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ENACTMENT OF THE ZLT FRAMEWORK ACT – TECHNOLOGICAL FREE ZONES

The testing and trial of technology-based innovative technologies, products, services and processes now benefit in Portugal from an innovative, structured and cross-sector approach, as approved by the legal framework for the creation of the so-called Technological Free Zones (ZLTs), which aim to facilitate and streamline the development of new products and systems with higher added value and social and economic impact.

Testing plays a key role in the research, development and implementation of innovative services and products, as well as in the development of appropriate regulatory responses to new technological challenges. They are, thus, a fundamental part of innovation processes.

Decree-Law nº 67/2021, of July 30th, establishes the framework for the promotion of technology-based innovation through the creation of Technological Free Zones (ZLTs). This act was enacted on the heels of the Resolution of the Council of Ministers 29/2020, which established the general principles for the creation and regulation of Technological Free Zones.

ZLTs are physical environments, geographically located, in a real or quasi-real-world environment, designed to test innovative technology-based technologies, products, services, and processes.

ZLTs are, in practice, regulatory sandboxes, since the proper regulatory authorities will directly and permanently monitor tests carried out in them, and are further competent for the provision of information and the issuance of guidelines and recommendations.

Note, however, that the act does not create any ZLTs per se but establishes the basic conditions for their future creation. The goal is to create a ZLT network in Portugal that shares common rules and ensures that entities wishing to carry out tests (the "Test Promoters") will easily and transparently access the ZLTs duly monitored by the proper authorities, thus minimizing burdens and promoting a testing culture. Each ZLT will therefore be created by a separate Government-approved act, although the Decree-Law expressly acknowledges other entities’ driving role in the creation of ZLTs.

The approved framework has a few specificities relative to the traditional approach to regulatory sandboxes, which are an added value for the promotion of innovation:

  • First of all, the legal framework is cross-sector and establishes the basic principles and rules for all ZLTs, irrespective of the sector or area at issue. This approach has no parallel in other countries and creates, for the very first time, an aligned framework for testing any technologies, products, services and processes regardless of the sector concerned.

  • ZLTs can be national, regional or local, to address any potential requirements of entities wishing to carry out tests, while considering the regional or local characteristics of the area where each ZLT is implemented and its development potential.

  • Each ZLT will have a Management Entity, but the ZLT network will be managed by the Testing Authority – the Portuguese National Agency for Innovation. Note that the Management Entity, the Testing Authority and the Regulatory Authorities all support, monitor, supervise and inspect the testing.

  • There are two ways for Test Promoters to access a ZLT: through a free application to be submitted at any time to the Managing Authority (according to the rules defined when the ZLT is created), or through Innovation Programs specifically created for this purpose at a later stage. Innovation Programs are nothing more than specific rules for the submission, execution and evaluation of tests, approved by a specific regulation prepared by the Managing Entity together with the proper Regulatory Entities and subject to the Testing Authority’s approval.

  • Each ZLT may further benefit from a more favorable legal testing framework: the so-called Legal and/or Regulatory Instruments. This more favorable legal framework may derogate from the existing legal framework, flesh out or make a less restrictive interpretation of the applicable conditions (for example, exemption or trial clauses), whenever possible, considering the mandatory rules that may arise from international, including European, laws. Its goal is to streamline testing activities whenever the current framework hinders, limits or burdens testing activities.

  • The act also contains conditions for the Test Participants' involvement, particularly regarding personal data, as well as provisions on liability, insurance, and incident or accident reporting. The acts creating each ZLT are, however, free to establish their own specific rules regarding these matters.

    • VdA assisted the Government in the whole process of study, design, drafting and implementation of this novel legal framework.

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