Portugal: Arbitration

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Portugal including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present.

This Q&A is part of the global guide to Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    Portugal adopted the Arbitration Act (Law No. 63/2011, 14 December, which entered into force in March 2012), applicable to voluntary arbitration procedures, containing mandatory as well as non-mandatory rules.

    The former Arbitration Law (Law No. 31/86, 29 August) was silent on a number of issues, such as interim measures, multiparty arbitrations and challenge of arbitrators. Scholarship and jurisprudence had resolved these issues in line with international standards but there were still some difficult topics that were not addressed with consistency.

    With the adoption of the Arbitration Act the main problems were resolved and Portuguese law now explicitly follows international standards.

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    Portugal is a party to the New York Convention, but with the reciprocity reservation, which means that only the awards rendered in states that are parties to the New York Convention follow this regime. Accordingly, foreign arbitral awards rendered in countries that are not signatories to the New York Convention must follow a recognition procedure governed by the Arbitration Act and decided by the court of appeal. Nevertheless this difference has little meaning, taking in consideration that the regime adopted by the Portuguese Law is equal to the New York Convention.

  3. What other arbitration-related treaties and conventions is your country a party to?

    Portugal adopted the UNCITRAL Model Law (the Model Law) through the Arbitration Act (Law No. 63/2011, 14 December), thus bringing the Portuguese arbitration voluntary law closer to the UNCITRAL Model Law. The Arbitration Act contains other solutions – complying nevertheless with the Model law - tested within the context of the previous arbitration law.

  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    Portugal adopted the UNCITRAL Model Law (the Model Law) through the Arbitration Act (Law No. 63/2011, 14 December), thus bringing the Portuguese arbitration voluntary law closer to the UNCITRAL Model Law. The Arbitration Act contains other solutions – complying nevertheless with the Model law - tested within the context of the previous arbitration law.

  5. Are there any impending plans to reform the arbitration laws in your country?

    At present and considering the fact that the arbitration law is a recent one, there are no impending plans to reform the law. There is, however, a study for a law regarding arbitration proceedings in corporate matters.

  6. What arbitral institutions (if any) exist in your country?

    The most important arbitration institution is based at the Portuguese Chamber of Commerce and Industry and was established in 1986 to facilitate and promote domestic and international arbitration. Its rules were changed and entered in force in March 2014. They were updated according to the modern trends of arbitration, including the adoption of the emergency arbitrator. Even more recently, in 2016, the Chamber adopted Fast Track Arbitration Rules, a set of rules that aims to tackle slow arbitration proceedings, especially, but not exclusively, in small amount cases.

    The Oporto Commercial Association also has an important arbitration centre and has also approve new arbitration rules, following the world best practices.

    Further to a public initiative, several arbitration centres were recently created in different and, until now, highly improbable fields, such as consumer conflicts, administrative and tax disputes. These are centres with strong state support and very strict procedural rules. Only the people that are listed by the respective centre can be appointed as arbitrators.

  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    The arbitration agreement must be in writing, but Portuguese law adopts the broad definition of written form established in the New York Convention and in the Model Law. The Law further adopted the incorporation theory, providing that a referral to an arbitration agreement included in a different document is enough to grant jurisdiction to the arbitral tribunal.

  8. Are arbitration clauses considered separable from the main contract?

    Arbitration clauses, contained in a contract, are considered as an autonomous agreement. As a consequence, should the contract be considered set aside by the arbitration court, that does not imply, in itself, the setting aside of such clauses.

  9. Can claims under more than one contract be brought in the one arbitral proceeding? Can an arbitral tribunal with its seat in your country consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

    Regarding the possibility of bringing claims under more than one contract to the one arbitral proceeding the law is silent, thus one may consider that this falls in the general processual rules since all are bound by arbitration agreement.

    In what refers to the consolidation of separate arbitral proceedings and once the Principle of Consent is of major importance in arbitration, the Arbitral Tribunal can´t do it against the parties will.

  10. How is the law applicable to the substance determined?

    In national arbitration procedures, the arbitral tribunal shall decide in accordance with the national law, unless the parties determine otherwise in an agreement, that the arbitrators shall decide ex aequo et bono. The arbitrators may also decide the dispute by reverting to the composition of the parties on the basis of the balance of interests at hand. Portuguese scholarship shares some doubts about the exact meaning of this decision criterion, mainly on how to distinguish it from ex aequo et bono.

    In international arbitration procedures, the parties may choose the rules of law to be applied by the arbitrators, if they have not authorised them to decide ex aequo et bono.

    Failing any choice by the parties, the arbitral tribunal shall apply the law of the State with which the subject-matter of the dispute has the closest connection.

  11. Are any types of dispute considered non-arbitrable? What is the approach used in determining whether or not a dispute is arbitrable?

    Under the Arbitration Act, provided that it is not exclusively submitted by a special law to the State courts or to compulsory arbitration, all persons may enter into arbitration agreements relating to disputes regarding economic interests. Given this, all commercial disputes can be subject to arbitration. Previous laws have also admitted arbitration in formerly unthinkable areas such as enforcement proceedings, administrative and tax law. Nevertheless, the Law that admitted enforcement proceedings through institutionalised arbitration – a truly innovative feature of Portuguese legal framework – was revoked in 2013.

    Disputes that do not involve economic interests can be submitted to arbitration procedures provided that the parties are entitled to conclude a settlement on the right in dispute.

  12. In your country, are there any restrictions in the appointment of arbitrators?

    The arbitrator must be an individual – it is not possible under Portuguese law to appoint a legal entity – and have full legal capacity. All arbitrators must be independent and impartial and have the duty to disclose any circumstance likely to give rise to justifiable doubts as to their impartiality and independence.

  13. Are there any default requirements as to the selection of a tribunal?

    The Arbitration Act provides that the number of arbitrators may be chosen freely by the parties to the arbitration agreement, but must always be uneven. If the parties are silent about the number of arbitrators, the law establishes that there will be three: two appointed by each one of the parties and the third chosen by the two arbitrators appointed by the parties.

  14. Can the local courts intervene in the selection of arbitrators? If so, how?

    If one party does not appoint its arbitrator or if the parties do not agree, when required (sole arbitrator or arbitrator nominated by both parties), they can apply to the national court to appoint the missing arbitrator. The competent national court is the court of appeal.

    Local courts may also intervene in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator’s appointment. In this case, such arbitrator shall be appointed, upon request of any party, by the State court.

  15. Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for such challenge?

    The proceeding for challenging an arbitrator is provided by the Arbitration Act but the parties can agree on different provisions or refer the case to an arbitration institution. When they do not set the rules, the challenge of an arbitrator is ruled by the arbitral tribunal, which will include the challenged arbitrator. The Act further provides that if the arbitral tribunal rules to uphold the challenged arbitrator, the challenging party may appeal to a national court on this issue. While such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and render an award. If the arbitrator is, followed to a challenge, refused, the decision cannot be reverted to national court. The reason behind the distinction is related with the protection of independence and impartiality. If the arbitrator steps down there is no risk of lack of independence or impartiality.

  16. Are arbitrators immune from liability?

    Arbitrators may not be held liable for damages resulting from their decisions, save for those situations in which judges may be so.

  17. Is the principle of competence-competence recognised in your country? What is the approach of local courts towards a party commencing arbitration in apparent breach of an arbitration agreement?

    The arbitral tribunal is competent to rule as to its jurisdiction – the well-known principle of Kompetenz-Kompetenz. The law provides for the ‘negative’ effect of this rule, according to which national courts may not decide on the arbitral tribunal’s competence before the tribunal issues its ruling. This disposition is applicable only in cases where the lack of jurisdiction is not obvious.

    Several local courts judgements addressed the kompetenz-kompetenz principle and in every one of them the ruling goes according to the Portuguese Law that follows international standards: when one of the parties argues an arbitration agreement, the national court immediately dismisses the case. The only exception is a clear invalidity of the arbitration agreement.

  18. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods of which the parties should be aware?

    The arbitral proceedings in respect of a particular dispute shall commence on the date on which a request that such dispute be referred to arbitration is received by the respondent. Such request is not subject to any specific deadline, except for the general applicable time limits regarding the forfeiture of rights.

    Following that and within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall submit its claim.

  19. What is the applicable law (and prevailing practice) where a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?

    If the respondent fails to present its statement of defence, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. Should the defendant fail to appear at a hearing, the arbitral tribunal shall continue the proceedings and make the award on the evidence presented by the claimant. The arbitral tribunal may however, in case it deems the default justified, allow a party to perform the omitted act.

    Resort to arbitration depends always, in addition to an arbitration clause, the initiative of one of the parties. Parties cannot be compelled to resort to arbitration. Should there be an arbitration clause and one of the parties initiate a proceeding in a State court, if the other party does not claim the court’s incompetence on such grounds, the State court cannot, on its own initiative, declare its incompetence.

    Third parties are allowed to join ongoing arbitral proceedings, provided that they accept the current composition of the tribunal and that the court considers that such joinder does not unduly disrupt the normal course of the arbitral proceedings and that there are relevant reasons that justify the joinder.

  20. In what instances can third parties or non-signatories be bound by an arbitration agreement or award (e.g. by joinder)?

    Only third parties bound by the arbitration agreement are allowed to join ongoing arbitral proceedings. Such adhesion may happen whether from the date of such agreement or subsequently. Should the adhesion be subsequent it requires the consent of all parties to the arbitration agreement.

    In what concerns the effectiveness of the award, it is subject to the general rule applicable to all court decisions, ie, it has a limited effectiveness.

  21. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    The Arbitration Act fully provides for interim measures, adopting the extended section of the UNCITRAL Model Law, as reviewed in 2006. The Act provides that an arbitral tribunal can grant interim measures it deems necessary in relation to the subject matter of the dispute. Three requirements must be fulfilled: a serious probability that the requesting party will succeed on the merits; sufficient evidence of the risk of harm of his or her rights; and that the harm resulting from the interim measure does not substantially outweigh the damage the requesting party wishes to avoid by the measure.

    Although arbitral courts have the power to grant interim measures they cannot enforce them. Enforcement can only be sought at a State court.

    State courts also have the power to issue interim measures regarding pending arbitration proceedings, in the same terms as they may do so in relation to proceedings before State courts.

  22. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?

    There are no particular rules governing evidentiary matters in arbitration.

    Where authorised by the arbitral tribunal, a party may request assistance in the taking of evidence from national courts. In such a case, evidence is taken and weighed up by national courts and sent to the arbitral tribunal, which shall analyse it together with the rest of the evidence.

  23. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    Since 2014 there is a Code of Conduct for the Arbitrator, approved by the Portuguese Arbitration Association (APA). Furthermore, some arbitration centres have their own codes of conduct (vg, the Commercial Arbitration Centre).

  24. How are the costs of arbitration proceedings estimated and allocated?

    If the parties have failed to regulate this matter in the arbitration agreement, it shall be agreed upon in writing by the parties and the arbitrators, said agreement to be entered into before the acceptance by the last of the arbitrators to be appointed.

    Should that agreement not be executed, the arbitrators shall fix the amount of their fees and expenses, and furthermore the procedure for said payment to be performed.

  25. Can interest be included on the principal claim and costs incurred?

    Yes, according to the general rules.

  26. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    There is no specific provision in the arbitration law as to the type of remedies available to the parties. Therefore, there is no limitation on the type of remedies that an arbitral tribunal may award, other than the limitation imposed by the parties’ claims in the sense that the arbitral tribunal can only grant what was requested, regardless of the nature of the claim.

    However, to a large extent the admissibility of the remedies depends on the substantive and procedural law applicable to the dispute. For example, if the arbitral tribunal applies Romanian procedural law, it may consider a request for a declaratory judgment to be inadmissible to the extent that the claimant has the option to bring a claim to enforce its rights.

    As for the enforceability of the remedies, again the arbitration law does not impose any limitations, the only remedies not enforceable being therefore the ones not enforceable by their nature (for example declaratory judgements).

  27. What legal requirements are there in your country for the recognition of an award?

    The arbitral award has the same status as a judicial award – res judicata effect and immediate enforceability. Under Portuguese law there is no need to recognise the arbitral award for domestic purposes, and so it may be enforced the day it has been granted. The enforcement proceedings are presented to a national court, and start with immediate seizure of the debtors’ assets. The entire proceeding is conducted by a private clerk and is nowadays a quick and effective process, fully computerised.

    In what concerns awards made in arbitrations seated abroad, their effectiveness is dependent upon recognition. The granting of recognition is subject to the requirements set forth either in the New York Convention, or in the Arbitration Act, depending on whether the country where the award was granted is a part to the Convention or not.

  28. Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?

    Unless otherwise agreed by the parties, recourse to a state court against an arbitral award may be made only by an application for setting aside with the grounds set forth in the art. 46 of the Arbitration Act.
    The application for setting aside the arbitral award, which must be accompanied by a certified copy thereof, and, if drafted in a foreign language, by a translation into Portuguese, shall be presented to the competent state court.

  29. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    On the contrary. The arbitral award is only subject to appeal to the competent State court if the parties have expressly contemplated such possibility in the arbitration agreement.

  30. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    There are no specific rules on such matter, beyond the ones contained on the international treaties in which Portugal is a part, such as New York and Washington Conventions.

  31. Are there rules or restrictions on third-party funders in your country?

    There are no rules on such matters.

  32. Is there a concept in your country providing for class-action or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

    There is no legal provision foreseeing class-action or group arbitration. To this date there has been no class actions in arbitration procedures.

  33. Is diversity in the choice of arbitrators (e.g. gender, age, origin) actively promoted in your country? If so, how?

    There are no such measures.

  34. Is emergency arbitrator relief available in your country? Is this actively used?

    The emergency arbitrator was adopted in 2014 by the Commercial Arbitration Centre Regulation. There are no news of its effective use since then.

  35. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    The Portuguese Association of Arbitration, as well as some Arbitration Centres aim to promote transparency in arbitration by the approval of arbitrators’ deontological codes.

  36. Are efforts being made by arbitration institutions or local courts to impose strict deadlines for the rendering of awards?

    Though specific measures are not known, the Arbitration Act predicts that once the deadline for the conclusion of the arbitration process expires it is automatically concluded and the arbitrators may be responsible for the damage they can eventually cause.

  37. Have steps been taken in your country to publish reasoned decisions on arbitrator challenges and provide more insight into the drivers behind arbitrator selection by institutions?

    The only step that until now was taken by the Arbitration Centres in Portugal was the upload of Arbitrators Lists and some Arbitration decisions on their webpage.

  38. Are there arbitral laws or arbitration institutional rules in your country providing for simplified procedures for claims under a certain value?

    The Centre for Commercial Arbitration has created Fast Track Arbitration Rules in 2016 which are applicable to claims worth €200.000 or less.