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Panamanian law recognizes that an arbitration agreement may take the form of an arbitration clause included in a contract or the form of an independent agreement. For an arbitration clause to be valid in Panama, it must be in writing. Likewise, there may be any type of evidence of its content, whether electronic communications, audio recordings or even that a party affirms the existence of the arbitration clause without its counterpart denying it[1]. An incomplete, contradictory or confusing arbitration clause may lead to unintended results for the parties, such as jurisdictional conflicts and potential delays.
The guide of the International Chamber of Commerce recommends as a first step, to use the standard arbitration clauses found in most of the rules of arbitration institutions, such as in Panama: CECAP, CESCON, and others. These are generic arbitration clauses that comply with the elements for their validity and have simple and clear wording.
Any arbitration clause, whether standard or new, should ideally focus on three points in order to be valid. First, it is recommended to include a broad description of the disputes that are arbitrable,[2] so that, when a dispute arises, there is no question as to whether the court has jurisdiction to hear it.
Second, according to the International Bar Association, it is recommended that arbitrations be submitted to an arbitration institution because when the arbitration is ad hoc, all issues related to the process are entirely left to the parties to mutually agree upon and, subsequently, to the arbitrators,[3] which results in a more extensive and, therefore, more costly work.
Third, the parties may designate a rule applicable to the substantive aspect or different rules applicable to various substantive aspects, but such segmentation must be clear. With respect to the standard of arbitration procedure, this must coincide with that of the arbitration institution that has been chosen, if applicable, or the parties may select the applicable procedural regulation if the arbitration is ad hoc.[4]
Lastly, concerning the confidentiality of the arbitration, if this is a matter of concern for the parties, they should include it in their arbitration clause because although the parties generally assume that this type of process is confidential, there are jurisdictions where theparties are not obliged to keep the content of the arbitration confidential. .[5] This is the case in Panama where Law 131 of December 31st, 2013 does not specify whether the parties have a duty of confidentiality as do have other participants in the process, such as the arbitral court and the Tribunal secretary.