On November 12 2014, the Supreme Court of Justice of Panama
issued a ruling on constitutionality on a case between
Compañía Agrícola Industrial
(CAISA), a major Panamanian pork producer, and Royal Dutch
Airlines (KLM). The ruling concerned the requirement that
parties involved in legal proceedings adhere to the principles
of due process, as guaranteed by the Panamanian Constitution.
The Supreme Court's ruling confirmed a lower court's
decision on a constitutional action, wherein KLM had requested
that a prior decision ordering the Dutch airline to pay
millions of dollars in compensation to CAISA be declared
invalid on the basis that KLM's due process rights were
violated. The alleged violation arose from the trial judge's
failure to serve KLM in accordance with the proper legal
procedure for notifying companies domiciled outside of Panama.
It is important to note that, unlike jurisdictions such as the
United States, in Panama the responsibility to serve the
defendant rests with the court. In such cases where the
defendant resides outside of the national territory, the law
authorises service by means of letters of request.
This Supreme Court ruling in CAISA v KLM sets an
important precedent. It recognises the obligation to follow
proper service in legal proceedings, including those concerning
service to a defendant domiciled outside of Panama, which,
among other defensive mechanisms, provides the foreign
defendant with more time in which to respond to a law suit
brought against it. In acknowledging the judge's failure to
properly serve notice, the Supreme Court held that such failure
invalidates the entire civil trial carried out against KLM,
reverting the process to its initial stage, thus guaranteeing
KLM's right to due process and judicial security throughout
each and every phase of the legal proceeding.