The current Arbitration Act dates from 1986 – although it has undergone some amendments – and arbitrations were already possible before that time.
Despite these last 20 years, the current practice is somewhat limited for a number of reasons, such as a general ‘suspicion’ about arbitration and the costs involved, as well as the fact that the Arbitration Act contained some provisions that could be used by a party less interested in having the conflict settled by means of an award than in freezing proceedings for years. The most recent amendment to the Arbitration Act has made this strategy more difficult.
As to the general ‘suspicion’ – although it is becoming less strong, at least when compared with other criticisms that can be made of the state court system, it does stem from several different causes.
In the Portuguese system there is no tradition of conciliation, with the consequence that almost all disputes go to court and settlements are only negotiated close to the trial stage. As no punitive damages are provided for in the law and as the losing party will only bear a very limited part of the legal costs of the counterparty, litigating – even considering the slow pace of Portuguese courts – frequently appears advantageous.
Arbitration, by nature and in consequence of the proximity between the parties and the tribunal, tends to provide many more opportunities for (informal) conciliation; conversely, the pursuit of unanimous decisions by arbitration tribunals often leads to more balanced decisions, therefore disadvantaging parties aiming for an all-out defeat/win.
This remark is the reverse side of the advantages arising from the closeness between the tribunal and the parties.
Traditionally, there was also a high level of respect for the state courts, which is gradually diminishing in consequence of the slow rate of proceedings (a case may take up to five years to be decided) and the practical inability of state courts to deal with the demands of some types of modern litigation.
In conclusion, and despite the reservations one may still have concerning arbitration, it is slowly establishing itself as the main alternative dispute resolution method.
As to costs, state courts used to be substantially less costly than arbitration. However, the law on costs was changed recently and state court fees increased dramatically, leading to a situation in which – and even in major disputes – the costs charged by an arbitral tribunal will be similar to the fees charged by a state court.
The Portuguese Arbitration Act is far from perfect and could certainly benefit from some changes in the near future. Nevertheless, the Portuguese Arbitration Act is a very valid instrument and provides almost complete freedom for arbitrators in defining the applicable rules and/or allowing the application of international regulations. This means that despite some ‘local eccentricities’, Portuguese law governs and accepts arbitration in similar terms to those of other modern laws.
A major step in the spread of arbitration as an effective dispute resolution method has been provided by the government, which has included arbitration clauses in a number of major contracts entered into in recent years.
2.1 What are the principal sources of law and regulation relating to domestic and international arbitration? (Describe the role of federal or state laws and relevance of court decisions.)
Arbitration is governed by Law 31/86 of 29 August (as amended by Decree-Law 38/2003 of 8 March) – the ‘Voluntary Arbitration Law’, which regulates domestic arbitration proceedings and provides the relevant framework for international arbitration. It is a reasonably modern statute, which takes into account some guidelines from the UNCITRAL Model Law on International Commercial Arbitration and is therefore suitable for effectively supporting arbitration (although there is some room for improvement in particular aspects).
In very broad terms the Voluntary Arbitration Law grants a substantial margin of freedom to the parties and to the arbitrators when defining the rules of the proceedings, merely imposing respect for some basic principles which are very close to those set out in the United Nations Convention on the Recognition and Enforcement of Arbitral Awards of 1958 (the New York Convention).
Furthermore, the Voluntary Arbitration Law allows the parties to use rules laid down by national entities providing arbitration services.
Besides the Voluntary Arbitration Law, there are some provisions in the Civil Procedure Code, most of which are connected with the value of awards and their enforcement (awards granted in domestic arbitration are considered equivalent to state court decisions while awards rendered by foreign arbitral tribunals are recognised in the same terms as foreign court decisions).
There is no precedent rule in Portugal and therefore court decisions are not binding for future cases. Furthermore, there are still a limited number of appeal court decisions concerning arbitration.
Finally, there is legislation creating private arbitration/mediation centres for settling consumer disputes and other types of minor disputes.
2.2 List and briefly describe relevant arbitration statutes, international treaties and conventions.
As mentioned above, arbitration is governed by Law 31/86 of 29 August (the Voluntary Arbitration Law); there is other legislation which sets out arbitration provisions (although the base is always the Voluntary Arbitration Law), with the most relevant being the Administrative Courts Procedure Code (enacted by Law 15/2002 of 22 February – which in certain cases allows individuals to force the state into arbitration) and the statute governing public construction contracts (Decree-Law 59/99 of 3 March). In legislation establishing major concession agreements it is also common to find arbitration provisions (although only applicable to those contracts).
As regards international treaties, Portugal (besides being a member of the EU) is a signatory to the 1958 New York Convention (Enforcement of foreign awards), as well as to the 1965 Washington Convention (ICSID).
3.1 What are/describe the principal institutions and/or government agencies that assist in the administration or oversight of international and domestic arbitrations?
There are no governmental agencies involved in the oversight of arbitration.
In international terms the International Chamber of Commerce (ICC) appears to be the more popular choice, although references to other international institutions are often found in agreements involving Portuguese parties.
In domestic arbitration proceedings there is a tendency to prefer ad hoc arbitrations. The local ICC branch also provides arbitration services and has its own arbitration rules, which are frequently used. There are several other entities with little activity (at least involving major commercial disputes). The Bar Association is currently revising its own Arbitration Rules in order to relaunch its own centre.
4.1 What is the relationship between agreements to arbitrate and access to the courts? Is there a presumption of arbitrability/policy support for arbitration? Will the courts stay court actions in favour of agreements to arbitrate?
The development of court decisions that analyse arbitrability and arbitration awards in the last 20 years shows a clear trend in favour of arbitration as a good means of settling disputes.
Courts now accept that they do not need to scrutinise arbitration agreements as they manifest the will of the parties.
Furthermore, there is a clear tendency by recent governments to favour arbitration, mainly in view of the current situation in the court system. This tendency is evidenced by the number of arbitration clauses inserted in public contracts, as well as in changes in the law to make provision for the arbitrability of certain disputes.
That has not prevented decisions excluding the arbitrability of some disputes, some of them on strange grounds.
Under Portuguese law, a matter cannot be referred to arbitration when it involves ‘unavailable rights’ (ie rights that, because they are connected with fundamental values, cannot be waived by the will of the parties). However, the Appeal Court of Lisbon (File no 3317/2003–6) ruled that an arbitral tribunal could not decide on the termination of a lease agreement, as lease agreements are regulated by some rules that cannot be waived by the parties an therefore have to be construed as unavailable rights.
Under the applicable procedural law, courts must stay proceedings if an agreement to arbitrate exists, provided that this objection is raised by one of the parties. There are numerous appeal court decisions staying court proceedings in consequence of the existence of an arbitral clause.
Nevertheless, there was more than one decision refusing such stay when one of the parties evidences that it cannot afford arbitration: the Appeal Court of Oporto (File no 120301, 2001) decided that if that situation arises without fault, the party in question shall revert to state court where legal aid is available, arbitration being no longer possible. The Appeal Court of Lisbon (File no 13096) and the Supreme Court of Justice (File no 99A1015, 2000) took similar decisions in different cases. However, the same Supreme Court, in 2003 (File no 3B1604), decided in the opposite direction, stating that a party signatory to an arbitration clause (international arbitration) without the means to enter into an arbitration should not survive as a going concern, this problem being not a reason to allow it to refuse the arbitral tribunal. In same direction the Supreme Court (File no 01B4182) decided that the fact that legal aid does not apply to arbitration proceedings cannot be a motive to refuse the arbitration clause.
4.2 May an arbitral tribunal rule on a party’s challenge to its own jurisdiction (‘competence-competence’)? Need a tribunal suspend its proceedings if a party seeks to test jurisdiction in the courts?
The ‘competence-competence’ principle is fully recognised. The rule is that objections as to the tribunal’s competence must be raised prior to the time an answer on the merits is or should have been filed.
If the tribunal considers itself competent, its decision may only be challenged after a final award is rendered and by means of an application to set aside the award.
5.1 Provide a selected bibliography of the most influential publications in or relied upon in the jurisdiction – books, journals, newsletters and pamphlets.
Books
A de A F Correia Temas de Direito Comercial, Arbitragem Comercial Internacional, Reconhecimento de Sentenças Estrangeiras, Conflitos de Leis (Coimbra: Almedina, 1989) Portugal J L Esquível Os contratos administrativos e a arbitragem (Coimbra: Almedina, 2004) L de L Pinheiro Arbitragem transnacional: a determinação do estatuto da arbitragem (Coimbra: Almedina, 2005) R M M Ramos Estudos de direito internacional privado e de direito processual civil internacional (Coimbra: Coimbra Editora, 2002) J L P L dos Reis Representação forense e arbitragem (Coimbra: Coimbra Editora, 2001) D M Vicente Da Arbitragem Comercial Internacional: Direito Aplicável ao Mérito da Causa (Coimbra: Coimbra Editora, 1990)
Journals
P M de Nápoles and I G da Cruz ‘Why the market is favouring arbitration’ [2005] International Financial Law Review, September P C e Siva ‘Anulação e Recursos da Decisão Arbitral’ (1992) 52 Revista da Ordem dos Advogados III at 893–1018, December M T de Sousa ‘A Recorribilidade das DecisÚCes Arbitrais’ [1988] Revista O Direito at 561–578 R Ventura ‘Convenção de Arbitragem’ (1986) 46 Revista da Ordem dos Advogados, September
6.1 Are there form and/or content requirements for an enforceable agreement to arbitrate? How may they be satisfied?
The only requirement set out by law is that the agreement to arbitrate must be written. The law expressly allows the validity of an agreement entered into by telex, by any other means of communication that provides written proof, or even by reference to any other document where an arbitration agreement is stipulated.
There is, however, a certain area of uncertainty, as can be seen through the following two decisions.
The Appeal Court of Oporto decided that a Tenant’s Regulation (Regulamento de Condomínio – the document that defines the rules applicable to the matters related with the common area of a building) is title enough to have arbitration, even if the actual owners of the plot did not sign formally any written agreement on arbitrability for their specific conflicts (File no 9650553, 1996). However, another decision from the same appeal court (File no 0030614, 2000) stated that this Regulation is not enough, a written agreement by the actual parties to the conflict on the arbitrability being necessary.
The law also requires that the dispute or the juridical relationship from which the dispute arises be identified.
There are mandatory proceedings that the law considers to be arbitration proceedings but which are not exactly arbitrations in the strict sense (that is the case eg with arbitrations involving expropriations).
However, there has been a tendency in recent years to favour arbitration in consequence of the situation of the Portuguese courts (complex procedural law, tardiness etc) and, as mentioned above, at least within the field of administrative law, there are situations where the individual may compel the administrative authorities to have recourse to arbitration.
7.2 Is arbitration prohibited for certain types of dispute (restraints of fundamental public policy)?
Article 1(1) of the Voluntary Arbitration Law establishes that any dispute may be subject to arbitration, provided that it (i) does not concern rights that the parties may not freely waive (literally ‘non-available rights’), (ii) to disputes that can only be decided in a state court or (iii) to disputes that have to be decided through state arbitration.
An example of the first proviso is proceedings involving family law; in the second case, examples are bankruptcy proceedings or enforcement proceedings; and in the third case we have eg expropriation proceedings, where a para-arbitral procedure is established and is mandatory.
Notwithstanding the wide scope of arbitration in Portugal, it is almost exclusively used to solve commercial disputes. Therefore there is little jurisprudence on the matter and surprises may arise as the definition of ‘nonavailable rights’ may cause some difficulty: a recent Lisbon Appeal Court (Case 3317/2003–6, 23 October 2003) stated that arbitral tribunals may not settle disputes concerning lease agreements as they refer to mandatory rules of law and therefore have to be construed as ‘non-available rights’.
8.1 May an arbitral clause be considered valid even if the rest of the contract in which it is embedded is invalid?
There is no court precedent that would provide a clear reply to this question. We think that in principle the interpretation of the conditions of the validity of the arbitral clause is arrived at by means of the same rules applicable to any other contractual clause. If, for instance, the invalidity is a consequence of forgery and one party falsified the signature of the other, obviously the entire contract is affected. But if the invalidity is based on other less absolute grounds, we believe that the arbitration clause can survive as a way of deciding whether the contract is invalid. In any event, the probability of an arbitral award being set aside when one of the parties provides evidence that the contract is invalid from the outset is higher than average.
9. QUALIFICATION/APPOINTMENT/LIABILITY OF ARBITRATORS
9.1 Are there specific provisions regulating the qualifications of arbitrators? Are there requirements (including disclosure) for ‘impartiality’ and ‘independence’, and do such requirements differ as between domestic and international arbitrations?
Traditionally, in Portuguese arbitration proceedings the chosen arbitrators are not usually asked to provide a disclosure of information to allow the parties to scrutinise whether the conditions for impartiality and independence are present. The historical reason is the small size of the Portuguese legal market, where only a few practitioners play active parts in arbitration. This means that it is easy to discover whether any potential arbitrator could be in a situation leading to problems of independence and/or impartiality.
In any case, the rules applicable to arbitrators are the same as those applicable to state judges. The small size of the market often justifies the parties accepting as co-arbitrator (or even as President) a practitioner who has formally had some kind of professional contact with one of the parties, if the person is considered ethically very correct. This happens, quite often, when the Republic is one of the parties, as the most respected arbitrators have already, in one way or another, worked for the government. The internationalisation of the Portuguese economy, the growing number of practitioners and the increase of international arbitration, is bringing Portuguese practice closer to international behaviour.
Both as a result of this growth and the influence of foreign and international sets of rules, it is common nowadays to see arbitration clauses and tribunal regulations providing for the presentation of declarations of independence.
No limitations exist as to citizenship, profession or residence even for domestic arbitration.
9.2 Are there provisions governing the challenge or removal of arbitrators? Do the courts or other jurisdictions play/have a role in any such challenge?
Yes, the Arbitration Act allows this possibility, provided that the arbitrator in question was not appointed by mutual agreement. The application is filed with the tribunal and may be appealed in the state courts. The provision is not, however, very clear and a number of procedural problems may arise.
In fact, we found an award (File no 0047281, 2002) from the Appeal Court of Lisbon about impartiality of arbitrators. The decision is that the arbitrators are nominated pursuant to the will of the parties and therefore it is not possible to file a request for the removal of one arbitrator as it would be an abuse of right.
9.3 Does legislation govern, or have the courts developed rules regarding the liability of arbitrators for acts related to their decision-making function?
As a general rule, arbitrators are as liable for their functions as are any other professionals. However, they do benefit from the same protection as afforded to judges, which will free them from any liability related to the consequences of the award unless evidence is made of wilful intent (dolo). The main reason for professional liability is the failure to grant an award within the time limit defined by the parties and accepted by the arbitrators, as the consequence would be to have the dispute referred to state courts and the arbitration clause deemed forfeited.
10. PARTY REPRESENTATION
10.1 Are there particular qualification requirements for representatives (‘counsel’) appearing in the jurisdictions?
The Voluntary Arbitration Law simply states that the parties may appoint someone to represent them in the proceedings. Thus it is clear that the law does not require that the parties be represented by legal counsel and therefore, if they so desire, they can represent themselves before the tribunal.
It is, however, a different matter to determine whether they can be represented by someone who is not a lawyer. Within domestic arbitration our opinion leans towards the understanding that the representative must be a lawyer (that is qualified to act as a lawyer in Portugal); the same would apply to international arbitration taking place in Portugal. We are unaware of any court decision on this matter.
11. PLACE OF ARBITRATION/PROCEDURES
11.1 Are there provisions governing the place (seat) of arbitration, or any requirement for arbitral proceedings to be held at the seat?
The Voluntary Arbitration Law only provides that the parties are free to agree on the seat of the arbitration and, failing such agreement, the arbitrators will decide. This provision refers only to domestic arbitration and only deals with the place where the proceedings are conducted (as the same laws apply in all countries, the seat will only be important to determine the competence of the appeal court – if applicable – or the court where an application to set aside the award should be filed).
As for international arbitration, the legislator was intentionally vague, thereby granting the parties (and the arbitrators) the powers to establish whatever rules they see fit. There seems to be nothing to prevent the proceedings (including the hearings) being conducted away from the seat of arbitration (provided that the parties agree).
11.2 Are specific procedures mandated in particular cases, or in general?
The few provisions of the Voluntary Arbitration Law which are meant to regulate the arbitration proceedings are general and may, in most cases, be waived by the parties.
Nevertheless, under the regime applicable to public construction contracts (mentioned above), the legislator decided to introduce some mandatory provisions on the procedure to be followed. Also, when arbitration is provided for in state concession contracts, it is common to find provisions for arbitration arising from that particular contract.
12. EVIDENCE GATHERING
12.1 What is the general approach to the gathering and tendering of evidence at the pleading stage and at the hearing stage (production, discovery, privilege, use of witness statements etc)? Are there differences between domestic and international arbitrations?
Portuguese procedural law still relies on oral witness statements, and does not allow written affidavits (except in particular cases). Even in cases construed on the grounds of documents it is common to have witnesses explain the meaning, context and scope of such documents. Expert witnesses are almost unknown (except within a formal expertise) and there are limitations on the deposition of parties’ representatives.
Consequently, it is common to see parties, even in domestic arbitration proceedings, establishing different rules on evidence gathering. Because of this, Portuguese parties in international arbitrations tend to accept different rules of evidence and the use of a set of rules, such as the IBA Rules on taking evidence, raise no particular difficulties.
12.2 What powers of compulsion or court assistance are there for arbitrators to require attendance of witnesses or production of documents, either prior to or at the substantive hearing? Is there a difference between domestic and international tribunals or as between parties and non-parties? Do special provisions exist for arbitrators appointed pursuant to international treaties (ie bilateral or multilateral investment treaties)?
Civil law establishes that the refusal of a witness (or of a party representative) to take the stand, or the refusal to produce documents, can be freely evaluated by the judge. This means in practical terms that a court may in theory decide against a party that refused to co-operate if the court is convinced that if the evidence were to be presented, it would be harmful to the interest of that party. In limited situations, this threat will function as a compulsory mechanism.
On the other hand, parties (and also the tribunal, although the law does not state it) may – after obtaining permission from the arbitral tribunal – request that the evidence be produced at the state court, after which it will be sent to the arbitral tribunal. It is not a practical system.
13. INTERIM MEASURES/ROLE OF THE TRIBUNAL
13.1 Are there special provisions relating to the granting of interim and preliminary relief? Have the courts recognised and/or limited any such authority? Do the courts themselves play a role in interim relief in arbitration proceedings?
Portuguese law makes provision for a certain number of interim measures, which are more or less typified. These are ordered by Portuguese state courts and there is some debate as to whether they can actually be ordered by an arbitral tribunal. In fact, in state courts, the consequence of not complying with an order of this type may imply criminal liability; however, a state court has (in theory) the means to enforce its own decisions.
For a number of years some Portuguese courts refused to order interim measures using the argument that if the parties had provided for the settlement of disputes through arbitration, that would necessarily involve interim measures. That changed in recent years (cf Files nos 06361, 2000 and 711/96, Appeal Court of Lisbon) and currently the main understanding tends to be the opposite, ie that only state courts are able to issue interim measures (as defined in the procedural law), as only they have at their disposal the means necessary for enforcement.
A different question arises when a tribunal, during the course of the proceedings, orders a party to adopt a certain type of behaviour or to refrain from doing something (this will be an ‘interim order’, but not an ‘interim measure’ for the purposes of Portuguese procedural law).
Very often in those cases we are facing little more than a procedural order and the consequence of not complying with it will be freely evaluated by the tribunal (eg if a party refuses to keep some evidence and destroys it, the tribunal will take such behaviour into account when evaluating the level of evidence produced).
Finally it should be noted that in Portuguese law it is not possible – in principle – to apply for interim measures in order to obtain the effect that would be obtained at the end of the main action (if successful); ie it is not possible to ask a court for an interim order for a party to pay some instalment under a contract (only securities may be obtained), or to obtain an immediate eviction during the discussion of a lease agreement. This characteristic of Portuguese law limits the scope of application of interim measures which, in commercial disputes, are normally used to secure credits. In such cases, it would be far easier to apply directly to a state court, which can enforce its decision directly.
Obviously it is possible, by agreement between the parties, to give the arbitral tribunal the power to decide preliminary awards or to use deposits provided by each one of the parties to compensate for the non-compliance with an interim order.
14. TAXATION OF ARBITRATORS’ FEES
14.1 Does the state, or any of its sub-divisions, purport to tax domestically the fees of foreign arbitrators conducting hearings in the state? Is there a difference if the arbitration is ‘seated’ in the state or elsewhere?
The tax rules related to international arbitrations are similar to those in other EU countries and the national rules are compatible with the interpretation provided by the European Court of Justice.
Therefore – and although we are not aware of any tax authority ruling in this regard – within the EU territory, arbitrators should add VAT to their fees, according to the rules in force in their home country, regardless of the place of arbitration.
15. DEFAULT PROCEEDINGS
15.1 Are there provisions governing a tribunal’s ability to determine the controversy in the absence of a party who, on appropriate notice, fails to appear at or seek adjournment of the arbitral proceedings?
The Voluntary Arbitration Law rules that ad hoc arbitration should be commenced by means of a letter notifying the counterparty of the intention to start arbitration proceedings, identifying the subject matter of the dispute and indicating the name of the sole arbitrator (for approval by the counterparty) or – if there are three (or more) – the name of the arbitrator that it wishes to appoint.
The counterparty has 30 days to answer this letter. If it fails to do so (or if it refuses to submit to arbitration), the party seeking arbitration may file an application with the appeal court for the district for the appointment of the remaining arbitrator(s).
The law does not require the effective participation of both parties in the proceedings; it is satisfied that both parties have a fair chance to appear and present their case. Therefore, if a party fails to participate, the proceedings will continue and an award will be rendered.
16. THE ARBITRAL AWARD
16.1 Must an award take any particular form, eg in writing, signed, dated, place, the need for reasons, delivery etc?
The Arbitration Act requires the award to be made in writing, signed, dated and state the place. The facts proved and the reasoning behind the award must be provided in some detail, as there have been cases of state courts setting aside awards on those grounds, although the position of the appeal courts is far from unanimous.
The Appeal Court of Lisbon (File no 69326, 1994) stated that the arbitrators are not obliged to answer to all the allegations of the parties, nor it is necessary for them to justify why they consider that enough evidence is not provided for some facts and that some other facts are irrelevant. This decision is obviously arbitration-friendly as it allows for simplification. Similarly the Supreme Court of Justice (File no 78288, 1990) said that if the award explains what is at stake in the case ‘with some detail’, identifies the arbitrators, refers the legality of the arbitration process, res judicata and its enforceability, that shall be considered enough for the national courts (it was the exequatur of an international arbitration award prior to the Portuguese adhesion to the UN Convention). In the same direction the Supreme Court (File no 841/01) and also the Appeal Court of Lisbon (File no 7318/00) stated that only the ‘absolute lack of motivation’ by the arbitral tribunal could justify the set aside of the award. Also the Supreme Court of Justice (File no 86342, 1995) stated that in order to set aside an award it is not enough that the motivation is defective, not perfect, erroneous or ‘insufficient’, it must not exist at all.
However the Supreme Court (File no 1B841, 2001) decided that, as the level of reasoning for the award is not defined by the Arbitration Law, the national procedural code would apply, which potentially could jeopardise a lot of arbitral awards if not familiar with Portuguese internal judicial criteria.
In the same direction in File no 3570/01, the Supreme Court set aside an award based on the fact that some requests of one party, as the simple fact of agreeing with the reasons invoked against it was not enough as motivation. Also the Appeal Court of Oporto, in a recent decision (File no 0324038, 2003), stated that the ‘analysis of evidence’ is a condition for not setting aside the award, not being enough a simple reference to what are the facts established and the means of evidence that justify the conclusion. The same court, however, in 2002 (File no 0132080), stated that an arbitration court shall not be bound to apply the strict formalistic rules that define the state courts.
The award must also be notified to the parties (or their legal counsel) for enforceability purposes and deposited with a state court. This last requirement may be waived by the parties themselves.
16.2 Are there limits on arbitrators’ powers to fashion appropriate remedies, eg punitive or exemplary damages, rectification, injunctions, interest and costs?
Portuguese law does not provide for punitive damages or similar remedies, with the exception of ‘astreintes’ (fines established on a daily basis for noncompliance with a court order). However, if the arbitration venue is Portugal but the applicable law is not Portuguese law, punitive damages may be considered.
As to rectifications, interest and arbitration costs, the arbitrators are empowered to make awards in this respect unless otherwise decided by the parties. A different situation may arise with regard to the legal costs borne by each party. Except for specific situations the procedural law does not provide for the recovery of these costs and therefore, in domestic situations, it is common to see specific provision either denying or establishing the possibility of such costs being recovered.
In international arbitration and even when Portuguese law is applicable to the merits of the dispute, no objections are raised to the recovery of these costs.
As for injunctions/interim measures, see section 13.1 above.
17. RECOURSE FROM AN AWARD
17.1 Are there provisions governing modification, clarification or correction of an award?
The law establishes that the jurisdictional power of the arbitrators ceases with the deposit of the decision in the state court or, when such deposit is waived, with the notification of the decision to the parties. Despite the strictness of this provision (mainly when the deposit is waived; when the award is to be deposited it is common for the tribunal to wait ten days for possible requests for clarification), tribunals have been considering themselves competent to clarify and correct mistakes and/or lapses before the decision is considered res judicata.
An interesting award from the Supreme Court of Justice (File no 086342) refers to a situation in which two arbitrators decided the award with the other dissenting, but a clarification had been agreed by the President and the former dissenter, against the opinion of the arbitrator that contributed to the award first decision. The Supreme Court saw no problem with that and did not set aside the award.
Modifications of the decision are not possible unless the parties made provision for an appeal. See below.
17.2 May an award be appealed to or set aside by the courts? If so, on what grounds and by what procedures?
In the arbitration agreement, the parties may waive their rights of appeal from the very outset, thereby conferring definitive status on the arbitral award. The waiver of the right to appeal may result expressly from the arbitration agreement but may also be implied from such an agreement if the parties refer to the dispute being ‘definitively’ adjudicated by the arbitral tribunal or, alternatively, authorise the arbitrators to decide according to equity. In fact, any mention of the word ‘definitively’ in the arbitration agreement is effectively a waiver of the right of appeal. On the other hand, since equity is based on general principles of justice and the conscience of the judge, recourse to equity obviously entails a waiver of the right of appeal.
The contrary holds true in international arbitration, that is to say, an appeal cannot be lodged against the arbitral award unless the parties have made express provision for such an appeal and set out the applicable terms.
However, even in those cases where the right of appeal is waived, the law allows the parties to challenge the arbitral award in two different ways, namely, by means of an application to set aside the award (an annulment action) or by means of an application opposing the enforcement of the decision.
The request to set aside the award must be filed within one month of the date of notification of the arbitral award, at the first instance court of the district where the arbitration took place. Therefore the venue of the arbitral tribunal is relevant for the purposes of determining which court has jurisdiction to hear the annulment proceedings. The opposition to enforcement will be filed when the enforcement is requested (if applicable).
The grounds to set aside an award correspond to situations which are so serious in their nature that very often they justify overturning the definitive status of the arbitral award. Thus, an action for annulment cannot be seen as a type of appeal against an arbitral award.
Consequently, the parties can only apply for the annulment of an arbitral award in the event that: (i) arbitration is not a suitable means of settlement for the particular dispute; (ii) the award has been made by a tribunal which lacks jurisdiction or by a tribunal which has been improperly constituted; (iii) there has been a breach of the fundamental principles which govern arbitration proceedings (equality, summons, adversarial principle, the opportunity for the parties to be heard prior to the final decision); (iv) the award has not been signed by a majority of the arbitrators, does not include or identify dissenting opinions, or does not give reasons; or (v) the award has addressed issues which lay outside its scope or has failed to address issues which it should have done.
It is noteworthy that within these provisions there is no reference to international public policy (ordre public).18. ENFORCEMENT OF AWARD
18.1 What are the procedures and standards for enforcing an award? Is there a difference between ‘domestic’ and ‘non-domestic’ awards?
For the purposes of enforcement, there is no difference between ‘domestic’ and ‘non-domestic’ awards. Instead the distinction is made between awards rendered in Portugal and awards rendered abroad.
Domestic awards are considered fully equivalent to national court decisions and therefore may be enforced directly in court (ie without the need of any procedure to obtain the ‘exequatur’). The only difference is that the enforcement proceedings can be contested on the same grounds that a request to set aside the award could be filed. In practical terms this means that if a party fails to file a request to set aside the award in due time, it still may avoid the enforcement with the same grounds. The same applies to awards rendered within international proceedings whose venue is Portugal.
As for awards rendered abroad, Portugal is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. The only exclusion declared by the Portuguese government concerned the principle of reciprocity, according to the provisions of art I n 3. Nevertheless, under certain conditions, Portugal recognises any foreign arbitral award.
In order to be enforced in Portugal, any foreign award needs to be recognised, ie to obtain the ‘exequatur’.
If the award was rendered in a country that is a party to the New York Convention, the only purpose of the recognition procedure will be to analyse whether the terms of art V of the Convention apply to the award. Nevertheless, even if the award was rendered in a country not bound by the New York Convention, the causes of non-enforcement under Portuguese law are very similar to the ones prescribed in art V of the Convention.
In no case will the court order a re-hearing of the dispute or a revision of the award. It is although possible that because of the compliance with the fundamental principles of Portuguese law (ordre public), the court may not recognise the entire award.
Once the foreign award is recognised, no other obstacle exists to its enforcement. The enforcement follows the provisions of the Portuguese Procedural Rules regarding the enforcement of judicial court decisions. Those rules still allow some opposition procedures to the enforcement (with very strict grounds), but in general those procedures are not able to stop the enforcement procedure, unless a surety is offered.
19. CONFIDENTIALITY OF PROCEEDINGS
19.1 What are the confidentiality requirements of the arbitral process, ie existence of the arbitration, pleadings, documents produced, hearing, award?
There is no provision in the law concerning confidentiality of the proceedings, although there is a general belief that arbitration proceedings are meant to be confidential. As a result, the entities providing arbitration services do not publish their decisions and it is very difficult to obtain information regarding disputes solved by arbitration. Therefore, only when a request to set aside is filed or when an appeal is decided in a state court is it possible to know more about arbitration proceedings (and even then, only a small percentage of the decisions rendered by appeal courts used to be published until recently).
As to the utilisation of materials used in arbitration proceedings, nothing prevents such utilisations. There are, however, some private rules that establish confidentiality of the proceedings.
20.1 Is there any particular aspect of the approach to arbitration in the jurisdiction which bears special mention?
Most of the particularities that arise within arbitrations involving Portuguese parties (mainly if the venue is Portugal) are more a consequence of the yet-limited arbitration experience in Portugal, rather than an evidence of any sort of anti-arbitration spirit.
From a legal point of view, the arbitration law was conceived in order to provide the largest field of application to arbitration. It is up to the practitioners to go along what clearly was the legislator’s intention.
