In Portugal, arbitration is governed by law no. 63/2011, of December 14^th, which has approved the Portuguese Voluntary Arbitration Law (“LAV”). This Law is of mandatory application for arbitration proceedings seated in Portugal and to the enforcement in Portugal of arbitral awards.

There is additional legislation relating to mandatory arbitration (e.g., in the context of sports disputes¹ and to tax arbitration².

Footnote(s):

¹ Law no. 74/2013, of September 6^th.

² Decree-Law no. 10/2011, of January 20^th.

Portugal is a signatory state to the New York Convention since 1995 and has made a reservation of reciprocity under the convention. Thus, the provisions of the convention shall only be applicable to Portugal if the seat of the arbitration whose arbitral award is being enforced was in another contracting state to the New York Convention.

Portugal is also a contracting state to the Washington Convention relating to the settlement of investment disputes between states and nationals of other states since 1984.

The LAV is inspired by the UNCITRAL Model Law. The most significant differences between the two relates to multi-party claimants and/or respondents, since the LAV has specific rules about the appointment of arbitrators and lack of agreement between co-claimants and/or co-respondents in that regard.

Even though there are no impending plans to reform the arbitration law, the necessity of specifically regulating corporate arbitration disputes has been highlighted by some arbitral professionals and legal authors, who suggest specific provisions in the arbitration law. In any case, no specific legislative process has been initiated in that respect.

There are 39 arbitration centers authorized to administer arbitrations³ in Portugal. However, the oldest and most renowned arbitration institution in Portugal is the Commercial Arbitration Centre of the Portuguese Chamber of Commerce and Industry (“Centro de Arbitragem Comercial da Câmara de Comércio e Indústria Portuguesa” or “CAC-CCIP”)⁴. The Arbitration Rules of the Centre were amended in 2021 and there are no amendments being considered at the time.

The Commercial Arbitration Centre has the following arbitration Rules in place: (i) Rules of Arbitration; (ii) Rules of Fast Arbitration; (iii) Urgent Pre-Contractual Administrative Arbitration; (iv) Rules of Mediation; (v) Dispute Boards Regulation; (iv) Rules of Corporate Arbitration.

The ICC – International Chamber of Commerce has a national committee in Portugal, which assists the Court in the appointment of Portuguese arbitrators.

Footnote(s):

³ https://dgpj.justica.gov.pt/Resolucao-de-Litigios/Arbitragem/Centros-de-Arbitragem-autorizados.

⁴ https://www.centrodearbitragem.pt/en/.

There is no specialist arbitration court under Portuguese jurisdiction.

There are no significant changes between the requirements provided in the UNCITRAL Model Law and the LAV.

Pursuant to the LAV, an arbitration agreement is only valid if it is entered into in writing. That requirement is met if the arbitration agreement is recorded in a written document signed by the parties, in an exchange of letters, telegrams, faxes or other means of telecommunications which provide a written record of the agreement, including electronic means of communication.

A contract that refers to a clause comprised in a different document (e.g. general terms and conditions) is also valid, provided that the contract is written, and the reference is expressly made and acknowledges that clause as a part of the contract. However, there are specific provisions relating to arbitration agreements stipulated in general terms and conditions concluded with consumers. If one of the parties is a consumer, the arbitration agreement is not binding for them, as the consumer must be free to decide if he wishes to submit the disputes to arbitration or to the state courts⁵.

Finally, an arbitration clause is also deemed valid in case a claim and a response are exchanged by two parties to arbitration proceedings, its existence is affirmed by one party and not denied by the other.

Footnote(s):

⁵ Article 21.º, paragraph h), of the Decree-Law no. 446/85, of 25th October.

Article 18(2) of the LAV provides for the principle of separability, according to which the arbitration clause is considered separable from the main contract for the purpose of assessing its existence, validity and enforceability.

Yes, Portuguese courts apply a validation principle, whenever there is more than one possible applicable law, by choosing to apply the law that renders the arbitration agreement valid and enforceable. However, this is mainly based on international arbitration principles, rather than on a specific legal command in force in Portugal, since the LAV is silent in that regard.

The LAV has specific provisions relating to the appointment of arbitrators in proceedings with multiple Claimants and/or Respondents.

Pursuant to article 11 of the LAV, in case the tribunal is composed of three arbitrators, the claimants shall collectively nominate one arbitrator, and the respondents shall collectively appoint the other arbitrator.

In the event the parties cannot reach an agreement, a state court can nominate the arbitrator if any of the parties requests it.

Likewise, if it is demonstrated to a state court that the parties which have not reached an agreement on the appointment of the arbitrator have conflicting interests, the state court can nominate all the arbitrators and designate the presiding arbitrator from among them.

Although pursuant to the LAV only parties that are bound by the arbitration agreement can join the arbitral proceedings, a non-signatory to the arbitration agreement can adhere to it provided that the original parties agree.

If the arbitral tribunal is already constituted, the joinder of third parties is only admissible if the party who is joining accepts the composition of the arbitral tribunal. This acceptance is presumed when the joinder is requested by the joining party.

The joinder is dependent on the acceptance of the arbitral tribunal, which shall hear the parties in the arbitration and the joining party. The arbitral tribunal shall only accept the joinder if it is justified by the circumstances and does not disrupt the normal course of the arbitral proceedings.

The LAV provides for two non-cumulative requirements for the arbitrability of the disputes. First, the dispute must regard to an economic interest or to an economic value. Second, even if it does not, a dispute is arbitrable as long as the rights in dispute must be disposable and/or negotiable.

Criminal, family, insolvency and certain employment matters are therefore not arbitrable.

Nothing with relevance to report.

The LAV provides only that the arbitral tribunal shall decide pursuant to the applicable law or, if the parties agree to it, pursuant to equity principles.

The parties are therefore free to decide on the law applicable to the substance of the dispute. If there is no express choice by the parties, the Rome Regulations shall apply.

Portugal is also a signatory of the United Nations Convention for the International Sale of Goods (“CISG”), thus the convention shall apply to disputes on the sale of goods between parties whose place of business is in different contracting states of the convention.

Outside of the requirements related to the arbitrators themselves – an arbitrator must be a physical person with full legal capacity, impartial and independent –, parties have full freedom of choice.

In terms of the composition of the tribunal, pursuant to article 8(2) of the LAV, if the parties have not agreed on the number of arbitrators, the arbitral tribunal shall be composed by three arbitrators. Arbitral institutions may provide for different default compositions in those situations (e.g. a single arbitrator).

Pursuant to article 10 of the LAV, in case the parties do not agree on the nomination of an arbitrator, or if one of the parties does not appoint its arbitrator, any of them can request the appointment from the competent state court.

Likewise, in case the Tribunal is composed of 3 (three) arbitrators and the arbitrators chosen by the parties do not reach an agreement on the appointment of the presiding arbitrator, any of the parties may ask the competent state court for said appointment.

It must be highlighted, however, that the legal standard is subsidiary, since the parties can always agree on the nomination of another appointing authority or make reference to the rules of an arbitral institution.

A party can challenge the appointment of an arbitrator if there are circumstances that raise concerns relating to the independence or impartiality of the arbitrator, pursuant to articles 13 and 14 of the LAV. An arbitrator can also be challenged if they do not possess the specific qualifications agreed by the parties.

The challenge of the arbitrator is made before the arbitral tribunal, within 15 days from the constitution of the arbitral tribunal or from the moment the party became aware of the existence of the circumstances that raise concerns.

The arbitral tribunal shall decide on the challenge in 15 days, with the participation of the challenged arbitrator. In case the tribunal dismisses the challenge, the party can appeal from the arbitral tribunal’s decision to the competent state court, which issues a final decision on the challenge.

In 2023, a decision of the Lisbon Court of Appeal⁶ annulled an arbitral award on the grounds of lack of independence and impartiality, as well as breach of the duty to disclose.

The arbitrator was challenged by the party that had nominated him since it was discovered that one of the parties involved in the arbitration proceedings was a key client of the law firm in which he was a Partner. The challenging party claimed to only have become aware of the facts after the arbitral award was rendered.

The arbitrator had failed to disclose these facts to the parties, and the court found that this constituted a breach of the duty to disclose, but argued that a breach of the duty to disclose alone is not sufficient to annul an arbitral award, since an actual breach of the requirements of independence and impartiality must also be demonstrated.

Additionally, the court held that the burden of proof regarding the moment when the challenging party became aware of the grounds for questioning the arbitrator’s independence or impartiality lies with the counter-appellant. Therefore, since the counter-appellant did not evidence that the challenging party was aware of those grounds earlier, the state court annulled the arbitral award on the basis of a breach of independence and impartiality by the arbitrator.

Footnote(s):

⁶ Decision of the Lisbon Court of Appeal, case no. 3215/22.7YRLSB-2, of 09th February 2023.

If an arbitrator becomes unavailable, for any reason, the LAV provides that his functions shall cease. A replacement arbitrator must be nominated, and the nomination proceedings shall be the same applicable to the appointment of the original arbitrator, except if the parties agree on a different process.

Pursuant to the LAV, arbitrators can only be held liable for their decisions in the same cases as judicial magistrates, and only before the parties to the arbitration.

Additionally, articles 12, 15 and 43 provide for other specific situations in which arbitrators may be held liable for damages caused to the parties (unjustified failure to exercise their functions after accepting the appointment, failure to cease functions when required within a reasonable time when required, or preventing the award from being issued).

The principle of competence-competence is expressly provided for in article 18 of the LAV, which establishes that the arbitral tribunal has the competence to decide on his own competence, even if that implies assessing the existence, validity or effectiveness of the arbitration agreement or the contract to which it relates, or its enforceability

There are specific mechanisms in the Civil Procedure Code to guarantee the applicability of this principle.

According to the Portuguese Civil Procedure Code, breach of an arbitration agreement is cause of incompetence of state courts, so it is likely to be the first question the state court decides on as soon as both parties have been heard on the matter.

That is also what is established in article 5 of the LAV, pursuant to which a state court, upon request of a defendant in a case brought up in breach of an arbitration agreement, must acquit said defendant, unless the arbitration clause is manifestly null, void or ineffective.

If a claim included in an arbitration agreement is brought before the state courts and the parties do not invoke its existence, the arbitration agreement is considered tacitly revoked, and the dispute can proceed in the state courts.

If a party fails to participate in an arbitration, state courts cannot compel them to participate. However, state courts may appoint an arbitrator if a party fails to do so, upon request of the counterparty.

If there is no further intervention in the arbitration proceedings, the arbitration will continue, and the arbitral tribunal will make its decision based on all the evidence presented before it.

According to the LAV, third parties can only join an arbitration if they are bound by the arbitration agreement, but a party who wasn’t a party to the arbitration agreement may adhere to it with no objection from the other parties.

If the arbitration is already in progress, a third party may only join if it consents to the constitution of the arbitral tribunal.

The joinder is subject to the approval of the arbitral tribunal, who is not bound by the parties’ decisions in this respect and will hear the existing parties and the party seeking to join. The tribunal may only allow the joinder if it does not disrupt the proceedings and if there are relevant circumstances that justify the inclusion of the third party.

The LAV provides that an arbitral tribunal may issue interim measures preliminary orders. However, while interim measures (“providências cautelares”) can be enforced by state courts, preliminary orders (“ordens preliminaries”) cannot since they only produce their effects between the parties in the arbitration.

Furthermore, state courts also have the power to issue interim measures, regardless of the existence of an arbitration agreement or a duly constituted arbitral tribunal. Therefore, parties can either request interim measures before the arbitral tribunal or state courts.

State courts can, consequently, issue interim measures, regardless of the constitution of the arbitral tribunal or the existence of an arbitration agreement.

Article 5(4) of the LAV explicitly prohibits anti-arbitration injunctions, stating that “issues of nullity, ineffectiveness, and unenforceability of an arbitration agreement cannot be independently raised in a claim brought before a state court, nor in provisional measures initiated before the same court, aimed at preventing the constitution or functioning of an arbitral tribunal.”

Additionally, the Court of Justice of the European Union (“CJEU”) has already ruled (West Tankers case) that anti-suit injunctions violate European Union law, specifically Regulation (EU) no. 44/2001. More recently, in Charles Taylor Adjusting Ltd & FD v. Starlight Shipping, the CJEU held that the imposition of a sanction or preliminary compensation for breach of a jurisdiction agreement closely resembles an anti-suit injunction and is therefore unenforceable, as it contradicts public policy.

As a result, anti-suit and anti-arbitration injunctions are neither available nor enforceable in the Portuguese jurisdiction.

Article 38 of the LAV expressly allows any party in the arbitration proceedings, with the arbitral tribunal’s permission, to request that evidence not voluntarily submitted or provided by a party, or third party be obtained directly before state courts.

The state court will then order said party or third party to provide and produce the evidence and provide a report of the findings to the arbitral tribunal.

The same principle is applicable to requests for evidence filed before Portuguese state courts by arbitral proceedings seated abroad.

The Portuguese Arbitration Association (“PAA”) approved an Ethics Code for its members in 2020, establishing specific principles and guidelines for arbitration professionals who are PAA associates. These rules were inspired by the IBA Guidelines on Conflicts of Interest in International Arbitration.

Additionally, some arbitral institutions, such as the Commercial Arbitration Centre, have their own Ethics Codes and Rules addressing conflicts of interest.

These ethics codes have already been cited in annulment proceedings before state courts to demonstrate breaches of the principles of independence and impartiality.

Article 30(5) of the LAV establishes that parties, arbitrators, and institutions are obligated to maintain confidentiality of all information and documentation obtained during arbitral proceedings, ensuring the confidentiality of the process. The admissible exceptions are the cases when parties need to make certain procedural acts public in order to defend their rights, as well as the duty to communicate or disclose those acts upon request of competent authorities.

However, arbitral awards in general may always be publicized provided that elements that allow the identification of the parties are excluded and that there is no opposition from any of the parties. Additionally, is it worth noting that arbitral awards issued in administrative arbitration involving a state entity are mandatorily published online, in accordance with article 185-B of the Portuguese Code of Procedure in Administrative Courts.

Except if otherwise agreed by the parties regarding cost allocation, the arbitral tribunal establishes the distribution of the arbitral costs in the award. The arbitral tribunal can, if it considers appropriate, determine that one of the parties should reimburse the other party for part of or the total amount of costs incurred due to its participation in the arbitral proceedings.

Specifically concerning arbitrators’ fees, in institutional arbitration it is usual for them (together with other administrative fees) to be pre-established in the institution’s regulation. In ad hoc arbitration, either the parties have agreed on fees in the arbitration agreement, or such an agreement must be reached in writing between the parties and the arbitrator(s) before the last arbitrator accepts the appointment. In the absence of said agreement, the arbitral tribunal may establish the amount of fees, but it can be challenged by the parties before state courts.

Yes, pre- and post-award interest can be included in the principal claim and costs incurred.

The LAV only establishes that an arbitral award must be in writing signed by the arbitrator(s), dated and it must also indicate the seat of arbitration. The arbitral award must also be reasoned, unless the parties have agreed differently or when the case is settled.

Notwithstanding what is provided for in treaties or conventions Portugal is a party to (e.g. New York Convention), foreign arbitral awards must be recognized by state courts before they can be enforced in Portugal.

Specifically for enforcement purposes, the requesting party must present the state courts the original award or a certified copy, as well as a certified translation (if it is not in Portuguese).

There are several legal grounds for refusal of recognition or enforcement (e.g. invalidity of the arbitration agreement, incapacity of one of the parties, one of the parties was not granted the possibility to exercise its rights, the award exceeds the scope of the arbitration agreement, the award was suspended or annulled by a state court in the country of the applicable law, the award violates Portuguese principles of international public order).

The timeframe for the recognition and, especially, enforcement of an arbitral award depends on the circumstances, but it tends to be a relatively quick procedure.

Article 57 of the LAV provides that after one party requests recognition of an arbitral award (seated in a non-signatory foreign state to the New York Convention), the counterparty(ies) is(are) notified to file an opposition within 15 days. After that and once any investigative measures deemed appropriate are concluded, the parties and the Public Prosecutor’s Office have another 15 days to file their final pleadings, before the state court issues a decision.

Recognition cannot therefore be requested on an ex parte basis.

Yes, the LAV has specific provisions for the recognition and enforcement of foreign arbitral awards.

Article 55.º of the LAV provides that without prejudice of the New York Convention and other international treaties regarding the recognition and enforcement of arbitral awards, an arbitral award issued in a foreign state is subject to recognition by the state courts before it can be enforced in Portugal.

Therefore, an arbitral award issued in Portugal may be directly enforced in first instance courts like a regular judicial award, whereas an arbitral award issued abroad will have to follow the process established in the New York Convention (if the seat of the arbitration was in another contracting state) or the recognition process provided for by the LAV.

The law does not impose limits on available remedies awarded by an arbitral tribunal. However, Portuguese courts may refuse enforcement or recognition of remedies (i) if it deems them to be in conflict with the Portuguese principles of international public policy, (iii) if the enforcement is expected to result in a breach of international public policy principles, or (iii) if the scope of the dispute is not arbitrable pursuant to Portuguese law.

As a rule, arbitral awards can only be appealed before state courts if the parties have expressly agreed on that possibility in the arbitration agreement and as long as the dispute was not resolved pursuant to equity principles.

However, the LAV specifically provides in article 46 that the annulment of arbitral awards can be requested before state courts. A request for annulment of an arbitral award must be submitted to the competent state court, along with a certified copy of the award and, if in a foreign language, a translation into Portuguese.

The annulment process is different from an appeal in terms of admissible grounds and follows specific procedural rules, including the submission of evidence and the opportunity for the opposing party to respond.

From a procedural standpoint, the annulment must be filed within 60 days of receiving the award. If only part of the award is subject to annulment, that part may be annulled independently. The state court may also suspend the annulment process to allow the arbitral tribunal to rectify any issues. However, the state court cannot interfere with the merits of the case, and the arbitration agreement remains in effect unless otherwise agreed.

In terms of grounds, for an award to be annulled it is necessary that the party requesting the annulment proves that:

• One party lacked capacity, or the arbitration agreement is invalid under the applicable law.
• Fundamental principles were breached, affecting the outcome of the dispute.
• The award addresses a dispute not covered by the arbitration agreement or exceeds its scope.
• The arbitral tribunal’s composition or procedure did not comply with the parties’ agreement or the law, affecting the dispute’s resolution.
• The tribunal awarded more than was requested or failed to address issues it should have considered.
• The award violated certain formal requirements or was notified after the legal deadline.

The state court also has the power to annul an arbitral award regardless of a request by one of the parties if (i) the subject matter is not arbitrable under Portuguese law and/or (ii) the award violates Portuguese international public policy.

An arbitral award can only be appealed if the parties have expressly provided for that possibility under the arbitration clause. The right to appeal from an arbitral award – if the parties specifically provided for it in the arbitration agreement – may therefore be freely waived by any of the parties, even before the dispute.

However, the right to challenge (request the annulment) an arbitral award is unwaivable pursuant to article 46(5) of the LAV.

Third parties or non-signatories can only be bound by an arbitral award if they were part of the arbitration proceedings, pursuant to the rules of third parties’ joinder. Recognition of arbitral awards, outside of the cases in which the state court can refuse it by its own initiative, can only be requested by the party the award is invoked against.

There are no court decisions in the Portuguese jurisdiction relating to third party funding that are publicly available and we are unaware of any decisions in that respect that might not be public.

There are no specific provisions under the LAV relating to the appointment of emergency arbitrators. However, arbitral institutions in Portugal have that relief expressly provided in their rules, as well as specific provisions for the appointment of the arbitrator and for the procedure to be followed.

The Commercial Arbitration Center has “Fast Track Arbitration Rules” in force, which provide for an expedited procedure. These rules are applicable by agreement of the parties or by decision of the President of the Commercial Arbitration Centre.

The President of the Commercial Arbitration Centre can determine the application of those rules to disputes which have a value equal to or less than € 400,000, except if both parties oppose to their application in the arbitration agreement or during the course of the arbitration. Moreover, the President of the Commercial Arbitration Centre will not determine the application of said rules if they are not deemed appropriate according to the circumstances of the case.

Likewise, the President of the Commercial Arbitration Centre can apply those rules for proceedings with a value greater than € 400.000,00 if deemed appropriate and the parties do not oppose to it.

Pursuant to said rules, the arbitral tribunal is constituted by a sole arbitrator, and the deadlines are substantively reduced in comparison to the regular arbitration rules. Moreover, the total time limit for the conclusion of the arbitration proceedings is six months, starting from the date of the tribunal’s constitution.

Pursuant to the statistics of the Commercial Arbitration Centre, there were no proceedings initiated in 2023 pursuant to said rules, but there were 2 (two) disputes concluded in that time period in the total amount of € 646,558.26.

Therefore, even though there are specific rules for expedited proceedings, parties seem to maintain a preference for the application of the regular arbitration rules.

Diversity does not formally play a role in the choice of arbitrators or counsels. However, concerns relating to diversity are being raised, and the Commercial Arbitration Centre provides for specific statistics relating to the arbitrators chosen by the parties. According to said statistics, in 2023 88,3% of the arbitrators appointed in the arbitrations managed by that Centre were male, and 11,7% were female, which is also a decrease in balance, since the statistics in 2022 showed that 16% of the arbitrators were female and 84% were male.

The fact that the Centre has started publishing these statistics since 2022 also demonstrates its commitment to promote diversity in arbitration, specifically relating to the appointment of arbitrators.

We have nothing to report in that respect.

There are ongoing proceedings in the state courts relating to corruption, which are dealt with pursuant to the Portuguese Criminal Code and Criminal Procedure Code.

Under Portuguese jurisdiction, the Public Prosecutor’s Office is the state entity in charge of conducting investigations on the practice of criminal offenses and has the burden of proof.

There are no arbitration-related proceedings on the matters of corruption in Portugal that we are aware of.

The arbitral institutions did not take specific measures in response to the COVID-19 pandemic.

However, during that period the Portuguese Government has approved legislation on the suspension of deadlines, also applicable to arbitral tribunals, as well as guidelines and procedural measures have been issued to mitigate the effects of the pandemic on the arbitration proceedings. As the most obvious example, arbitral tribunals have taken measures to privilege remote hearings, when possible.

That tendency appears to have gained some traction, since arbitrators and parties have continued to privilege remote hearings on the early stages of the proceedings even after the pandemic was officially overcome.

Although there is nothing significant to report in terms of rules, legal or approved by arbitration institutions, it is clear that the number of virtual hearings has grown compared to the pre-Covid context, especially in the early stages of proceedings – attendance to the final hearings in person is still considered more beneficial for the resolution of the dispute.

One of the most recent disputes on climate change regards to a claim presented by “Associação Último Recurso”, “Quercus – Associação Nacional de Conservação da Natureza” and “Sciaena – Associação de Ciências Marinhas e Cooperação” against the Portuguese State, for breach of the Climate Framework Law.

The first instance court and the Court of Appeal considered these claims as vague, ambiguous and obscure, thus in breach of the Portuguese Civil Procedure Code.

However, on the 19^th of September 2024, the Supreme Court of Justice has revoked the decision of the previous instances, considering that the request submitted by the activists and associations had “a sufficient degree of specificity to ascertain the existence of the alleged breaches of the right to a human, healthy, and ecologically balanced environment (Article 66 of the Constitution, in conjunction with Articles 2 and 26), of climate balance (Article 5 of the Climate Framework Law), and of respect for the private and family life of the holders of the diffuse interests at stake in this action (Article 26 of the Constitution and Article 8 of the European Convention on Human Rights), on which these claims are based”.⁷

The activist associations were invited to indicate the necessary measures that the Portuguese State should adopt in order to substantiate the claim.

Footnote(s):

⁷ Decision of the Supreme Court of Justice, in proceedings no. 28650/23.0T8LSB.S1, of 19th septembre 2024.

There are no court decisions regarding economic sanctions. However, Law no. 97/2017, of 23^rd August, regulates the application and enforcement of restrictive measures adopted by the United Nations or the European Union and establishes the sanctioning regime applicable to the violation of those measures.

Thus, the economic sanctions determined by the United Nations and the European Union are enforceable in the Portuguese jurisdiction, and are binding for all Portuguese citizens or residents, companies and public and/or private entities. Its enforcement under Portuguese jurisdiction is dependent on an act of the Ministry of Foreign Affairs and the minister responsible for the sector in which the sanction will be verified.

There are no rules relating to the use of artificial intelligence, generative artificial intelligence or large models implemented in Portugal in the context of international arbitration.

However, artificial intelligence platforms are starting to be developed for the management of proceedings in state courts.