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Panama: Proper serving proceedings

Selva Quintero
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.

Selva Quintero

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