Arbitration Law in Portugal
In Portugal, arbitration is governed primarily by the Code of Civil Procedure (CCP) and the Arbitration Law (Law No. 63/2011), which came into effect on 1st September 2011. Portugal has a strong legal framework for both domestic and international arbitration, and it has adopted several international conventions to ensure the effectiveness of arbitration in the country.
Key Features of Arbitration in Portugal:
Legal Framework:
- Law No. 63/2011 (Arbitration Law): This law governs arbitration in Portugal, modernizing the country’s legal framework for arbitration and aligning it with international standards, particularly the UNCITRAL Model Law on International Commercial Arbitration.
- Code of Civil Procedure (CCP): The CCP includes provisions related to arbitration, including procedural aspects such as the enforcement of arbitral awards, challenges to awards, and the roles of the courts in arbitration.
Arbitration Agreements:
- Arbitration Agreement: Arbitration agreements in Portugal are enforceable under the law. They can be included in contracts (arbitration clauses) or entered into after a dispute arises (submission agreements).
- Validity: For an arbitration agreement to be valid, it must be in writing, and the parties must have agreed to submit disputes to arbitration. The courts generally uphold arbitration agreements and refer parties to arbitration unless the agreement is invalid or unenforceable.
- Exceptions: Certain types of disputes, particularly those related to family law, consumer rights, and labor law, may not be arbitrable under Portuguese law.
Arbitration Procedure:
- Arbitral Institutions: Arbitration in Portugal can be either institutional or ad-hoc:
- Institutional Arbitration: Administered by an arbitration institution such as the Portuguese Arbitration Association (Associação Portuguesa de Arbitragem, APA) or the Lisbon Court of Arbitration. These institutions provide rules and administrative support for arbitration.
- Ad-hoc Arbitration: Where the parties select arbitrators and agree on procedural rules themselves or adopt rules such as the UNCITRAL Arbitration Rules.
- Selection of Arbitrators: The parties are free to choose their arbitrators. In institutional arbitration, institutions often provide lists of arbitrators. In ad-hoc arbitration, the parties appoint arbitrators themselves.
- Number of Arbitrators: Typically, one or three arbitrators are chosen. The parties can agree on the number of arbitrators, but if they fail to do so, the court may appoint them.
Recognition and Enforcement of Arbitral Awards:
- Domestic Awards: Arbitral awards issued in Portugal are generally enforceable and binding. If a party refuses to comply with an award, the other party can request the court to recognize and enforce the award.
- International Awards: Portugal is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). This means that foreign arbitral awards are recognized and enforceable in Portugal, subject to limited exceptions (e.g., if the award is contrary to public policy).
- Enforcement Procedure: The procedure for recognizing and enforcing both domestic and foreign arbitral awards in Portugal is straightforward and governed by the provisions of the CCP. If necessary, the Portuguese courts can intervene to ensure compliance with the arbitral award.
Role of the Courts:
- Supportive Role: Portuguese courts provide assistance in arbitration in various ways, including:
- Enforcing arbitration agreements: Courts can compel parties to proceed with arbitration if a party tries to litigate a matter that is subject to an arbitration agreement.
- Interim Measures: Courts can issue interim measures (e.g., freezing orders or injunctions) during the course of arbitration to preserve the status quo.
- Appointing Arbitrators: If the parties cannot agree on the selection of arbitrators, the court can appoint them.
- Limited Intervention: Courts in Portugal generally have a limited role in arbitration. They will only intervene in specific cases, such as:
- Setting aside awards: A party can challenge an arbitral award before the courts on very limited grounds, such as violations of due process or public policy.
- Recognition of awards: Courts can refuse to recognize and enforce awards that violate public policy.
Public Policy Exception:
- Like other jurisdictions, Portugal maintains a public policy exception for the recognition and enforcement of arbitral awards. A court may refuse to recognize or enforce an award if it contravenes Portuguese public policy.
- This exception is strictly interpreted, and the courts only refuse to enforce awards if they are fundamentally incompatible with the core principles of Portuguese law.
Confidentiality:
- Arbitration proceedings in Portugal are generally private and confidential, unless the parties agree otherwise. This is one of the key reasons why arbitration is often preferred in commercial disputes, as it helps protect the confidentiality of business-sensitive information.
Advantages of Arbitration in Portugal:
- Efficiency: Arbitration is generally faster than court litigation, making it an attractive option for businesses.
- Cost-Effectiveness: Arbitration may be less expensive than traditional litigation, especially when parties opt for ad-hoc arbitration or select an efficient arbitration institution.
- Flexibility: The parties have more control over the procedure and can select arbitrators with expertise in the specific area of dispute.
- International Recognition: As a signatory of the New York Convention, Portugal offers a secure and reliable system for the enforcement of foreign arbitral awards.
Recent Developments:
- Portugal has been working on improving its arbitration framework, and Lisbon has increasingly become an attractive hub for international arbitration. Portuguese arbitration institutions are actively promoting the country as a favorable venue for resolving international disputes.
- Additionally, there have been efforts to enhance the training of arbitrators and the availability of resources to support the arbitration process.
Summary:
Arbitration in Portugal is governed by the Arbitration Law (Law No. 63/2011) and the Code of Civil Procedure, which provide a modern, flexible, and efficient framework for both domestic and international arbitration. Portugal is a signatory to the New York Convention, allowing the recognition and enforcement of foreign arbitral awards. The Portuguese legal system generally supports arbitration, and courts only intervene in limited cases, such as when enforcing arbitration agreements or challenging arbitral awards. Arbitration in Portugal is known for its efficiency, confidentiality, and flexibility, making it an attractive option for resolving commercial disputes.
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