MARIT. POL. MGMT., 1995, VOL. 22, NO. 2, 155- 170
Kent
Labour relations and the transfer of the Panama
Canal [1]
PAULE. KENT
National Ports a nd Wa terways Institute, Louisia na $ tate University,
I 300 North 17th Street, Suite 320, Rosslyn, YA 22209, U.S.A.
The intern,1tional maritime communily is concerned about Panama's preparedness
to undertakc the responsibility of wha t many considcr to be thc world's grcatcst
maritimc assel, the PanamH Canal. In accordance wi1 h 1reaty provisions, the
Canal"s stewardship will be trnnsfcrred to Panama in December t999. to be no
longcr within the dominion of the U.S. govcrnmcnt and its anendant regulatory
írarncwork and policics. To a great extent, Pam1ma's efforts lo prepare for thc
trnnsfcr thus: far ha ve bcen driven by itsobj cctivc ofascamless transfer, whercby the
status q110 (mcaning thc Canal's cxisting institutional and organizational framc-
work and auendant policies and procedures) would be prcserved as much as
possiblc. T his would assurc thc mariLin1c comin unity that it can cxpcct thc samc
sorvice a nd cost standards traditionally enjoycd undcr the Panama Canal Commis-
sion·s stcwardship. Stilt of grcat conccrn1 howcvcr, is thc continucd rcliabili ty and
productivity of the Canal's labour force; the C,ma l's reliability and etlicient perfor-
mance in 1hc past is oftcn auributed to its history of harmonious labour-
management rclations, This article addresses sorne of thc critica) labour rclations
i33ucs thul will necd lo be con:.idercd even if Panam.1·s sláfus quo objeclive for the
transfer is achie\1ed.
l. 1ntroduction
The continued stability and reliability of the Panama Canal is of critica! conccrn to thc
in ternational maritime commun ity a nd Panama. A flcr the transfer o f thc Canal from
lhe United $tates lo Pa na ma on 31 Dcccmbc r, 1999, the Panama Canal Commission
(PCC). t he U.S. governmcnt organization opcra ting the Canal. will ccasc to cxist. To
address the concerns related to the transfcr. in April I993 Panama ·s Prcsident Guil-
lermo Endara Galimanycreated thc Presidential Commission for Cana l AITairs, which
was charged with the responsibility for inslituling a conslitutio nal reform clTon and
attendanl rules and regula tions for the future Canal o rganization. In J u ne. the Com-
mission submilled its p roposcd constilutio nal amend ment crcating the Panama Canal
Aulhority to the legislative assembly in Scptember. which approved thc measure in
January 1994. Under Pa na ma·s constitutiona l reform proccss, the a mendment will
also havc to be approved by the nexl legisla tive assembly elected in May 1994.
As pan of its clTons. t he Presiden ti al Com missio n completed a lransition pla n in
January 1994, which presents Panama·s plan for the transilion process. The plan
defines an overall framework tha t recognizes thc transition rcsponsibilitics of thc
Uni ted States and the PCC, a nd the need for cooperalion a nd coordination in many
areas througho u t the tra nsition pe riod. T he pla n's development was guided in pan by
the p hilosophy lhal for assuri ng the goal of a seamless lransfer to Pana ma. the status
quo, meaning thc existing organizational framework, should be preservcd as much as
possible. This would provide for a mínim um of disruptions by assuring continuily of
organization rules, practiccs, a nd policie.s. T he Constilutional a me nd ment providcs
Ol08- 8Sl9/9S Sl0.00 <t> 1995 T,ylo, & Fnmd, Lod
156 P. E.
the Panama Canal Authority with a framework very similar to thal of lhe PCC's,
where the organi7.at ion wi ll be an autonomous governmental entity havi ng its own
organizational. financia!, administrat ive, person nel. and operational policies. Because
of this autonomy. thc future Canal organization could essentially adopt the same
policies as its predecessor, 1herefore assuring to a certain ex tent that the seamless
object ive is achieved. Mos1 agree today that u nder this proposed fra mework, the
efficient and elTective operations of today·s Canal will continue beyond the year 2000,
provided tha t Pa nama add rcsscs issues that may alTcct organiza tional stabilily, par-
ticularly as they relate lo Iabour- ma nagcmenl rclations (LMR).
The Constitutional amcnd mcnl specifically a utho rizes the Board ofDircctorsof the
future Panama Canal Authority to develop policies a nd procedures for resolving
labour con ílicts. ll fu n her slates thal la bo ur conílicls between Canal employees and
thc Panama Canal Authority will be resolved through arbitration in accordanoc with
procedurcs established in thc law. Finally. it declares thcad ministration and operation
of thc Canal asan esscnlial public scrvicc and Lhcrefore thc conlin uous transiting of
vcsscls shall nol be interrupted. The amcndmcnl continucs by slating that t hc stan-
dards applicablc lo lhc work.ers of thc Canal (including cont ractors, conccssionaircs)
whose services are essenlial for the operation and maintenancc of thc Canal should
correspond to the need to prevent any interruption ofCanal services.
Tn keeping with thc objcctive fora scam lcss transfcr a nd a t the same lime providc for
opcrational stability ofthe Canal, the Presiden t ia! Commission has recommctldcd that
to the cxtent possiblc. thc futurc Cana l organization would in hcril the same Ia bour
rcla tions system that is in place toda y. T hc ability lo do this, howevcr, depcnds in par l
o n whcthcr thc proposcd Constilutiona l amcndmcnl is passcd d uring its sccond
legis.1:Hive vote. In thc c:vcnr th::et i l is not , thcn rhc f'u111rc h1ho11r reJ:.11ions ~ystc:m is.
Iikely lO be a product of lhc general labour lcgislation lhat exists in Panama al lhe lime
the Canal is transferred o r, alternately, it would be a producl of legislative machi-
nations creating the law for the future Canal o rganization. G iven the Pa na manian
workforce's propensity lo strike[2) and the stro ng p ro-union environme nt [3], the
Canal's guaran lee of continuous transi t, a nd lherefore uninterrupled servicc, is at risk .
Thisarticleexamines the labour rclations issucs lhat need to bcconsidcred in lig ht of
the Canal's lransfer to Panama . ll begins with a com parison of the existing Panama
Canal Commission·s labour relations programme wilh tha l of Panama's. ll then
discusscs somc of the critica! and related institutional concerns, such as reprcsentation,
restrict ions on ncgotiabili ty. the arbitration system. and thc right to strikc. The art iclc
lhen examines sorne o f thc transitional issucs rclated to thc LM R process a nd thc
transfcr of thc Canal. such as thc legal standing of collcctivc bargaining agrccmcnls
ncgotiatcd bcforc the Canal's transfcr, the nccd to cstablish a n impartía! LMR
framework, and implications for training the futurc LM R stalT. Thc a rticlc concludes
with a recommended programme o f aclivities thal should be u ndertaken d uring the
transilion period to the year 2000 in order to assure Panama·s dual objectives of a
seamless transfer a nd uninterrupted transiti ng ofvessels.
2. Comparativc rcvicw of labour rclarions fcarures of thc Panama Canal Commi,¡sion
and Panama
The labou r- managcmcnt rclations (LM R) system c ncompasscs a series oflaws provid-
ing for an impartía! proccss wherc labour- management diffcrcnccs are resolved,
Gencra lly, this proccss consists of grievance and disp ute rcsolution proccdu res tha t
 Labour relations and the Panama Canal rransfer 157
both labo ur (usually represenled by collectivc ba rgaining unils) and managemenl
(usua ll y through a spccial unit within management's o rganization) may file complaints
against the other party or at times against a system or body of law and policy created
o utsidc thc organization tha t potentially impacts labourconditions. benefits. cornpen-
satio n, a nd work practices. The process is generally referred to as med iation and
arbitralion, which results in a decision made by an impanial person whose decision
both parties agree to abide. The impania l person, k nown as the arbitrator, is expecled
to make a decision o n the basis of evidence and arguments presented by the parties.
Arbitratio n thus resembles a judicial proceeding in form, but is in tended to resolve a
dispute so that it need not go t hrough the judicial system fo r resolution.
The PCC's LMR programme fa lis under the jurisdictio n of an independent agency
of the executive branch ofthe U.S. government (Federal Labor Relations Authority-
FLRA). T he Authority consists ofthree full-time members appointed by the President
(wit h ad vice and consent of the Sena te) for 5-year terms. One member designated by
thc Presiden! as Chairman of the Authority serves aschief executive and administrative
officcr. Thc At1thority is empowered to oversee the labour relations process of 1he
federal govcrnment sec1or. Among some of i1s du ties, 1he FLRA is empowered to
determine the appropriateness of units for labou r organization representation; super-
vise or cond uct elections to determine whe1hcr a labou r organization has been selec1cd
asan exclusive representative by a majority of thc cmployees in an appropria1e unit
and administer t he provisions related to the exclusive rccognitio n oflabour organiza-
tions; resolve issues related to management's and labour's o bligation to bargain in
good faith; conduct hearings and resolve complaints of unfair labour prac1ices; and
resolve exceptions to arbitrators· awards.
Panama does not cu rrently havc a LM R progrnmme for public sector cm ployees,
although the country's constitutio n autho rizes onc[4]. The vast majority of 1he LM R
framework of Pa nama's Labor Code, which declares in Anide 334 that the o rganiza-
tion of unions is in 1he pu blic interest, a pplies to 1he prívate sector only. Unlike the
United Sla tes, where ano ther inde pendent agency (the Federal Labor Rela1io11s
Board) presides over the prí vate sec1ors LMR programme, Panama·s Labor M inister
has primary responsibility. The Labor M inister's role is 10 regu late the es1ablishment
and certification of unions, the collcctive bargaining process (including 11egotia1ions
and concilialion proceedings), strikes, and arbitration.
T he LM R programmes of Panama a nd the Unitcd Sta tes are similar to 1he extent
1hat both coun1ries declare labour organizations and collec1ive bargaining 10 be in 1he
public interest. and bo1h provide for grievance proced ures in 1he event that Lhe
agrccment's conditions are violated. Additionally, both coun1ries req uire the use o r
intcrcst and grieva nce (or rights) arbi tration in the event 1ha1 a d ispute or grievance is
no t mcdiatcd. Panama's framework. however. appears to be strongly biased towa rds
la bo ur and protecting its rig hts in face of what is recognized asan employers' inherenl
ad vantages. For this reason, Panama ·s Labor Code declares tha1 i1 is intcnded 10 have
a pro-union orientation.
T hcrc scems also to be a significant d ilTerence in the systems' level of commitment
for providing an impartial process for resolving disputes. T he Labor Minister in
Panama plays a simila r role to the Federal Labor Relations Authorily. Asan indi-
vidual appointcd by 1he Presiden!, however, there is a greater risk that the Labor
M in ister may be tcmptcd to make a decision in an elTon to a11ai11 suppon l'rom cer1ain
intcrcsts or 10 reward interests that have supported t he governmen1 in power. This is a
highly rccognized weak ness of Panama's LM R programme. T he Labor M inistcr is also
158 P. E. Kem
the key lcader in Panama·s d ispute settlemenl process, appointing conciliators and the
chief of the tripartitc arbitration panels assembled to resol ve d isputes [5).
The tcmptat ion for biased behaviour is reduced in the U.S. approach as the
Authorily is ovcrsccn by a th ree-member panel a ppointed by the Presiden! (with the
advicc and consent of the Senate) to five-year terms. Even the Authority's Federal
Scrvice lmpasses Panel, an independent panel wi1hin the Authority charged with
resolving negotiation impasses. has members appoimed to staggered 1erms by the
Presiden t.
The strong un ion o rientation of Panama ·s Labo r Code and thc key ro le of a single
individual in dispute resolu1io n rcprcscnt a fundamental dilTcrcncc bctwccn thc Pana-
manían and U.S. systems. T hc U.S. system is not neccssarily dcsigncd to encourage o r
even assist in the unionization of thc workers; rathcr, its focus is to providcan i.mpartial
system in which labour and management can ncgotiatc contracts and resolvc disputes
on cqual tcrms.
Thc following discussion addrcsses key differences between the PCC and Panama-
nian la bour rclatio ns progrnmme. Thesc d ilTerences relate LO:
(a) represcntation;
(h) rcstrictions o n ncgotiability:
(e) the arbitratio n system; and
(d) 1he right to st rike.
Each of these and thei r institutional implications are brieAy discussed bclow.
2.1 . Represe11tatio11
lrrespective of i1s strong union oricntation. Panama docs not pcrmit public cmployccs
to be unionized. However, under cxisting Panama law the cmployees may csta blish
associations. whose demands go vernment has respo nded 10 in much Lhe same way it
has to those of prívate sector unions. The three no ted exceptio ns to this were due
prima rily to the fact 1hat workers ofthese o rganizations had union rights prior 10 thcir
rcorganiza lion. T hewo rkers' right lo be unio nizcd was negotiated asa righ t that wou ld
co nti nue after reorganizatio n. Using this logic, workers in the future Canal o rganiza-
tion would likely be permi tted 10 establish o r be affiliated with labour unio ns since
under current a rrangements the PCC a lread y has five collecti ve bargaining units [6).
Re presenta1ion in Panama's prívate sector is acquired through a petitio n and
certification process cont rollcd by thc Ministry of Labor. T hc o bligations and rcspon-
sibilitics of the unions to re presen! cmployce in tercsts are q uite sim ilar to thosc of thc
PCC. There apparently are no rcstrictions on who can be a union mcm bcr. T hc Code
sta1es that ali em ployecs, regardless of t hei r tradc, profcssio n, or ac1ivity, may join
unions. T he o nly restriction is that o ne cm ploycc cannot be a mcmbcr of more tha n one
union of thc sa me typc and activity, although it appears thal an employee may hold
simultancous mcmbcrships with a craft union (unions representing the same occupa-
tion or tradc) andan entcrprise. ind ustrial. or mixed/ general unio n.
Even if the PCC's collcctivc bargaining units will be recognized by the future Canal
o rganization, o nc rcmaining q uestion relates to the fate of the collective bargaining
agrccments at the time ofthc tra nsfer. Thc agrecments were ncgotiated within the U.S.
colleclive bargaining framewo rk and essentially o ne pan y (the employer) will cease 10
exist. Therefore, there is a q ues1ion of the legalily of 1hc collectivc barga ining agrec-
men1. Relief o n this issue can possibly be found by ana logy in Panama's Labor Codc
 ú 1bour rela tions and //,e Panama Canal iransfer 159
(which again regula tes o nly priva te sector labour rclatio nships). Article 41 5 siates tha t
an employer being replaced will not afTect the obligations and rights encompassed in
the collective bargaining agreement; essentially, the new employer is bound to the same
terms and cond itions that existed wit h the previous employcr. One can assume,
therefore, that even if the collective bargaining agreements ncgotiatcd by lhe Panama
Canal Commission are no longer valid after the year 1999, lhe ncw cmployer, or the
future Canal organization, will be bound to the terms of those same agreemenls umil
such time that ncw agrcemenls are negotiated. This wo uld al leas! providc some
stability in the labo ur relations arena after the transfer.
2.2. Resrrictiom 01111ego1iabili1y
A significant difTcrcnce betwecn lhe two colleclive bargaining syslems lics in the
negolia bility ofsalaries, wages, and retirement and lea ve bencfits. Thcse are gcncrally
not negotiable in the U.S. federal government sector because the U.S. couns havc
affirmcd the Cong ress' and Prcsident's rights to establish these conditions. which are
also cstablishcd in law. T hc Courts have also r uled under certain circumstanccs that
these cconom ic conditions are negotia ble. For example, sorne agencies are given the
autho rity to establish lhei r own wage sea les. As long as the basis for salary detcrmina-
tion is not prescribed in the law (as it is for the PCC), 1hen cconomic condi tions are
negotiable [7). T his justification wi ll obviously be lost after the transfer of the Ca nal
since Panamanian law regula1ing public employee$ remains silent in this mattcr. and
thccoulllry·s labourcode allows vinually any1hing to be negotiable, unless Articlc 415
also rcstr icts negotiabilily asan existing economic condition tha t is continucd with a
new employcr. Articlc 341 declares lhal a union may be organized 10 study. im prove,
defcnd. and protcct workcr economic and social interesrs. while Arlic:k 1'i7 dc:d,ires
thatonc ofthe o bjectives of unions is to improvc work cond itions and defend workcrs'
common interests.
Even tho ugh it a ppcars anything can be nego1ia1ed under Panama law, bccause
therc is no Constilutional guarantce regarding the negoriability of any issuc. it appcars
that Panama can also rcslrict thc negoliability o f a numbcr of i1erns in thc fulu re Canal
organization's lcgislatio n (although somcone will undoubtedly challengc the constitu-
tionality of the rcslriclions). T he debate on sucl1 restrictions would therefore focus on
the desi rability for havi ng them and the consequences for not. Clearly. ooe major
objec1ive for the future Canal o rganization is to provide uninterrupted transil of
vessels: thercfore. the non-negotiability of certain economic or social conditions can
conlributc to this objcctivc in the event thal employees will be permitlcd to strike. For
example, since thc vasl majorily of slrikes are based on economic disputes. then non-
negotiability for ccono mic conditions ca n be an efTective strategy for limi ting the
numbcr of strikes. A general rule of thumb, howeve r, is that in an envi ro nment whcrc
negotiability of economic conditions and strikes are permitted. compensalion always
incrcascs. The extent of the increases is even frequently out of thc hands of thc agency
because these negotialions commonly go lo a rbilralion. and may cven wind up in thc
lcgislative bra nch. Obviously, this can have importan! financia! conscquenccs on the
future Canal o rganization, since 1he ability to covcr pay raises comes from the
organizatio n·s ability to cut costs or increase revenues (e.g. increase tolls).
2.3. Arbitration .ty .~tem
Thc PCC's LMR programme provides for boll1 interest and grievance arbitration.
lnterest arbitration rcfcrs lo lhe a rbitration ofd isputes over thc tcrms to be includcd in
160 P. E. Ke111
a collcctivc bargaining agreement . In the evenl of a negoliation impasse ovcr agree-
ment terms. the Federal Services lmpasscs Panel (a unit ofthc Federa l La bor Relatio ns
Aulho rity), is directed to consider the maller on req uest of either pa rty, Allernatively,
the parties rnay thernsclves adopl a proeedure for binding arbitration, but o nly if thc
procedurc is approvcd by the lmpasses Panel. lf the Panel considers thc mancr itself
and is unahle to bring abo ut a seulcment. it may take whatever aetion neccssary to
reso lve the impasse, and thc actio n lakcn is bind ing o n !he parlies d uring lhc lcm1 of
the agreement, unless bot h partics agrcc othcrwise.
Grievance arbitratio n refers to arbitration concerning lhe in1erpretatio n or a ppli•
cm io n of co ntract tcrms. U.S. law requires that unless the part ics agree o therwise, ali
collcctive bargainingagrccme~ts ;ue to establish a systcm of bindingarbitratio n fo r the
reso lulion of thesc typcs of gricvances. T here are a few statutory exceplions [8[. but the
clear intent is to make arbilra tion lhe no rmal method fo r resolving disputes. A party
d issatisfied with an arbilratio n award may file an exceptio n wi th thc Autho rity, which
is a uthorizcd to takc action if it finds that t he award is contrary lo any law. rule. or
rcgula lion or is deficient on other grounds si milar to those applicd by federal couns in
prívate sector labo r- managemen1 rclaiio ns.
T hc Panama labour eode providcs for bo th intcrest and grievance arbitra tio n. In
Panama. lhese forms of arbilralio n are rcícrrcd 10 as legal/jurid ieal conflicts and
cconomic collec1ive/collectivc conílicts oí intercst, respcctively. Legal/jurid ica l con·
ílicts are generally rcferrcd d ircctly 10 Panama's la bo ur court syslem following a
demand by either party. In thccvcnt that 1hc conciliation efTo rt is unsuccessful wi1hin a
specified perio d of time, the Minist ry no tifoes the pa rtics of wha1 he co nsidcrs cond u-
eive to d ispute resolulion. Gcnerally, if the d ispute is not resolved at this point, the
workcrs may cal! a slrike o r, alternately, may request arbitratio n. Arbilratio n is o nly
volunlary, as il can only be uscd in the event tha t both panies agrcc or if 1he workers
bcfore o r during a sl rikc requesl arbitratio n from lhc Minislry or Labo r. Arbitrators
are requircd to declare an arbitra tio n award within 10 days followi ng thc hearing and
consideratio n ofall the evidence provided by the partics to the dispute. Thc M inist ry of
Labor m,ty subject the contlict to compulsory a rbitration whenever ·public service'
cntcrprises are involved. T his arbi1ra1ion ordcr ends thc strike. Panama's La bor Code
defines public serviccs as thosc cnterprises engaged in communica1ions and transpor-
talion. fuel. eleclricity, water and scwage. hea llh. hospitals, eemeteries, and csscntial
foods. Generally. arbitra to r decisions a re bind ing. An a ppellate proccss is provided
sho uld thc arbitrators makc a ruling o n a matlcr 1101 submi11ed 10 it, if thc ruling
decreascs thc quality of work conditio ns enjoyed by the workers, or if thc award is
given a fter thc spccificd time limit required for arbitratio n.
T he U.S. system incorpo rales a nu rnber of features to assure thc efTectivencss of the
federal employec arbitratio n process. First. the U.S. system req uires t hat arbitrato rs be
experienced in thc collcctive bargaining process and in thc rcsolution of la bour
g rievanecs and d isputes. Additio nally, arbitrators must demonslratc thcca pa bility for
conducting orderly hearings. analysing evidence, preparing cica , and concise llndings
and dccisions within a reasonablc pcriod of time, and be kno wledgea blc of general
federal government agency adm inistralio n a nd opcratio ns. Thus. the U.S. approach
focuscs on the experience and skills rcq ui rcd for co nducting effective arbitratio n
hcarings. and still req uires fundamental k no wlcd ge of federal governrnent agcncy
opcrations. Thc Panama approach. 0111hcothcr ha nd, is silcnt o n skills and ability. and
focuses o nly o n the leve! of awareness thc arbilralor has o n social and eco nom ic
pro blems and of the 1ype of activity the o rganizatio n is cngaged. T his is a critica!
 ll1bour re/01ions muí 1he Panama Canal 1ra11.ifer 161
difference, asan arbitrator's ability (as represemed by arbitra lion sk ills and know-
ledge) is wha1 normally leads toan efTective and expeditious arbitration proccss and
fair and defensiblc awards.
The U.S. federal governmen t system generally relies on a single arbitralor system in
which both parties select from a single lis! of qualified arbi1rators. as prcviously
descnbed. The Panama system prescribes a tripartite sysrem in which cach party 10 the
dispute selects an arbi1ra1or; lhese two arbitrators 1hen at1emp1 to select ano ther
arbitrator and, in the event lhey cannot agrce, which is usually the case. thc Labor
Minister makcs the sclcction. Given that there are no skill requirements for Panama-
nian arbitrators. thc sclcction of the first two arbitrators is based solcly o n thc party's
perecí ved undcrstanding of that arbitrator's likelihood of reprcscnting i1s sidc in the
proccss. Given 1hal thc arbi1rator lisis are formulated by each party in thc first place,
the likelihood of selecting one that will take your sidc is very high. They then bccomc
·partisan· arbitrato rs. This cfTcctivcly docs not change the negoliation stancc of eithcr
party. lnstcad. it is an opportunity tocontinue the levcl ofintransigcncc that rcsullcd in
the necd for arbitration in the first place. This is presumably thc purposc fo r having a
third arbitrator, who in theory would be a ·neutral'.
In the event that the Labor Minister has lo select the third a rbitrator. a question
arises regarding how neutral this arbitrator might be. In theory, the neutral should be
thc primary focus of thc facts and argumcnts presentcd a t 1he hearing and should be
undcterrcd by partisan activitics of the other arbitrators at lhe hearing. At thc samc
time. Panama's Labor Minister is required at least in theory 10 be thc natio n·s greatesl
proponent of unions. He is o bliga ted to encourage the formal ion of unions whcrc thcy
do not exist and to promote the affiliation ofworkers in existing unions. Morcovcr, the
11n ion~ are rn1irl~d In rocPivP tP.chnic-<11 ::tis:~is t~nc-e from 1he Mini~te-r fo r virt ually any
purposc, as longas it is in linc with •. . . nationa l rea lities and interest.' With this role.
o ne has to wonder how impartía! thc Labor Minister migh1 be in his sclection of 1hc
third arbitrator. Furthermore, political eonsiderations may also influcncc the Minis-
ter 's selcction.
In a situa1ion involving a single arbitrator. as is the case for thc PCC. 1herc is a
procedural decision-making focus. The parties must rely on the neutral's undiluted
judgcmcnt in making rulings on motions and objections, in a llowing or excluding
evidcnce. and in guiding the hcaring in thc manner best sui1ed to the arbitra lor's nceds
in devcloping 1hc record for the ultimate decision. But in the tripartite situation. 1hc
neutral arbitrator must expand thc foregoing responsibility by bccoming a rcfcrcc for
disputes between the partisan members of the tripanitc panel. Additionally, the
partisan members may go beyond their questioners role, and use 1heirposi1ion to serve
as an advcrsary. Whcn thcy asscrt such dual roles, 1hey disrupt thc tradilional
adjudicatory structurc. Evcn if thc 1hird arbitrator is neu tral, therefore. his role as
chairman of thc panel requires that he intervene when thc adjudica tory proccss is
lransgressed by the partisans. The neulral's abili ty to do this is in doubl if his
qualifications are limited to those prescribed in Panama·s Labor Codc.
When considering the merits of a tripartite or single arbi1rator system. onc also has
to consider thc cost. In Panama, the Labor Ministry covers 1he arbitration costs. while
1he collective barga ining agrcements a1 the PCC requires that each pany sharc equa lly
in the costs associated with , rbitration (the labour share comes from thc d ucs paid by
members of !he collective bargaining unit) [9]. The Pa nama approach. particularly if
the arbitration process is viewed by ei1her pa rty as favourable to thcir interests,
162 P. E.Ke111
cncourages ali disputes to be resolved at the arbitration leve!. while the PCC approaeh
tcnds to discouragc the frivolous pursuits of arbitration .
2.4. Rig/11 10 strike
For those eoncerncd about thc ability for thc futurc Canal organization to providc for
uninterruptcd transit, thc right to strikc is thc most critica) iss11c. A stríkc in thc U.S. is
an illegal labour action in thc federal govcrnmcnt sector, while in Panama it is a
constitutiona l guaran Ice. 1n thc U.S., thc federal govcrnment has a right to impose
certain sanc1ions in 1hc evcnt a strikc occurs, including dcccrtifica tion of lhc un ion's
exclusive rccognition status, and disciplinary actions and criminal penaltics against the
employccs. This provision alone is attributed by many to the virtually continuous
transiting of vessels throughout the Canars history. Continm1tion ofthe no-strike rule
would 1herefore require a change in the Panamanian Constitution·s existing right-to-
strikc clause. or the insertion of a no-strike provision in the proposed Constitutional
amcndmcnt.
In an exchangc of protocols dated 16 June, 1978 that were related to the Treaty
Conc:erning rhe Pernument Neurrality ami Opéra1io11 of tite Panama Canal, both
Pamuna and thc Unitcd Statcs exprcssed the dcsire to prevent thc Canal from being
intcrfered with or closcd. The protocol's conditions statc that in lhc evcnt this occurs.
the United Sta tes and Panama •.. . shall cach havc the right to takc such stcps as cach
deems necessary . . . to rcopcn thc Canal or rcstorc thc opcrations o f t hc Canal , . .' A
strict interpretation of 1his condition thcrcforc suggcsts thal actions may be taken in
the even l that a strikc interrupts or prcvcnts thccon1inuous transit of vcsscls. However.
the closing statement of the pro1ocol's 'Understandings' seems to rest rict thc U.S.'s
right to Utke unilateral action, as· ... measures 10 reopen 1he Canal or to restore its
normal operation, ifit should be in1errupted o r o bstructed, will bcefTected in a manncr
consisten! with the pri ncipies of mutual respcct and cooperation . . .' In othcr words.
any U.S. action lo keep the Canal open or uninterrupled would require Panama's
au1horization, which is difficult to see happen in light of Panama's desirc to excrcise its
sovereignty over the Ca nal. lt is clear, therefore, that assuring continuous vcsscl
transits should be done by focusing on stratcgies that prevcnt or constrain the
likclihood of a strikc.
An carlicr vcrsion of thc Consti tutional amendmcnt includcd a prohibition against
strikes as part of Artiele 2 1. Howcvcr. beca use of fea,· of reprisals in the form of U.S.
tradc sanctions. Panama 's Labor Minister succcssfully a rgued for the removal of the
prohibi1ion. The Labor Ministcr's concern was apparcnlly thc result of a recent review
by 1hc United Sta tes of ceru1in work practiccs that werc deemed contrary to inter-
na1ional (International Labor Orga nization) standards established for worker rights.
Neverthcless. an examination ofthc circumsrnnces revealed that U.S. 1radc sanctions
as a result of this strike prohibi1io11 wcre highly unlikcly [ 10]. This was attributcd to
thrce rcasons: (1) a no-strike provision would not significantly alter thc favourablc
workers rights review already conducted by the relevan! U.S. trade agency. (2) othcr
favourable workers rights provisions proposed in the Constitu tional amendmcnt
would amelioratc any infringcment of workers rights brought about by thc no-strikc
provision, and (3) a no-s1rike provision is alrcady a wcll-cstablishcd labour rclations
policy in the U.S.A.
Al though thc strike lai1guage was dclctcd in thc Consti1t11ional amcndmcnt. sorne
argue lhat the prohibition is still lhcre. Articlc 21 declares Lhat Lhc Canal is an csscntial
 Labour relation.r and the Pana11w Canal tra11sfer 163
public service (11) and 1herefore the continuous transit of vcsscls shall no1 be imcr-
rup1ed. As a res uh, the A nicle says, 1he siandards applied to the Cana l workers and its
concessionaires a nd contracto rs. whosc services are essential for the func1ioni11g and
maintena nce o f thc Canal, shall corrcspond with the need to prevem any in1errup1ion
of the service. It can t herefore be argued that any action taken by workers 1hat
in1errupts contin uous vcsscl tra nsit is prohibited . This would include strikes, sickouts,
and work slo ppages o r slowd owns.
Wha t is lcssclear is which employees migh1 becovered by the A n icle. lt appears 1hat
it applies only to those workers in maintenancc and opcrations who, if not working,
would not allow the continuous transit o f vcsscls, such as loek opcrators and pilots.
T hcrefore, othcr workers may be entitled 10 strikc. lf the A nicle is not interprctcd to
prohibit strikes, thcn the Canal could be subjected to the 20 30% manning requirc-
ment in the La bo r Codc's A n icle 487. At the same 1ime, Pa nama will havc to focus in
some way o n providing for a fair and impa rtí a! process (wbich i1 should do rcgardlcss
of a s1rikc prohibitio n) and on othcr strategics for d iscouraging sirikcs (e.g. no n-
negotia bility o f compensa1ion and benefils).
As earlicr noted, lhe righl 10 st rike in Panama is a Co11stitu1io nal guaranlcc which
cannot even be waived in a colleclive bargainingagreement. Nevertheless, govemment
<loes reserve the right to apply certain strike restrictions in the public sector. Gcncrally,
this is done through the Labor Code which currently prescribes mí nim um manni ng
rcquircmcnts to avoid the complete paralysis of 1he agency. Becausc govcrnmcnt has
thc right to impose restrictions, then italso has thc righ1 to dcviatc from thc rcstriclions
ela borated in the Labor Code through the legislalion of !he futurc Canal o rganization.
Thcrefore, for cxample. the mínimum manning requircments can be increascd if the
l nciP.'s: r:nrrr:n l prcscriptinn is. ins ufficie nt to provide for the continuous transit of
vesscls. Moreover, government a ppea rs to have 1he abil ity to apply othcr rcs1rictions
(c.g. thc above-mentioned negotiabili1y rules) [ 12] 1ha1ca n severely li mit the opportu•
nity to strikc as well as limit the adversc impac1 ofa slrikc in !he cvcnt il occu rs.
Al though st rikes are permitte-d in Panama, a strikc is illcgal if the rcasons l'or the
s1rikc do not include the following o bjectives: lo obtain bcttcr working cond itions ora
collcctivc bargaining agreement: 10 demand compliance wi1h a collcc1ivc bargaini ng
agrcernent, settlemen1. or arbi1ra tion awa rd; and to suppo rt s1rikes by 01her workcrs
(sym pathy stri ke). A strike is also illcgal if labour failcd lo follow the proccdurcs (c.g.
dcclaration by che General Assem bly of 1hc labour orga ni,ation, fili ng of a no1ice of
intcnt to stri ke) for declaring a strike. Even if thc strike is not in compli.ince with thcsc
req uiremcnts. however. it is still assurned to be legal in thc cvent that 1hc cmployer fails
10 file a pcti1ion ofillegality within three days a ftcr thc starl of a strikc. Aftcr this time.
1hcre is still 1he possibility for a stri ke to be declarcd illegal duc to circurnsianccs
occurring ata later date (e.g. acts of physical violence are agrced to or carricd out by
rhe majority of strikers or wi1h their knowlcdgc).
3. Transi1ion issues
Thc primary transitional issuc Panama will face wi1h respect to labour relations is
deciding wha1 features necd to be incorpo ralcd a nd the proper LM R framework for
carrying them out. To a great extent. thc fcaturcs and lhcir framework will rely o n
which of the following a l1erna1ives Pa nama takcs:
(o) Pana ma can subject the future Cana l organization to t he prcvailing laws at thc
time;
164 P. E. Kem
(b) Panama can choosc 10 amcnd its nalional labour relations policy as it aíl'ects ali
public sector organizations; or
(e) Panama can authorize the future Canal organization 10 institutc its own LM R
programme.
T he merits of Panama ·s current framework have already been discussed relative 10
thc PCC framcwo rk. For the s¡¡ke of assuring a harmonious labour management
relationship, therefore, it would seem undesirable to apply Panama·s framcwork to the
future Canal organization. The second alternative is impractical as it requires a refonn
ofa labour-rcla1ions framework t~at has been in place for a numberofyears. C hanging
1hc na 1ional framework would be a noble eíl'ort, bu1 it should not be done for thc sakc
ofprovid ing the framework for che future Canal organization. Further, such a refonn
would su bject the issue to a national debate. and as a resull thc ultimatc framework
could be even more impartia l than il currcntly is, givcn the likely massivc worker
oppositio n to the reform eíl'ort that would rcsult.
T his leaves alternative (e) as the mosl li kcly. T hc curren! vcrsion of thc Constitulion-
al amendment implies thai the fu1ure Canal organiza1ion will havc an LMR pro-
gramme. Article 20 compels the organiza1ion 10 rcsolvc labour disputes through an
agrecment following thc procedures for dispute resolu1ion in 1he reg ulatio ns, presum-
ably those devclopcd by the Canal organ izatio n. The Article a lso prescribes compul-
so ry arbitration. and in fact it appe,us that 1he decision of1he arbit rator(s) is binding as
arbitratio n is dcclarcd 10 be che tasi administra tive step fordispute resolution. Funher,
Articlc 14 statcs 1ha1 it will be within the board's regulato ry power to establish its o wn
proccdurcs for resolving la bour conflicts and. as earlier discussed, Panama has permit-
1ed o ther public secto r organizations to instilute their own LM R prog rams via t hcir
o wn lcgislatio n. lt is clear, therefore, tha1alterna1ive (e) is a likely possibili1y cven if thc
Constitucional amcndmer11 fails 10 pass.
Assuming that ahcrnativc (e) will be thc onc to be pursucd. thcrc are so mc
importan! issues that nccd to be addrcsscd in thc transition proccss if a n elfoc1ivc and
impartial framewo rk is to be in place in thc ycar 2000. Thcsc include the nced for
co llecti ve bargaining ag reements. 1hc establishment o í thc LM R programmc. and
implications on training rcqui rcmcnts.
3. 1. Col/ective bargaining ogreemellls
As previo usly noted, the Pana111a Cana l Commissio n has fivccollcctivc bargaini ng unit
agreemerns. a li ofwhich may be rcnego1ia1cd undcr thc PCC's LMR framcwo rk bcforc
1999. Article 415 assures t hat the tcrms and conditions es1ablishcd in thc agrccmcnts
will contin ue. cvcn if che agreemcnts thcmsclves expire o ra re invalidatcd in 1999.
Nevertheless, al somc point, new agrccmcn1s in accordancc wi1h futurc Canal organ-
izatio n policies will have to be ncgotiatcd. Mo rcovcr. thc panics to thc agrccmcnl are
unknown. Thc mcrnbers of the five collective bargaining unils can, if 1hey so choose,
rco rganizc aftcr thc ycar 2000 [I JJ. creating the possibility fo r fewer o r even greater
n umbcrs of bargaining unils. wilh concomitan t changes in unit memberships. Panama
will thcrcforc ha ve three o ptions:
(a) it can choosc not to ncgo tiatc new agreements until the year 2000;
(b) it can negoli,He agreemen1s that will co ntinue to be valid after 1999; o r
(/') it can nego1ia1e new agreemcnts prio r 10 the lransfcr 1hat will not be clTcctive
un1il the year 2000.
 Lahour relations and the Pmwma Canal transfer 165
Article 415 provides sorne degree of security to the work force, and therefore worker
concerns about work conditions can be alleviated with the knowledge that existing
conditions will contin ue beyond the year 2000 until new agreements are negotiated.
Still. workcrs are apt to feel sorne uneasiness in that until new contracts are negotiated,
they have no idea as to what the new conditions will be. T his unknown maycausesome
workers 10 lea ve before the year 2000. Not havingan agreement can also affect moral e,
produclivity, and safety and crea te high levels of discomfo rt o n thc pan ofboth labour
and management.
Thc bcncfit of the second option is that it con tributes to labour rclations stability in
thc ycar 2000 and avoids the disadvantagcs of thc first option. Even though Panama
law allows the same terms and conditions ofthe agrcemenl to continue. having a va lid
agreemenl adds sorne 1a ngibleevidencc 10 managcment and labour that they will work
under agreed-10 terms and conditions. Anothcr bcnefit is that it provides for even
greater stability than the fi rst; thc new agrcements will assure recognition of the
collcc1ivc bargaining units after 1999. This obviously providcs for critical continuily in
thc labour- management relations programme as thc Canal's lransfer lakcs place. Thc
disadvantagc to the option, and rnost difficult 10 ovcrcome, is that there is a host of
institutional issues that need to be resolved for the agreements to be negothned and
valid.
Assuming that the future institutional framework is devclopcd prior to the ycar
2000. thc agreements have to reconcile the fcaturcs and inslitulional responsibilitics
thcy addrcss. For example, the collective bargaining unils are affiliated wilh U.S.
unio ns. which havc no legal standing in Panama. The U.S. system relies 011 a nctwork
of organizations that play varying roles in the LMR programme, ranging from
ccrtifying the exclusive represenlative to providing lists of qunlificd arbilrntors. Under
the futurc framework, these organizations, bccausc they are federal agencies. will
cssentially not be accessible to Panama [ 14]. Wherc agrecments have refercnccs 10 thcsc
agencies, thcy will a lso have to have parallel references to entities having simi lar
rcsponsibilitics in thc future organi1,a1ion·s LM R framework. Essentia lly, thc fcatures
of two different LMR rrameworks wi ll have 10 be reconciled in the agreernents.
crcating an en1anglemen1 of cross-references, complcx spccifica 1ion of possibly chang-
ing work conditions. and confusing allocation of rights and rcsponsibilitics.
Obviously. such agrecmcnts will be difficult to interprc1 by ei1her party. and thcrcforc
also difficuli to en force.
Thc Lhird option continues in force those agreements nego1ia1ed be1ween the PCC
and thc existingcollective bargaining units. i\t thesame time, management and labou r
will ncgotiate agreements under the futurc ins1i1utional framcwork tha 1 will not
bccomc cffcctive until after the transfer. In so doing. it assures tha1 the ncgotiating
partics. particularly thecollective bargaining units, will be continucd. This option thus
encompasses 1he adva ntages oí s1ability and continuity and avoids lhe oonfusing
reconciliation of two diffcrelll LM R frameworks into a single agreement. Al thc saine
time, it provides a certain degree of security to the workforcc, thereby providing sorne
incentive to remain as part of 1he future workforcc, and has 1hc addcd advantagc of
cducating thc workforce of 1he future LMR framcwork and associated tcrms and
cond itions.
Relatcd 10 thc issuc of collective bargaining agreements a re the disputes thal are in
progress al 1hc time of thc Canal's transfer. As suggested before. the collective
bargaining agreements nego1ia1ed before the Canars transfer under the PCC LM R
framcwork would effectively be termina ted a t the transfcr, alt hough as noted Panama
166 P.E.Kent
law provides for the samc terms and condí tions to continue. There is sorne uncertaimy,
therefore, as to what happcns to thc validity of a grievance ifit is not arbi1rated befare
the Canal's transfer.
In the U.S. priva te sector, the situation that most resembles thc possi blc Canal case
is one in which thcrc is a successor employer, where the gricvancc soughl lo be
arbitrated arosc bcfore 1he con1ract expired, but arbitralion would take place afler
1ermina1ion. The U.S. Supreme Court deah wi1h this situation (15] whcre a union ized
employer( lntersciencc Publishcrs, Inc.) mcrged with the larger non-un ion firm of John
Wiley & Sons. In very broad dicta. the Court cited national labour policy as requiríng
some balance of cmploycc protection threalened by a sudden change in the employ-
ment relationship. Thcrcforc. the successor employer could be required to arbitrate al
le.ast in 1he si1ua1ion wherc thcre is 'substantial cont inuity in lhe business enlerprise
befare and afler thc change'. which would apparently be the case of thc Canal
organization.
Onc problem with this decision is .-clatcd to jurisdiction . In the Wiley case, both
organiza1ions were U.S. companies, and thcrcforc thcrc is no jurisdictional dispute. In
the Canal's case. however, the ·ownership' of thc organiwlion is being transfcrred to
Panama. Even if arbitration would be pcrmitted , o nc has to wonder under whal
jurisdictional au1hority a U.S. arbitrator would havc 10 impose (and the U.S. or even
Panama courts 10 cnforce) an arbitration dccision. Thcrc is not much cxperience to
refer 10 in the U.S. public sector eithcr. Cenainly organizations have been merged or
have disappeared through rcorganizalion efforts. However, the general provisions
from collective bargainingagrccmcnts have been contim,ed in 1hese cases, as they were
when the Panarna Canal Company cvolved into the Panarna Canal Comrnission.
There is a tempta1ion to su~icst thal arbitration cases pendi ng a l the Canal's
transfer would automatically be dismisscd; howcver. the cases may represent import·
ant precedences from which futurc grievances should be governed. Therefore, it mighl
be prudcnt to nego1i,11e the fate ofsuch grievances in collective bargaining ncgotiaLions
that takc place prior to the year 2000. A possiblc solution might be to transfer the cases
10 appropriate levels of the LMR programmc that is eventually o rganized for the
fu1ure Canal o rganization. Theorctica lly. lhis should 1101 be difñcult g iven that thc
future LMR programme will likcly cncompass many of thc features found in the
currelll framework.
3.2. Organizing rite labour relatio11sji111ctio11
An important task to be undertaken cluring the transition is crcating a LM R frame-
work. Thc Prcsidcntia l Commission indica tes its support for thc general lcaturcs ofthe
exis1i ng framcwork. The problern. as a lready noted. is that lhc PCC frarnework
involvcs a varicty o r exrernal organizations for which no comparable organizations
exist in Panama. Therefore, ifthe future Canal organi2a1ion is to have an cffective a nd
impartía! process, i1 wi ll havc 10 fonn ulatc a frarnework that incorpora tes a nurnber of
features which today are accommodatcd by externa! organizations. This sugge.sts thc
creation ofa new unit wilh in thc futurc Canal organization that will have the full rangc
of LM R responsibilities.
Some might suggest that thc PCC's Industrial Relations Office could serve LMR
programme necds. Howcvcr. this Oflicc·s rcsponsibility in pan is 10 represen! the
agency's views and interes1s in the collec1ive ba rgaining process. The Office is effec-
tivcly a party 10 an agreement. and is expected 10 represent the agency through thc
 Labour relation., and the Panama Canal transfer 167
agrccment's adminislration. As currently structured. thereforc. il can hardly be con•
sidered an imparlial unit. At thc samc time, it should be pointcd out lhal the Office is
comprised ofindividuals with sufficient knowledge and ski lis to cstablish the full range
oí LM R rcsponsibilitics within the organ i1.ation. The expansion oí LM R rcsponsibili-
ties dictates the establishment of sorne son of a new oflice within the future Canal
organizalion. The need for impartiality means that this office should not repon to
management ; rather, the oflice might be headed by an independent panel within the
organization. Sorne of the office's functions could i11clude certification oí collective
bargaining unils, collective bargaini ng unil agreemenl admi nislration, union member
dues collection/administralion, mediation of disputes, and arbitration administration.
/\n important issue is related to when this new office should be created. Given 1hat
the existing framework is U.S. based, the PCC's au1ho rizing legisla1ion (e.g. Tille 35)
may havc 10 be amendcd[l6] to allow the PCC to organizc i1s own in-house LMR
programme. Amending thc legislation also has important consequences on the lega lity
and provisions oí the exisling collcctivc bargaining agrecmenls. Because oí lhese
issues, it may be more expedienl to prepare lhc ncw LMR framework during the
transition period, and implement the new framework afler the year 1999.
While 1he LMR framework has worked quite well in 1he Canal's history, it should
be pointed out tha1 therc are also possibilitics for improvcmcn1 (c.g. sircamlining the
number or grievanec proccdurcs). Morcovcr, given 1ha1 thc new officc would be
organized to handle disputes, lhere may be sorne possibilities oí assigning lo the office
other organizalional responsibili ties regarding conflict mediation. facl finding. and
rcsolu1ion , which are ac1i vities that dictale impartiality (e.g. complain1s associated
with equal employment opportun ity, sexual harassmem, personnel classification, etc.)
and are also accivíties whose framcworks encompass U .S. institutions. The organiza-
tion of the new office, including determining the most appropriate ovcrsighl, features,
functions, and staffing and related training requirements requires a comprehensive
LM R programme study. Given the lime necessary lo prepa re lhe organizational plan
for the ncw office, define a process for arbitralor/mediator selection a nd appoint
candidate arbiIra tors/ mediators, conducl stafT and arbitralor/ mediator training, nego-
tia 1e new collectivc bargaining agrccmcnts, ele., thc study should be complc1ed by the
end of 1995.
3.3. lmplicatio11s 011 1rai11i11g
The new office would be responsible for a host of func1ions which 1he PCC here1ofore
has not conducted. As a result, there will be a need to prepare 1he stafT, 1he core of
which can be assumcd to be sorne oí the existing employccs. Additionally, managemcnl
and labour groups will necd to be traincd on thc aspccts of the ncw LMR programmc
and their respective rights and rcsponsibilitics undcr thc ncw arrangcments. Arbitrator
candidates will have to be idenlificd a nd thcn trainccl in a hosl of lopics relaled lo
i111erest and g rievance or rights arbi tralion, conducting arbitration hearings, fac1find-
ing, examin ing the basis for arbi1ration decisio ns, and writing 1he a rbi1ra1ion
decisions/ awards (17).
The training activity can be managcd by thc transition cntity. Nevcrthclcss. given
the extent oftraining required for the future office·s stafT. an arrangement will have to
be made between !he lransilion entily and the PCC to grant release lime for slafT to
participate in training ac1ivi1ies. Ali ofthe training can be conducted 011-site. assumi ng
that the PCC is wi lling to provide space for this activity. The detailed definilion of
training requirements should be onc product of thc LMR programmc study, along
168 P. E. Ke111
with identitication of training resources. estimated costs, anda schedule for training
implementation [ 18].
4. Conclusions
T hc world's maritime community has always bencfittcd from thc Canal's high ly
efficient level of performance. Much or this succcss is attributcd 10 thc cxtensivcly
trained workforce and the relalively harmo nious labour- managcmcnl relations al the
PCC and its predecessor organizations. The average Canal transi1 time has bccn a
remarka ble 22. 1 hours per vessel, and in its 80-ycar his1ory, thc Canal has never bccn
closed due to labour strife. The Panama Canal Treaty assures thal the country will
reccive Canal facilities in an operating conditio n and free oí liens and debts [l9].
Thereforc, Panama al thc time oí the t ransfer will not have to be concerned with the
state oí lhc Canal's infrastructure or its financia! well-being. This leaves labour
relations as perhaps 1hc most critic.al issue.
Thc discussion of 1ransi1ion issues assumes that Panama will authorize the future
Canal organization 10 ins1i1ute its o wn LM R programme. Given 1he merils favouring
this, it is a logical approach. Furiher, arguments suggest 1ha11he collective bargaining
agreements covering future Canal organi7.31ion cmployccs should be nego1iated prior
10 the 1ransfer, which would 1101 be e!Tectivc until aftcr t he transfcr takcs place. Based
on these assumptions. a number of key activitics necd 10 be accomplished; lhese
include lhe following.
(a) /11stitutional a11alysis a11d develop111e111 ejfort. Panama should determine thc
features. functions, staffingand training rcquirements ro, perrorming thc LMR
function. Al a mínimum, this e!Tort should address how thc LMR functions
nccd 10 be organi1.ed wi1hin the s1ructure oí 1he future Canal organization;
define 1he func1ions 1ha1 need to be performcd; dcvclop an arbi1rator/ mcdia1or
selection sys1em; identify LMR staffing requiremenls and associated traini ng
requirements (including training requircmcnls for the LM R unit's personnel.
ro, arbitrators/ mcd iators, and for Canal o rganizatio n managers and labour
representatives); and implcmcn l training prio r to thc year 2000.
(h) Se/ectio11 ~/Ji11w·e arbitrutors/mediators fmd 11ego1ia1io11 of neiv col/ective bar-
gaining agree111e111s. Thesc activities are vital for assuring lhe Canal's
employees tha1 collcctivc bargaining agreements will continue to be 1he organ-
ization·s practice and that an im partial arbitra1ion/ media1ion process will be in
place prior to the Canal's transfer.
Al1hough Panama will cvcntually own thc Cana l. il is truly a 1ranspor1a1ion facili1y
for the world's marilime community; vesscls transit ing the Ca nal Ry the flags of nearly
80 nations each year. The vessels' decision to use 1he Canal is for 1hc most pan based on
cost, cfficicncy, and reliabili1y. Jf these q ualities are violatcd, shippers wi ll be forced to
seek alternative ro utings and modes ro, transport, which are available today. T his
makes the labour- management relations proccss a critica! factor for assuring the
s1abili1y that 1he Canal's uscrs havc 1raditionally enjoycd and come to expcct.
Rcfcrcnccs and notes
1. Thi.s ar1iclc is based in parl on the author's participation as institutional and managemenl
spccialis1 on a tcchnical assistancc programnie t0 Panama sponsorcd by thc U .S. Agcncy
fer lnternational Oevelopment. See Louis Bcrgcr lntcrnational. lnc./National Por1s and
Watcrways Institutc. Ji'a11.'iitim1 Pla11 for tlie Trtm.eferofthe Panama Canal. January 1994 .
 Labour relatio,u and the Pmwma Canal transfer 169 170 Lnbour relati011.< a11d the Pa11ama Ca11al tran.ifer

2. During 1993, for cxamplc, Panama faccd a national tcachcrs' strikc, and strikcs by workcrs 17. T here is a 1rend today in whic.h thc arbitrator may abo serve a$ a mediator. Both roles are
of thc national tclcphonc company and thc national powcr company, involving more than distincl. Ncvcrthcless, tho approach has becn vcry cffcctivc and. for it to be succcssfully
30 O()() workcrs. implcmcntcd requirescross- training for individuals to serve bo1h roles. T hearbitrator may
3. Panama dislinguishcs itsclf from a host o f other Latin American countrics (Chile. Costa thus also receive training in the role of mcdiation and mcdiation tcchniqucs.
Rica, D ominican Rcpublic, H onduras, and Mcxico) as lheonlyc:ountry whose labourcode 18. Starting at this 1ime would give candidate media1ors/ arbitra1ors thc opportunily to
mandat.c.s thc govcrnmtnt to aakc an active role in thc cncouragcrncn1 or creation of participate as observcrs in the negotiations orncw agrccmcnts (a.ssumíng thc partics to the
unions. Othcrcountricslcavc this initiative to workcrs. Further. once a union is certified by agr<.-emcnt would permit this), which probably should commcncc in thc Iattcr half of 1998
the government, ali workers relaled lo the activitic$ the union represents are requircd to to carly 1999.
pay union ducs. cvcn if thc workers are nol union mcmbers. For a comparative evaluation 19. Pa1111111" Ct11wl Trewy. A rticle XIII. 1979.
of Panama 's labour code with 1ha1 o f other Latin American countrics, se.e Pe:tcrGrcgory &
A lberto O.ivila. A11 l:.'valumion o/1he I'mwmam"an Lnbor Cotle. Dcvclopment Tcchnologies.
lnc./Ministry of Planning and Economic Policy, Government of Panama, April 1993.
4. lro nically, becausc of thc lack of a public sector LM R programmc. Panama·s Procurador
GcncrHI in 1985 declared strikes in the public sector illegal, cvcn though Articlc 65 of thc
Labor Codc r.-<:ognizcs thc righl of al! workcrs to strikc. faccptions to Ihis legal interpreta-
1ion apply to the Nalional Pon Authority and the National Tclephone Company ( INTEL),
whosc cnc,bling lcgisl:'.u ion providcs 1hc framcwork for a collec1ivc bargaining process; lhe
employees are therefore permitted to strikc. A rcccnt stríkc by INTEL workers was
declared illegal beca use workers failcd to comply with thc collcctive bargaining framcwork
set forth in INTEL's enabling legislation.
5. Note that thc arbitrators selectcd by thc disputant partics are supposcd to jointly appoint
thc third arbitrator. In theevent that they cannot agree, thc Labor Ministcr sclcc1s thc third
arbitra tor. who ~1lso serves as chairman of thc tripartitc panel. In practice. the two
arbitnHors normally fail t.o agree on the 1hird nrbitrator's selec1ion.
6. The significa ncc ofthis point should not be ovcrlookcd; one of the thrce organiz.11ions was
the National Port Authority. which had its roots in the Panama Canal Company, thc
precursor organization to thc Panama Canal Commission.
7. No1c that this interprctation is now bcing challcnged by thc Panama Canal Pilo1s Branch
beforc thc Federal Labor Relations Authority. Thc l'ilots Branch contends that salaries are
neeo1i.::1blt•
8. For examplc. disputes ovcrcxamination (for jobapplicalion evaluations). appoin.unem. or
retircment and insur¡,nce plans. This is because generally thcrc are othcr appcllatc or
grievance proccdures for these arcas.
9. T he paymcnl of such dues is optional undcr thc U .S. sys1em; in Panama. 1hc paymcnt of
ducs is also optional. unlcss thc cmploycc bcncfits from being rcprcscnted.
10. f'or a dctailcd rcvicw of thc issue. scc Paul E. Kcnt, Thc No-strikc Clausc ofthc Constitu-
tional Rcform and lhc Prospects for U.S. Reprisals. a reporl of the Canal Presidcn tial
Commission, August 1993.
11. Convention 87 of the ILO. to which Pa nama is a signatory, defines essential services as
thosc that if not providcd would be dctrimcntal to life, health, and safcly. T hcrcforc, slrikcs
cannot be prohibited because of 1heir potemial economiccons.equences. In the eyes of 1he
lntcrnational Labor Organization (1LO), thcrcfore, the Canal is not an essential servicc. A
violation of this Convention. howcver. has no impact on Panama in the sense that the ILO
has no authority to imposc s.anctions.
12. Panama's proposed civil service law (Ley ' por la cual se establece y regula la Carrera
Administrativa') allowsstrikcs to occurin 1he evcnt that thc agcncy fails to comply with an
arbitrator's decision or if thc futurc Civil Service agency fails to appoint thc a rbilnHors
selected by the disputants. These are restrictions not currcntly prcscribcd in lhc Labor
Codc.
13. Aclually, 1hc U.S. fra mcwork allows them LO reorganizc al any 1imc, dcpcnding on thc
support of thc mcmbership. Howevcr, this is viewed as highly unlikely given the existing
level of stability in labour management rela tions.
14. Onc possiblcexccplion lo lhis would be tbe American Arbitralion Association (AAA). Thc
AAA is a non-governmcntal, non-profit orga nization hcadquartcrcd in New York. Among
manyof its actívities. it provides qualified arbitrators and conducts arbitration trnining for
both arbitratorS, and labour and managcment groups.
15. Jo/111 Wilé)' & Som, /ne. v. Livi11gston. 376 U.S. 543 (1964).
16. Or somc othcr similar lcgislativc effort. such as passing a transition law or policy.