The electrochemical formation of a palladium nanoparticle catalyst composite material has been investigated. A carbon nanoparticle-chitosan host film deposited onto a carbon substrate electrode has been employed to immobilize PdCl2 as catalyst precursor. A one-step electrochemical reduction process gave Pd nanoparticles within the chitosan matrix with different levels of loading, on different carbon substrates, and with a reproducible catalyst particle diameter of ca. 3-5 nm. High activity for formic acid oxidation has been observed in aqueous phosphate buffer medium. The oxidation of formic acid has been investigated as a function of pH and maximum catalyst activity was observed at pH 6. When varying the formic acid concentration, limiting behaviour consistent with a "resistance effect" has been observed. A flow cell system based on a screen-printed carbon electrode has been employed to establish the effect of hydrodynamic conditions on the formic acid oxidation. Both increasing the convective-diffusion mass transport rate and increasing the concentration of formic acid caused the oxidation peak current to converge towards the same "resistance limit". A mechanistic model to explain the resistance effect based on CO2 flux and localized CO2 gas bubble formation at the Pd nanoparticle modified carbon nanoparticle- chitosan host film has been proposed.