Panama Legislation on Ship Registration under Foreign Flags

Panama Legislation on Ship Registration under Foreign Flags

Law 57 of August 6, 2008 governs Panama's general maritime law, encompassing matters related to ship registration, vessels, imports and exports, and maritime commerce. This law regulates the Panamanian legislation concerning the flying of foreign flags.

What is a Flag of Convenience?

In the Republic of Panama, ships can be registered for two main purposes: Domestic Service or International Service. This registration can be done either under personal title or through a corporation. Ship registration is an administrative act where the state grants a vessel its nationality and authorizes it to fly the Panamanian flag (to hoist or display its national flag).

Procedure

The ship registration process can be completed within 30 business days. The legal representative must submit the registration application using the PKI token, along with all pre-supplied information from the ship owner, to the General Directorate of Merchant Marine in Panama or at an authorized Consulate of the Republic of Panama.

How to Register a Foreign-Owned Ship in Panama

To register a ship for international service, the following documents are required:

• The original document designating the resident agent, granted by the owner, duly authenticated if issued abroad.
• Prima facie evidence of ship ownership or intent to acquire such ownership.
• Proof of payment of applicable taxes, fees, and dues.
• Any additional documents required by the General Directorate of Merchant Marine.

Ships for international service and foreign-registered ships navigating Panamanian jurisdictional waters must carry a navigation permit issued by the General Directorate of Merchant Marine. The technical requirements for such a permit will be set by the Directorate.

Controversies and Criticisms

The registration of ships under the Panamanian flag accounts for 22.3% of the world's maritime fleet. Recently, there has been a notable increase in the number of ships registered in Panama. This growth is attributed to measures taken by the General Directorate of Merchant Marine to streamline the registry by removing non-compliant ships while promoting the registration of newly built ships and those with higher tonnage.

Due to these stricter standards, Panama has been included for the first time on the White List of the Paris Memorandum of Understanding (Paris MOU). This list comprises selected countries that meet the highest standards of maritime safety.