Panama approves new civil procedure code

Law No. 402 of October 9, 2023 approved the new Code of Civil Procedure of the Republic of Panama.

Since it is a subject of interest for banking institutions and creditors, we highlight some relevant aspects of the chapters that deal with the Executive Proceedings, in general, and the Mortgage Executive Proceedings, in particular (Title IV, Chapters I and II):

Once the defendant has been notified of the Order issuing the payment order, it will have a term of 5 business days to make the payment of the debt or denounce assets for the payment thereof. Failure to make such declaration will be considered a contempt of court and false declaration will be considered a crime.

Certifications issued by an issuer or its representative, in relation to the rights that a person has over securities represented by means of book entries, and those issued by an intermediary, in relation to stock exchange rights dealing with escrow accounts, were eliminated from the list of documents that have executive merit.

The possibility of seizing luxury and art objects was added.

Previously, the rule indicated that bank accounts with a balance of US$1,000.00 dollars or less were unseizable. This rule has been modified and now establishes that bank accounts with a balance of US$2,500.00 dollars or less are unseizable.

In order to qualify as a bidder in a judicial auction, it was previously necessary to deposit 10% of the base of the auction. This provision has been modified and now it is established that, in order to qualify as a bidder, 25% of the auction amount must be deposited.

Previously, auction notices had to be published for 3 consecutive days in a newspaper of national circulation. This provision has been modified and now establishes that the auction notices must be published for 5 consecutive days in a newspaper of national circulation and additionally, they must be published in the official portal of the Judicial Branch, where they will be maintained from the date they were generated until the day of the auction.

The auction notices may be published in social networks, commercial advertisement sites or available media.

On the day of the auction, if no valid bids are submitted, a new auction will be opened on the following business day and bids may be submitted for up to 50% of the base amount of the auction, automatically and without the need for any notice.

In the event that the property to be auctioned is not awarded on the second date, the court will proceed to award the property to the creditor for 50% of the base of the auction and in the event that the creditor refuses to receive the property, the judge will proceed with the foreclosure of the property and its delivery to the foreclosed party.

The resolution approving the auction must contain the order for the release of the debtor or third party occupant of the real estate and, once registered, it must be communicated to the Justice of the Peace for its immediate execution, without any further procedure.

It should be noted that the amendments mentioned above will enter into force on October 9, 2025, that is, two years after the enactment of the law approving the new Civil Procedure Code.