been arrested transiting the Panama Canal, but in most cases there has been no connection with the Panamanian jurisdiction, either in respect of the place of the incident, nationality of the crewmember or flag of the vessel. In many cases the contractual benefits have already been fully paid and an appropriate release document signed in the Philippine jurisdiction.

The problem has been compounded by the fact that Club Letters of Guarantee have not been accepted and in order to secure the release of the vessels, security has been required in the form of bonds. Bonds worth millions of dollars are currently outstanding in relation to these crew claims, awaiting the outcome of the cases being litigated in the Panamanian courts.

Unfortunately, in a number of cases the Panamanian Maritime Court of First Instance has rejected counsel’s jurisdictional arguments and some of these cases are in the process of appeal to the Panamanian Supreme Court. These particular arrests and subsequent court cases are disturbing and fundamentally unfavourable to shipowners, particularly given the fact that the contract and conditions which apply between crewmembers and shipowners are dictated by the appropriate authorities in the Philippines.

Given the serious nature of the problem, the International Group of P&I Clubs formed a Working Group to consider the situation and assess potential remedies from both a legal and political standpoint. Subsequently, an International Shipping Federation delegation visited the Philippines to discuss the problems arising from the growing number of claims being lodged against shipowners. The delegation met with a positive response from Officials during their visit and it is hoped that the current uncertainties surrounding these claims will be resolved whilst protecting the crewmembers’ legitimate interests.

One suggested proposal was the implementation of a bilateral agreement between Panama and the Philippines. The object of this agreement would be to reduce the scope for disputes, whether through challenges in the courts in Panama or elsewhere, particularly where settlements have already been reached. A draft agreement is currently being considered by the appropriate parties.

In the interim, several cases decided by the Panamanian Maritime Court of First Instance await appeal to the Supreme Court. Defence counsel remain optimistic that vessel interests will prevail with regard to valid jurisdictional points.