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American Review of International Arbitration - ARIA - Vol. 18 No. 4 2007 

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ARIA Vol. 18 No. 4 2007

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 INTRODUCTION
The quest for exploring and developing Panama’s oil and gas resources has
occupied private investors and the Panamanian government for many decades.
This may be related to Panama’s proximity to Venezuela and Colombia,
neighboring countries with vast proven oil and gas reserves. To facilitate the
process, Panama has enacted some specific laws and regulations to govern such
activities.
Simultaneously with the development of its legal framework to regulate oil
and gas activity, Panama has enacted laws and regulations meant to encourage
arbitration as an alternative dispute resolution method. This article examines the
interplay between oil and gas activities and dispute resolution mechanisms,
particularly arbitration, examining relevant laws, contracts and case law regulating
each subject.
I. DISPUTE RESOLUTION CLAUSES IN EARLY
EXPLORATION CONTRACTS
In 1978, the Republic of Panama entered into a number of oil and gas
exploration contracts with private companies. These contracts included dispute
resolution clauses designating Panamanian courts of law as the sole forum for
dispute resolution. The contracts at issue were afforded the rank of national laws.
These were signed with, among others: Carib Exploration Inc. (Law No. 40), San
Blas Exploration Inc. (Law No. 41), Colon Exploration Inc. (Law No. 42), Balboa
Exploration Inc. (Law No. 43) and Isthmus Exploration Inc. (Law No. 44).
The concept of enacting what would otherwise be a standard government
contract into a stand-alone law is to provide investors with an added level of legal
stability. This model became quite popular in the 1990s with regard to port
operations, transportation concessions and even some oil and gas-related
activities, as we shall see below.