The right to file class actions has been recognized by the Portuguese Constitution for several decades now (since 1976 and in a more detailed manner since 1997) and Portugal has had a class action mechanism system in place since 1995, which applies to all areas and sectors of the law, and which has always been deemed as claimant friendly.

The general procedure and framework for bringing class actions are set out in the Law on the participation in administrative proceedings and collective action (Law no. 83/95 of 31 August – Class Action Law) which aim is to prevent infringements of, notably, public health, environment, quality of life, goods and services, consumer protection, cultural heritage and public interests.

Apart from this general procedure and framework for bringing class actions, there are several other laws and provisions that explicitly prescribe said right such as the Law of Environment Policy, providing the possibility of filing class actions on environmental matters (Law no. 19/2014 of 14 April); Law of Cultural Heritage, providing the scope and the parties entitled to bring class actions on cultural heritage matters (Law no. 107/2001 of 8 September); Consumer Protection Law, in connection with consumer claims and the powers of the consumer associations to file a class action (Law no. 24/96 of 31 July); Portuguese Securities Code, regarding class actions seeking to protect interests of non-qualified investors in financial instruments (Decree-Law no. 486/99 of 13 November) or the abovementioned Private Enforcement Law regarding infringements of competition law.

More recently  entered into force the Decree-Law no. 114-A/2023, of 5 December, that transposed the Directive (EU) 2020/1828 of the European Parliament and of the Council, of 25 November, on representative actions for the protection of the collective interests of consumers (“Directive 2020/1828”) and which is now the applicable regime whenever it comes to infringements, committed by professionals, of the provisions of national and European Union (EU) law referred to in Annex I of the Directive 2020/1828, which harm or are likely to harm the collective interests of consumers. The rules provided for in the Class Action Law and the Consumer Protection Law shall continue to apply on a subsidiary basis. Also, the Class Action Law and the other laws and provisions that explicitly prescribe the right to class action shall continue to apply to the remaining infringements.

Class actions differ from other forms of collective actions. Joinder of parties involves the possibility of hearing together collective actions when multiple claimants join separate claims on a similar or related subject in one action. Class action is also distinct from the joinder of actions, which is the possibility, when two or more proceedings are already pending before the court and there is a connection between the claims, to request that both cases be joined and decided together.

According to Class Action Law, class actions may be brought by any citizen, individually or jointly with others, in the exercise of his civil and political rights, by legal associations and foundations (but not companies or professionals) that protect public health, environmental protection, quality of life, consumer rights and services, cultural heritage and public dominium, as well as by the public prosecutor and local authorities in respect of their geographical jurisdiction, regardless of their own direct interest in the proceedings.

In relation to the legal requirements provided for legal associations or foundations, it is undisputed that the association and foundation must have legal personality, the relevant interest to be protected must be covered by the corporate purpose as set out in their articles of association and the association or foundation cannot carry out an activity that could, in any way, be deemed as competing with an activity carried out by a corporate entity or a liberal professional. The application of additional legal requirements regarding consumer associations, pursuant to consumer’s law and doctrine has been under discussion, notably if associations must have a minimum number of associates, as well as corporate bodies freely elected by universal and secret vote, if they must be non-profit-making for themselves but also for their members and third parties and if they must have as their main objective the protection of the rights and interests of consumers in general or of consumers who are members of the association.

On the other hand, under the terms of the Decree-Law no. 114-A/2023, of 5 December, the right to initiate a domestic collective action belongs to associations, foundations and local authorities, and cross-border collective actions may be brought only by qualified entities which meet a certain number of requirements.

According to the Decree-Law no. 114-A/2023, of 5 December, a national entity wishing to be designated as a qualified entity for the purposes of bringing cross-border class actions in other Member States must comply with the following requirements:

1. The exercise by the claimant of an effective public activity to promote the interests of consumers at least in the 12 months prior to the application for designation as a qualified entity;
2. Its corporate purpose demonstrates the existence of a legitimate interest in the protection of consumer interests, as provided for in the provisions of the EU legislation referred to in Annex I of the Directive 2020/1828;
3. Non-profit making;
4. The absence of an insolvency process or declaration;
5. The independence and the absence of influence by anyone other than consumers, in particular professionals, who have an economic interest in bringing a representative action, in particular in the case of third-party funding, and adopt procedures to prevent their influence, as well as to prevent conflicts of interest between itself, its funders and the interests of consumers;
6. The public availability of information on compliance with legal requirements, on the sources of funding, the organizational, management and participation structure, the corporate purpose and the activities.

Also, the submission to the competent authority of an application for designation as a qualified entity is instructed with a set of elements, namely:

1. statutes and proof of registration as a legal person of the entity in question;
2. the activity report for the previous two years;
3. declaration on oath of absence of insolvency process or declaration;
4. copies of agreements signed with funding entities;
5. identification of the website (or similar) where the information will be available.

Decree-Law no. 114-A/2023 does not foresee the designation of qualified entities for the purpose of bringing domestic representative actions but it attributes legal standing to bring domestic representative actions to:

1. associations and foundations, regardless of whether or not they have a direct interest in the action, provided that they meet the requirements set out in Article 6 – which are the abovementioned requirements provided for in the Class Action Law – adding the independence of the plaintiff and the absence of influence from third parties, in particular professionals, who have an economic interest in bringing a representative action, namely in the case of third-party funding, and the adoption of procedures to prevent their influence, as well as to prevent conflicts of interest between themselves, their funders and the interests of consumers; and
2. the local authorities.

Class actions can be filed in administrative or civil courts, depending on the object of and parties to the claim. Competition courts also have jurisdiction over class actions related with infringement of competition rules.

The collective action mechanism provided for in Class Action Law applies to all areas and sectors of the law. The right to popular action is exercised to prevent infringements of, namely, public health, environment, quality of life, goods and services, consumer protection, cultural heritage, and public interests. Such right may also be exercised to safeguard property owned by the Portuguese state, autonomous regions, or local authorities.

All types of claims can be filed collectively, as long as the general and special requirements set out in the Class Action Law or in the Decree-Law no. 114-A/2023, of 5 December are met, according to the specific case.

According to our own experience and information gathered from the market, the number of class actions seeking damages compensation (redress measures) has significantly increased in recent years, whereas before class actions for injunctive measures predominated. Furthermore, we have been witnessing an increase of more complex class actions, as shown by the spread of consume-related class actions, that involve more sophisticated players in the market, more high-value actions, high-profile defendants and third-party funding.

We are convinced the number of class actions will keep increasing and in particular that long-term financial litigation, litigation on consumer rights and class actions based on infringements of competition law will continue to dominate the landscape.

The first risk companies face has to do with the fact that, in comparison with some other jurisdictions, there is still not a lot of experience in class actions in Portugal, since many have fallen by the wayside and there have been only a few for damages compensation. Therefore, there are not many public court decisions on procedural and substantive aspects and doctrine from recognized authors is only now beginning to emerge. This leads to a degree of unpredictability regarding the result and course of these actions.

Another relevant challenge arises from a potentially broad or liberal interpretation of the range of rights that may be enforced through class actions and the fact that it is quite easy to bring a class action in Portugal, especially since the Claimant is not required to attach a declaration or a power of attorney of each of the represented citizens, and as the legal fees regime applicable to class actions totally or partially exempts claimants from the payment of legal fees, which may lead claimants to submit high-value claims, to put pressure on the Defendants, with no consequences in terms of legal fees. In fact, there is no limit on the damages that can be claimed, no deterrence for claimants from filing exorbitant claims (except if acting in bad faith) and no effective control over the amount of money claimed at an early stage of the proceedings.

Regardless of the action’s actual grounds, the Defendants may face significant reputational risks, in particular before high-value claims, as class actions tend to be prominent cases that easily capture the attention of the media.

Portugal is an “opt out” jurisdiction and the right to opt out of a class action may be exercised until the end of the evidence production stage of the proceedings by submitting a statement to the court.

However, in actions seeking redress measures, under the Decree-Law no. 114-A/2023 and in compliance with the Directive 2020/1828, the opt-in regime has been expressly established for consumers who do not have their habitual residence in Portugal.

Assuming that citizens (individually or collectively) or entities have legal standing under the terms indicated above in point 2, the requirements are those generally provided by law.

A class action may take any of the forms set out in the Civil Procedure Code and the Administrative Procedure Code. Pursuant to the general terms of Portuguese Law, the Claimant must be represented by a lawyer, and it is required to file a statement of claim, describing the facts, explaining the cause of action and the applicable law. Documentary evidence, if applicable, must be attached to this pleading, beyond the necessary indication of other types of evidence such as witnesses. It should be emphasized that within the context of tort liability, the claimant will have to show the infringement occurred, prove the ensuing damages, and demonstrate the existence of a causal link between the one and the other (without the benefit of presumptions of harm). The burden of proof may only be reversed in case of legal presumption, exemption, or liberation from the burden of proof, or in case the counterpart has deliberately made the fact impossible to prove.

The claimants must concentrate the full statements in the statement of claim and set out all essential facts and arguments, as well as the respective evidence, at this initial stage, otherwise they may not be able to do so later. Yet, in class actions the judge is not dependent on the evidence submitted by the parties and may require the parties to provide additional evidence.

In Portugal, there is no certification, but instead there is the preliminary order, whereby the statement of claim may be dismissed at an early stage if likely to be rejected. The court may dismiss the proceedings at an early stage if it considers that the claims are manifestly unlikely to proceed (because it does not aim to protect diffuse interests and/or homogenous individual interests, because it is evident that there is no proper class, because the claims are notoriously groundless), but such prerogative or power must not be confused with a proper certification phase.

It is up to the claimant to identify the class of individuals represented and covered by the claim, and when the interested parties cannot be specifically identified, the summons should refer to the relevant scope of individuals, this scope being determined based on the specific circumstances and features that the individuals have in common – the potential members of the class covered by the claim may be referred to as holders of the relevant interests –, the geographic area where they live or the group or community that they are part of.

Both redress measures and injunctive measures may be requested in a class action, either under the Class Action Law or under Decree-Law no. 114-A/2023.

The available redress measures, apart from compensation, are the reimbursement of the amount paid, price reduction, repair of the goods or termination of the contract, according to the specific case.

The injunctive measures might be provisional or definitive measures, intended to put an end, or, if that’s the case, to identify or prohibit an unlawful practice by a professional, including the declaration that the practice is unlawful, the obligation to publish the judicial decision (in whole or in part), in the manner determined by the court or by the administrative authority, or the obligation to publish a corrective statement, as well as the obligation by the professional to provide information owed to the consumers.

Beyond that, the judge is required to order the infringing trader to publish the decision (or extracts) at its own cost in two newspapers.

Pursuant to Portuguese law, as a rule, no punitive damages are admitted.

Class action proceedings are not subject to juries.

The Portuguese law does not impose a maximum limit on the damages that the court may award, as the quantum is fixed considering the actual losses suffered by the claimants. In addition, all types of damages are recoverable, including general and special damages and compensation for loss of profit.

To obtain compensation for damages, the claimant has to prove the defendant’s fault or negligence (except in exceptional cases of strict liability that may only occur when expressly stated in the law) in performing the unlawful conduct, the extent of the injury and the link between the two (except when rebuttable or irrebuttable presumptions apply if expressly applicable to the case at hands).

Portuguese courts must be the competent to decide the case under the applicable rules of international jurisdiction, which may vary depending on the case.

Under Class Action Law, there are no limits on the nationality of claimants, but on their domicile, since the right to popular action is only granted to citizens in Portugal in the exercise of their civil and political rights (which include foreigners residing in Portugal).

The Decree-Law no. 114-A/2023 that transposed Directive (EU) 2020/1828 has made some changes to the class action mechanism for the protection of the collective interests of consumers, especially regarding the legal standing to bring those actions, cross-border actions, and third-party funding. The rules provided for in the Class Action Law and the Consumer Protection Law shall continue to apply on a subsidiary basis. Also, the Class Action Law and the other laws and provisions that explicitly prescribe the right to class action shall continue to apply to the remaining infringements.

There are also no specific provisions regarding the admissibility, content and terms of a settlement within collective actions in the Collective Action Law (the only reference being the possibility of the Public Prosecutor replacing the claimant in cases of withdrawal of the proceedings, settlement or any conducts which it deems harmful to the interests at stake – Art. 16), in the Private Enforcement Law or in any other law containing specific provisions on collective actions. Decree-Law 114-A/2023 also does not contain any express rule regarding the admissibility of settlement and/or withdrawal of the claim and the terms in which these are possible, stating only in Art. 17 that “[a]ll final decisions, including decisions to approve settlements, shall be published and communicated to consumers”.

In the absence of specific provisions, it can be arguable whether settlement is in fact possible within collective actions, namely when dealing with diffuse interests, but the reasons that militate in favour of the admissibility of the withdrawal of the claims and settlement in the context of class actions seem to prevail.

The general requirements set out in the Civil Procedure Code should then apply. Cases can be settled out of court by the parties and then submitted to the court for approval. The members of a class that have expressly opted out will not be bound by the settlement and the right to opt out may be exercised until the end of the evidence production stage of the proceedings by submitting a statement to the court.

As mentioned, there are no specific rules regarding settlement within class actions, so the referred general requirements set out in the Civil Procedure Code apply. Settlement has to be submitted to the court for approval.

Some class actions arise following convictions by regulatory authorities, and especially by the Competition Authority. In the specific context of competition and in compliance with the implementation of Directive 2014/104/EU, Portugal has a private enforcement law in place (Law no. 23/2018 of 5 June 2018) that provides the right to submit claims seeking for damages resulting from infringements of competition law. Thus, following any administrative decision in this scope, and taking advantage of it, a class action may be filed to seek compensation for damages caused by that infringement. The referred law has the potential to increase class actions and those signs are already visible in Portugal.

We are aware of some high value class actions related to alleged non-compliance of environmental norms and principles (ESG matters), whereby the claimants request specific prevention or redress measures, but such actions have not been framed under the ESG Directive, which has not been implemented yet.

Third party funding has not been regulated in Portugal in any way until the entering into force of Decree-Law no. 114-A/2023 (only applicable to proceedings initiated after its entering into force) and there had been absolutely no consensus on whether national law allowed for the financing of class actions by third parties.

Only the funding of representative actions for redress measures has been regulated, and it has been established that the claimants must make the funding agreement available to the court, and that it must guarantee the independence of the claimant and the absence of conflicts of interest. The agreement will have to include a financial summary listing the sources of funding used to support the collective action, and a list of the various costs and expenses that will be borne by the third-party funder.

The Decree-Law 114-A/2023 now regulates third party funding within collective actions seeking redress measures and it establishes that: (i) for transparency purposes, claimants must disclose to the court a certified copy of the funding agreement, in writing and in Portuguese, which shall include the sources of the funding and the costs and expenses to be funded; (ii) the funding agreement must guarantee the independence of the claimant and the absence of conflicts of interest and the claimant shall be exclusively responsible for taking any decisions regarding the collective action, having as its guiding principle the defence of consumer interests, including in particular the decisions to bring, proceed, withdraw, settle, appeal and, in general, carry out any procedural acts in the proceedings; (iii) the funder cannot impose, impede or in any way influence any of the referred decisions, being any clauses included in the funding agreement that contend with such prohibition null and void. In cases of violation of said provisions, the court shall invite the claimant to refuse or make amendments to the funding agreement and that if such amendments are not made within a certain period of time the court shall declare that the claimant has no legal standing. Regarding the funder´s remuneration, Decree-Law 114-A/2023 establishes that the funding agreement cannot determine ‘a remuneration of the funder that goes beyond a fair and proportional amount, assessed in the light of the characteristics and risk factors of the collective action in question and the market price of such financing’.

Decree-Law 114-A/2023 finally states that for the purpose of the allocation of compensations unclaimed by consumers to the payment of all costs, fees and other expenses incurred by the claimant, the remuneration of a third party shall be considered an expense incurred by the claimant as a result of the action.

Although the Portuguese Bar Association rules admit the success fee, they prohibit any agreement in which the right to attorney’s or firm’s fees is exclusively dependent on the outcome of the lawsuit.

Under Portuguese Law, the “loser pays” principle is applicable, but there are limits to the amount that the wining party may recover from the losing party.

Court fees and other costs paid (e.g., experts costs when judicial expert evidence is produced) are recoverable by the successful party from the losing party. However, lawyer fees of the successful party are recoverable up to a maximum amount corresponding to 50% of the court fees. In turn, court fees in class actions are very low since the court fees are determined by the value of the proceedings and class actions in Portugal tend to be attributed the value of 60.000 €.

Private Enforcement Law (Law no. 23/2018 of 5 June 2018) and Decree-Law no. 114-A/2023 state that the non-claimed amount of the global compensation may be used to pay for the claimants’ expenses, but they don’t include a similar provision regarding defendants which seems to raise constitutional issues.

The class action mechanism provided for in Decree-Law no. 114-A/2023 which entered into force in December 2023 is very recent and there are currently no proposals for the reform of the Class Action Law.