Answer ... The relevant legislation to consider is the Portuguese Voluntary Arbitration Law (Law no. 63/2011, of 14 December 2011 – “PAL”), which must be operated along other general statutes such as the Civil Code and the Constitution of the Portuguese Republic. Under the PAL, oral arbitration agreements are not considered as valid and enforceable. In addition, not every dispute may be subject to arbitration (“arbitrable”) even if the parties have agreed to resort to arbitration.

Answer ... The PAL applies to both domestic and international arbitration, albeit with slight nuances as regards the latter. For instance, in international arbitration there is no possible appeal of the final award, and if the parties wish to have a review on the merits of the dispute, they must conclude a supplementary agreement so as to hold a second arbitration to review that final award. According to Art. 49, no. 1 of the PAL, arbitration is “international” whenever interests of the international commerce are involved.

Answer ... Indeed, the PAL was inspired by the provisions and principles of the UNCITRAL Model Law.

Answer ... Not all the provisions of the PAL are mandatory but the core principles of arbitration may not be derogated by the parties (due process, independence and impartiality of the arbitrators, absence of appeal in international arbitration, grounds to set the award aside, to name a few).

Answer ... At present, there are no known projects or proposals to amend the PAL.

Answer ... Portugal is signatory to the New York Convention. It acceded to it on July 8, 1994, and it came into force in Portugal on January 16, 1995. Portugal has made a reciprocity reservation in the following terms: “Within the scope of the principle of reciprocity, Portugal will restrict the application of the Convention to arbitral awards pronounced in the territory of a State bound by the said Convention”.

Answer ... Yes, Portugal is party to the ICSID Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”), which came into force on August 1, 1984.

Answer ... Art. 1 (1) of the PAL provides that only negotiable patrimonial rights can be arbitrated. Regarding disputes involving non-economic interests “the arbitration agreement is also valid provided that the parties are entitled to conclude a settlement on the right in dispute” (Art. 1 (2) PAL). Disputes related to copyright and related rights may also be submitted to arbitration if they involve “disposable” or “alienable” rights (Portuguese Code on Copyright and Related Rights (1995)). Other “arbitrable” disputes include:

• Industrial property rights related to reference medicines and generic medicines (Law No. 62/2011 of 14 December 2011).
• Particular issues related to sport federations, leagues and other sports entities, and disputes related to doping in sport (Law No. 74/2012 of 6 September 2013).
• Particular issues of collective bargaining (Portuguese Labor Code).
• Issues related to copyrights and intellectual property involving:
• 1. royalties of works protected by copyright (Decree-Law No. 332/97 of 27 November 1997);
  2. rights to authorise or prohibit cable retransmission of works protected by copyright (Decree-Law No. 333/97 of 27 November 1997);
  3. compensation for the recording or reproduction of works (Decree-Law No. 62/98 of 1 September 1998); and
  4. technological protection measures (Portuguese Code on Copyright and Related Rights 1995).

Answer ... There are no restrictions on the choice of the seat of arbitration or of the arbitral institution.

Answer ... The PAL states that arbitration agreements must be in writing. The requirement applies whether the agreement takes the form of a stand-alone submission agreement or an arbitration clause in a contract (Art. 2 (1) PAL). An arbitration agreement is binding even when it is merely incorporated by reference into the contract giving rise to the dispute (Art. 2 (4) PAL). This writing requirement is met “if the 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” (Art. 2 (2) PAL) or “if it is recorded on an electronic, magnetic, optical or any other type of support, that offers the same guarantees of reliability, comprehensiveness and preservation” (Art. 2 (3) PAL). This requirement is also met “if there is an exchange of statements of claim and defence in arbitral proceedings, in which the existence of such an agreement is invoked by one party and not denied by the other” (Art. 2 (5) PAL).

Answer ... According to Article 18 (2) PAL, the principle of separability is expressly recognised, pursuant to which the invalidity of the underlying agreement does not automatically entail the invalidity of the arbitration clause per se.

Answer ... Yes, according to Art. 31 PAL, the parties are free to determine the place of arbitration. In case the parties fail to agree, such place shall be fixed by the arbitral tribunal, taking into account the circumstances of the case, including the convenience of the parties. In addition, the parties may freely agree to choose the language or languages to be used in the arbitral proceedings and if they do not agree, the arbitral tribunal shall determine the language or languages to be used in the proceedings (Art. 32 PAL).

Answer ... Parties must raise an objection to the jurisdiction of the arbitral tribunal up to, or together with, the submission of the defence on the merits (Art. 18 (4) PAL).

Answer ... Under the PAL, the tribunal is competent to decide, ex officio or at a party’s request, matters relating to the existence, validity and effectiveness of the arbitration agreement and the contract in which the arbitration clause is inserted (Art. 18 (1) PAL). This provision embodies the well-settled principle of kompetenz-kompetenz. The arbitral tribunal may rule on its own jurisdiction either in the final award or in an interim award. In the latter case, a party may challenge the arbitral decision before the state courts within 30 days (Arts 18 (9) and (10) PAL). If the arbitral tribunal rules on the jurisdictional issue for the first time in the final award, the decision by which the tribunal finds itself competent will only be open for challenge in set-aside proceedings (Art. 46 (3) PAL).

Answer ... According to Art. 5 (1) of the PAL, the state court can only address the issue of the jurisdiction and competence of an arbitral tribunal when the existence of an arbitration agreement is invoked by one of the parties and the court judge concludes that said agreement is manifestly null and void, is or became inoperative or is incapable of being performed.

Answer ... There are no restrictions, other than those provided for in the Portuguese Code of Civil Procedure (“CCP”), regarding judicial capacity in court. Regarding the Portuguese State and other collective entities of public law, they may be party to arbitration agreements provided that they are authorized by law to do so, or that the dispute relates to matters of private law (Art. 1(5) PAL).

Answer ... The parties, as well as the arbitrators (and if applicable, the entities that administer voluntary institutional arbitrations), have the duty to keep confidential all information and documentation produced throughout the arbitration proceedings, without prejudice to the duty to communicate or disclose information or activities to the competent authorities, if imposed by law (Art. 30 (5) PAL). Moreover, the parties are subject to the general duties of cooperation, good faith, and reciprocal correction, as provided by the CCP.

Answer ... Yes, Articles 11 and 36 PAL contain provisions referring to, respectively, the constitution of the arbitral tribunal in case of multiparty party arbitration, and the joinder and the intervention of third parties in pending arbitral proceedings.

Answer ... Arbitration proceedings seated in Portugal, and not involving international interests (in other words, domestic arbitrations), are generically governed by the Portuguese Arbitration Law. Regarding international arbitrations seated in Portugal, in the absence of a contractual provision, the validity of the arbitration agreement and the arbitrability criteria are governed by the law applicable to the merits of the dispute or by the Portuguese law (Art. 51(1) of the PAL). It is understood that Portuguese arbitration law will govern all aspects of the arbitration agreement and of the arbitration proceedings.

Answer ... The PAL provides that the arbitrators shall decide the dispute according to the law, unless the parties agree that they shall decide according to “ex aequo et bono” (Art. 39 PAL). In international arbitrations, in the absence of a contractual provision, the tribunal will uphold any choice of law, which will be understood as not including the rules on conflict of laws (save if the parties have provided that such rules are included in the appropriate contractual provision). In the absence of any provision as to the governing law, the tribunal will apply the law applicable to the merits of the dispute which holds the closest connection to the dispute (Art. 52 PAL). The foregoing does not prejudice the application of other rules according to international treaties which Portugal is party to (such as Rome I and Rome II).

Answer ... The PAL does not provide any specific provisions in respect to the consolidation of arbitratal proceedings. Nevertheless, the rules of arbitration of the prominent arbitral institutions in Portugal deal with consolidation issues, which are usually addressed on a case-by-case analysis.

Answer ... Article 36 PAL provides for the joinder and the intervention of third parties in pending arbitral proceedings. In such cases, The PAL sets forth that only third parties bound by the arbitration agreement, whether from the date of execution of said agreement or by having subsequently adhered to it, are entitled to join ongoing arbitral proceedings (Art. 36 (1) PAL). Nonetheless, the joinder of third parties requires the consent of all parties and the arbitral tribunal shall only admit third-party intervention provided that the joinder does not improperly disrupt the normal unfolding of the arbitration and there are relevant reasons justifying said joinder – e.g., when a third party has an interest in the subject matter of the dispute equal to that of the claimant or respondent in the arbitration proceeding (Art. 36 (2) PAL).

Answer ... Specifically to the extension of the arbitration agreement to third parties, at least two Portuguese courts have decided that arbitration agreements can be extended to non-signatory parties, but only in exceptional circumstances. In both cases, the court denied the extension of the arbitration agreement to those non-signatory parties (see decisions of the Lisbon Court of Appeal of 24 March 2015 and 11 January 2011). The Supreme Court of Justice affirmed the January 11 decision on 8 September 2011.

Answer ... Pursuant to article 10 (1) PAL, the parties may, in the arbitration agreement or in a subsequent instrument, appoint the arbitrator or arbitrators that will constitute the arbitral tribunal or stipulate the way in which the arbitrators are chosen, notably by committing the appointment of all or some of the arbitrators to a third party. In case the arbitral tribunal shall consist of a sole arbitrator and there is no agreement between the parties as to such designation, such arbitrator shall be chosen, at the request of either party, by the competent state court (Art. 10 (2) PAL). Where the arbitral tribunal is to be composed of three or more arbitrators, each party shall appoint an equal number of arbitrators, and the arbitrators so appointed shall choose another arbitrator, who shall act as arbitral tribunal´s chair (Art. 10 (3) PAL).

Answer ... According to Article 9 (1) PAL, arbitrators must be natural persons with full legal capacity. In addition, there is no restriction as to their field of expertise or academic qualifications, but most commonly, arbitrators have a legal background. The parties are free to agree on the number of arbitrators. However, the panel must be constituted by an uneven number of arbitrators.

Answer ... Throughout the arbitral proceedings, arbitrators have a duty to be and remain impartial and independent (Art. 9 (3) PAL), and they are also subject to the rules applicable to the challenge of court judges (Art. 9 (4) PAL). Under article 13 (1) PAL, arbitrators have a duty to disclose any circumstances that may give rise to justifiable doubts as to their impartiality and independence. In this context, if the arbitrator fails to make such disclosure and those facts or circumstances are subsequently made known to the parties, the arbitrator may be challenged by the parties. In general, an arbitrator may only be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not possess the qualifications agreed to by the parties. A party may only challenge an arbitrator appointed by it, or in whose appointment it has participated, for reasons of which it becomes aware after said appointment (Art. 13 (3) PAL).

Answer ... The challenging party must submit the challenge directly to the arbitral tribunal within 15 days of becoming aware of the constitution of the arbitral tribunal or after becoming aware of the facts forming the basis for the challenge. The arbitral tribunal, including the challenged arbitrator, shall decide on the challenge (Art. 14 (2) PAL). To this end, if an arbitration is to be replaced, he or she shall be appointed, in accordance with the rules applied to the appointment of the replaced arbitrator, without prejudice to the parties being able to agree that the replacement of the arbitrator shall be made in another way or that they waive the replacement (Art. 16 (1) PAL). Finally, the arbitral tribunal shall decide, considering the stage of the proceedings, if any procedural act shall be repeated in view of the new composition of the tribunal (Art. 16 (2) PAL).

Answer ... As mentioned, Art. 9 (3) PAL prescribes duties of impartiality and independence applicable to arbitrators. Additionally, when assessing whether there is a breach of the duties of impartiality and independence, state courts and arbitral institutions frequently take into consideration the “IBA Guidelines on Conflicts of Interest in International Arbitration” and the “Arbitrator’s Code of Ethics of the Portuguese Arbitration Association”.

Answer ... (a) Procedure, including evidence?

With regard to the procedure, the PAL establishes rules on the conduct of the arbitral proceedings, in particular to ensure the compliance with basic and mandatory principles: (i) the respondent shall be summoned to submit its defence; (ii) the parties shall be treated equally and given a reasonable opportunity to assert their rights, both in writing and orally, before the issuance of a final award; and (iii) the “due process” principle shall be complied with at all stages of the proceedings, except where otherwise provided by the law (Art. 30 (1) PAL). Without prejudice, until the acceptance of the first arbitrator, the parties may agree on the rules of procedure to be observed in the arbitration proceeding to be adopted by the arbitral tribunal, provided that those principles and other mandatory rules are respected (Art. 30 (2) PAL).

Additionally, the PAL does not prescribe an exhaustive list of admissible means of evidence in arbitral proceedings, thus the powers of the arbitral tribunal include, among others, the determination of the admissibility and relevance of any evidence presented or to be presented by the parties.

(b) Interim relief?

Once constituted, the arbitral tribunal may grant interim measures (Art. 20 PAL) and modify, suspend, or terminate an interim measure or a preliminary order it has granted or issued, upon application of any party or, in exceptional circumstances and after hearing the parties, on the arbitral tribunal’s own initiative (Art. 24 (1) PAL). An interim measure issued by an arbitral tribunal shall be binding on the parties and, unless otherwise provided by the arbitral tribunal, shall be enforced upon application to the competent state court, irrespective of whether the arbitration in which it was issued being seated abroad (Art. 27 (1) PAL).

(c) Parties which do not comply with its orders?

Generally speaking, there are two kinds of interim decisions: preliminary orders and interim measures, which may be defined according to international legal standards. The difference between those two is, whilst interim measures may be enforced in state courts (Art. 27(1) PAL), preliminary orders do not enjoy such facility (Art. 23(5) PAL). Notwithstanding, regarding procedural orders such as those related to the production of evidence, whenever the parties do not comply with the orders issued by the arbitral tribunal, a state court may assist arbitral proceedings by ordering disclosure/discovery or requiring the attendance and deposition of witnesses.

(d) Issuing partial final awards?

Partial final awards are expressly set forth in the PAL for the cases where the tribunal decides upon its own competence (Art. 18(8) PAL) and it is otherwise commonly understood that arbitral tribunals enjoy the power to make partial awards.

(e) The remedies it can grant in a final award?

There are no limitations as to the types of remedies available in arbitration, although Portuguese law does not allow punitive damages, i.e., in addition to the existence of actual damages – however, penalty clauses are valid and enforceable under Portuguese law.

(f) Interest?

Interest is considered to be a matter of substantive law and, therefore, the arbitral tribunal holds the power to award interest as long as the applicable law so provides for.

Answer ... In general, if a respondent fails to file its statement of defence or to participate in the final hearing, that does not prevent the arbitral proceedings from continuing. Nonetheless, the failure by the respondent to file the statement of defence does not, on its own, entail the acceptance of the facts alleged by the claimant, unless otherwise provided by the parties. The refusal to participate in an arbitration will not prevent an arbitration award against that party.

Answer ... In Portugal, once an arbitrator has accepted his or her appointment, that arbitrator will not be held liable for any damage caused by the decisions or judgments they make, except in the same circumstances in which judges can be held liable (Art. 9 (4) PAL). However, arbitrators may also be liable for damage caused to the parties by an unjustified delay in deciding a dispute that has been submitted to the arbitral tribunal (Art. 43 (4) PAL).

Answer ... According to Art. 5 (1) of the PAL (in line with the New York Convention), when a party commences court proceedings in apparent breach of an arbitration agreement, the state court before which a lawsuit is brought shall, if the respondent so requests not later than when submitting its first statement on the substance of the dispute, dismiss the case, unless it finds that the arbitration agreement is blatantly null and void, is or became inoperative or is incapable of being performed. National courts have constantly upheld the kompetenz-kompetenz principle and, therefore, do refer the parties to arbitration whenever the arbitration agreement is invoked by one of them.

Answer ... State courts may intervene in support of arbitrations seated in Portugal in the following matters: appointment of arbitrators when one of the parties has failed to do so, or of the chairperson, where the appointed arbitrators failed to reach an agreement as to the person who will serve as such; review of decisions on the fixation of fees; challenge of arbitrators; assistance to the arbitral tribunal in the taking of evidence; enforcement of interim awards and of the final award; procedures to set aside the award; review of the award in appeal when admissible; recognition of foreign arbitral awards.

However, the powers of state courts may be limited where institutional rules apply (for instance, according to most institutional rules, the challenge of arbitrators must be brought before the appropriate administrative bodies of the arbitral institution). Additionally and as aforementioned, the state court can, in exceptional circumstances (i.e. when it finds that the arbitration agreement is patently null, void, or incapable of being performed), decide upon the validity and operation of an arbitration agreement.

Answer ... Except when the agreement of the parties refers those powers to the arbitral institution at stake, parties cannot waive or otherwise modify the powers of state courts to intervene in help of arbitration.

Answer ... The costs of arbitration are decided by the arbitral tribunal in the award, but exceptionally a state court can intervene in correcting any decision of the tribunal related to the arbitrators’ fees.

In addition, unless the parties have agreed otherwise, the award shall state the apportionment between the parties of the costs arising directly out of the arbitral proceedings. The arbitrators may also decide in the award, if they consider it fair and appropriate, that a party or parties shall compensate the other party or parties for all or part of the reasonable costs and expenses that they show they have incurred by reason of their intervention in the arbitration (Art. 42 (5) PAL).

How will the tribunal approach the issue of costs?

Answer ... There are no restrictions under the PAL and the parties can agree on the terms of costs in arbitral proceedings. However, when involving the arbitrators’ fees and expenses, parties must firstly secure their agreement before they accept the referral.

Answer ... In Portugal, there is no legislation prohibiting third-party funding. In fact, although third-party funding is still at an early stage of development, there is a steadily growing awareness of such funding among players and professionals. Thus, the latest “Rules of Arbitration” (2021), of the CAC, now provide that, to guarantee the independence and impartiality of the arbitrators, parties must inform the CAC’s Secretariat, the arbitrators, and the other parties to the proceedings of any third-party funding (Art. 10 (5)). As third-party funding is yet to be regulated, this is a positive and opportune update provided by the CAC, surely innovative in the Portuguese context.

Answer ... In line with Article 42 PAL, the award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award based on a termination of the arbitral proceedings through settlement of the parties (Art. 41 PAL). The award shall also be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal or that of the chairman, in case the award is to be made by the latter, shall suffice, provided that the reason for the omission of the remaining signatures is stated in the award (Art. 42(1) of the PAL).

Answer ... Pursuant to Article 43 (1) PAL, unless the parties have agreed on a different time-limit up to the acceptance by the first arbitrator, the arbitrators shall deliver the final award on the dispute brought before them within twelve months from the date of acceptance of the last arbitrator. Notwithstanding, the parties may subsequently agree on extensions of such time-limit. Likewise, the tribunal is free to determine such extensions, unless all parties oppose.

Answer ... The recognition and enforcement of arbitral awards is subject to the PAL and the Code of Civil Procedure. The judicial procedure follows the general enforcement procedure before state courts. According to the PAL, the party seeking to enforce an arbitral award must supply the original or a certified copy of the award, and, if the award was not made in Portuguese, a certified translation thereof into Portuguese (Art. 47 (1) PAL). The New York Convention on the Recognition and Enforcement of Arbitral Awards of 1958 (“New York Convention”) also applies in Portugal.

Answer ... Parties may only request the annulment of awards by means of a set-aside lawsuit, according to Art. 46 PAL. The party making the application for an arbitral award to be set aside by the competent state court must show that:

• one of the parties to the arbitration agreement was under some incapacity or the agreement is not valid under the applicable law;
• there has been a violation of the due process principles set forth in Art. 30 (1) of the PAL, with a decisive influence on the outcome of the dispute;
• the award dealt with a dispute not contemplated in the arbitration agreement, or contains decisions beyond the scope of the arbitration agreement;
• the composition of the arbitral tribunal or the arbitral proceedings did not comply with the agreement of the parties, unless the agreement was in conflict with a mandatory provision of the PAL or the composition of the tribunal or the proceedings were not in accordance with this Law, and, in any case, if this inconformity had a decisive influence on the decision of the dispute;
• the arbitral tribunal awarded an amount in excess of what was claimed or on a different claim from that that was presented, or has dealt with issues that it should not have addressed, or failed to decide issues that it should have decided;
• the award does not comply with the formal requirements set out in Art. 42 (1) and (3) of the PAL; or;
• the award was notified to the parties after the deadline contained in Art. 43 of the PAL.

In addition, the court may annul the award if it finds that:

• the subject-matter of the dispute cannot be decided by arbitration under Portuguese law; or
• the contents of the award violates the principles of the Portuguese international public policy.

Answer ... The petition for seeking the annulment of the award must be filed before the competent state court within 60 days from the date of the notification of the award (Art. 46 (6) PAL).

Answer ... Arbitral awards may be subject to appeal if the parties’ agreement contemplated such option. Otherwise, awards may only be challenged by way of a setting-aside lawsuit, the right to which the parties cannot waive before the award is made.

Answer ... As mentioned, the arbitrators, the parties and the arbitral institutions must preserve the confidentiality of any information obtained and any documents produced during the arbitration proceedings, without prejudice to the duty to communicate or disclose information or activities to the competent authorities, if imposed by law (Art. 30 (5) PAL).

Answer ... Unless a party objects, awards and other decisions may be published, excluding details that would identify the parties’ law (Art. 30 (6) PAL).