ARIFA obtains dismissal of class action filed against relevant oil companies

Arias, Fábrega & Fábrega acted as Panamanian counsel to, Compañía Texaco de Panamá, S.A., Petrolera Nacional, S.A. and Esso Standard Oil, S.A.  in connection with a class action filed by a (an alleged) consumer  of fuel products before the Courts of Commerce.

The case originated with a class action filed in January 2003 by an alleged consumer of fuel products, who sought damages from the oil companies selling fuel (gasoline and diesel) to the service stations operating in Panama, due to the presumed existence of pricing arrangements and anti-trust practices affecting the price of the finished product (gasoline, diesel) paid by the consumer when buying fuel in the service stations.

ARIFA succeeded in obtaining the dismissal of the class action filed against the oil companies operating in Panama by the alleged fuel consumer. If admitted, the class action would have presented a risk to the oil companies' operations in Panama, as this action would have allowed all individuals purchasing fuel from service stations (car owners) to assert their claims against the oil companies as members of a class. This would also have meant that if admitted, under the then existing Consumer Protection Law of 1996 regulating class actions, parties not having a direct relation with the consumer would qualify as providers of services and products, as was the case for the oil companies, changing the interpretation and terms of the Consumer Protection Law.

Representing the interests of different companies, ARIFA divided its main objections between the companies, so that rather than presenting one unified defense, each company would individually file a motion requesting the dismissal of the claim on different grounds, notably: absence of standing by claimant, absence of valid prima facie evidence required to file such action, and failure by claimant to demonstrate defendants could be party to a claim of such nature (not being providers of finished products). When considering the merits of the appeal filed by claimant, the Court of Appeals considered each of ARIFA's motion as sustained in the writs of opposition separately. This strategy allowed ARIFA to reduce the risk associated to the filing of a sole brief, which if rejected, would have prevented ARIFA from sustaining its arguments for dismissal. 

Multinational oil companies in Panama have been often perceived as being responsible for the increase of gas and diesel prices in gas service (or pump) stations serving the public. Panama is not an oil producer but an oil importer, and is therefore affected by the oil prices in the international markets which have risen considerably in the past years. This situation has created regulatory sensitivity as the oil companies have often been denounced in the media as being responsible for making pricing arrangements with the local service stations competing in the regulated local market, triggering anti-trust investigations by the Consumer Protection Authority. This class action was a first effort by an alleged consumer under the former Consumer Protection Law of 1996 to seek damages directly from the oil companies with whom the consumer had no direct connection, as opposed to the service stations, and helps to have a better understanding of the requirements to be met when filing a class action under Panamanian Consumer Protection laws, as the Court of Appeals when confirming the first instance decision dismissing the claim, addressed in its decision each of the formal requirements inherent to a claim of such nature.