Since January 1, 2023, the Panama Canal Authority (PCA) has imposed an “Interruption Fee” on vessels with deficiencies, with the amount reaching up to $250,000. The PCA introduced this charge to reduce transportation accidents, thereby minimizing delays and interruptions, and to encourage vessels to promptly correct deficiencies or declare those that cannot be corrected. According to reports from Gard members, several cases have arisen since the implementation of this fee.
Financial Impact
This fee is categorized as “Low Impact” or “High Impact” based on a deficiency matrix and the time the deficiency is reported or discovered. In some cases, the impact level also depends on the type of deficiency. The fee ranges from $15,000 to $250,000 and is typically billed together with other maritime service charges (such as for tugs, lines, mooring, and pilotage).
Regulation Interpretation
The PCA has issued several explanatory announcements and notices detailing the scope of application of this regulation, classification criteria (/High Impact), examples of triggering deficiencies, and relevant procedural rules. This regulation has been applicable to ports within the Canal since July 1, 2023, with specific details available in Shipping Notice A-23-2023.
Vessels that develop a deficiency in the waterway have a 30-minute grace period from the time the deficiency is reported or discovered to correct the deficiency or condition to avoid being charged the interruption fee. However, relevant parties state that this grace period is rarely applied in practice.
Appealing the Fee
There is no specific “appeals procedure” for such charges. If a party wishes to pursue a legal defense, the available options are the following two:
1. Filing for constitutional review (i.e., an “amparo” or protective writ), or
2. Initiating an administrative dispute with the Panama Canal Authority, aiming to annul the relevant regulation.
Both of the above options require filing a lawsuit with the Supreme Court of Panama.
It is understood that constitutional review has little hope of success, while administrative disputes have not yet been proven effective and may take years to resolve.
The PCA is willing to negotiate the imposition of the “Interruption Fee” on a case-by-case basis, depending on the specific circumstances. It is reported that in at least one instance, the PCA reconsidered a potential charge for an “interruption situation.”
Case Analysis
1. Mechanical Failures
Main Engine Failure: A vessel experienced a main engine failure while approaching the Miraflores Locks. To ensure safety, the vessel transited the locks with minimal ballast and subsequently anchored in Gatun Lake. As the engine wear exceeded permissible limits, the vessel was replaced, resulting in a $125,000 interruption fee.
A similar incident involving a Neopanamax vessel led to a $250,000 interruption fee.
Engine Telegraph Failure: A vessel experienced an engine telegraph failure while transiting the first set of locks (Atlantic side). However, the vessel maintained control throughout the lock transit. The crew responded promptly, operating the engine via local controls. After exiting the locks, Canal authorities advised the vessel to anchor for inspection, which confirmed the telegraph was in normal condition. Despite the successful inspection, the vessel was escorted by tugs to Flotation Buoy No. 1 at the Pacific entrance and was levied a $250,000 interruption fee.
Inability to Achieve Engine RPM: A vessel was unable to provide more than 40 RPM (slow ahead) during transit and requested over an hour for repairs. Due to unstable engine performance and the inability to achieve the required RPM, the transit was aborted, and the vessel was assisted by tugs to anchor at Gatun Anchorage. This resulted in a high interruption compensation fee of $125,000.
Starter System Failure: A vessel conducted a full engine test before entering the Agua Clara Locks. However, while approaching the locks, the crew noticed a sudden drop in starting air pressure, caused by a burst disc in the starting air line of unit No. 6. The crew immediately notified the master and replaced the burst disc, but the component ruptured again after engine start. The vessel was forced to anchor and paid a $250,000 interruption fee.
2. Cargo Hold Corrosion
Due to holes from corrosion in the bottom plates of a cargo hold, some oil leaked into a ballast tank. Although the shipowner performed temporary repairs before transit, the transit was canceled, and a high-impact interruption fee was imposed. Notably, contact with ballast tank No. 6 during transit could have caused pollution, highlighting environmental risks.
3. Exceeding Draft Limit
After passing through the Gatun Locks, the master ordered the vessel to anchor in the lake because its draft (12.10 meters) exceeded the permitted limit of 12.04 meters. This violation resulted in a $125,000 penalty.
4. Excessive Bridge Temperature
Because the measured temperature on the navigation bridge was 28.5 degrees Celsius, exceeding the range of 21 to 26 degrees Celsius stipulated in Notice A-11-2023, the vessel was fined $125,000 for the violation.
5. Windlass Failure
A vessel was unable to weigh anchor due to damaged winch gears while preparing to enter the Panama Canal, causing a delay in the sailing schedule. Inspection revealed severe wear on some commonly used anchor chain. After repairs, the vessel had to move to the inner anchorage for inspection before its transit could be rescheduled. This incident incurred a $125,000 interruption fee.
Recommendations
To help shipowners, managers, and masters avoid interruption fees, the following key measures are recommended:
• Familiarize yourselves with common deficiencies and ensure a comprehensive understanding of all Panama Canal requirements;
• Conduct proactive inspections before the vessel’s arrival and before departure to identify and resolve potential issues during the voyage;
• Report all known deficiencies early and honestly. The PCA requires all known deficiencies to be reported at least 96 hours in advance via the Panama Maritime Single Window (VUMPA). Early disclosure is a key step to avoiding charges or mitigating their impact.
