Portugal
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. The freezing order consists of a judicial apprehension of assets located within the Portuguese jurisdiction. In general the respondent is not prevented from dealing with the assets, but any dealings of the assets with third parties could be held to be ineffective (as if they did not take place).
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
No.
3. Briefly what is the relevant legal test?
The applicant must evidence:
(i) the probability of the existence of a claim; and
(ii) that there is a risk of the claim not being paid (for example, dissipation for the purposes of frustrating or preventing the satisfaction of a judgment or award).
The applicant must specify the assets to which the freezing order will apply.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The applicant must file an application with the Court, providing the relevant facts, the relevant documents and appointing the witnesses (where appropriate). Freezing orders are usually ordered without prior notification to the respondent.
After the freezing order is granted, the respondent is summoned and may challenge and/or appeal the freezing order.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Not as a general rule. However, the Court may order that the applicant provides a deposit guarantee before granting the freezing order. If the freezing order is deemed unjustified or expires due to the applicant’s inaction the applicant may be considered liable for damages caused.
6. Can it be sought against third parties?
Yes, a third party to the underlying proceedings or prospective proceedings may be made a party to a freezing order where there is good reason to suppose that its assets are in fact the assets of the respondent/defendant in the underlying litigation or will be available to the defendant/respondent to meet a judgment or arbitral award. Equally a third party which is not a party to the freezing order (for example, a financial institution holding the defendant’s assets) which is notified of it is still required to ensure that it does not knowingly assist the respondent in breaching the terms of the freezing order.
7. What assets are covered by a freezing (or equivalent) order?
As a general rule, any tangible or intangible assets belonging to the respondent (within the jurisdiction). However, the applicant must specify which assets are to be subjected to the order. It is within the Court’s discretion to limit the freezing order, in light of the value of the claim, should it deem that the specified asset value is disproportionate
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes, but only where it is permitted by a convention/treaty/EU regulation to which Portugal is a party.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage, including prior to commencing the claim (although the applicant then has the duty to submit the claim) or while the judgment is pending to assist with its enforcement.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Yes. The respondent may not be deprived of the earnings necessary for ordinary living expenses. Although not specifically an exception, if certain assets are required by a corporate respondent they may apply to Court to determine whether the assets are subject to a freezing order without taking possession of the assets.
12. What happens after a freezing (or equivalent) order is granted?
The Court and/or an enforcement agent proceed with the necessary acts to implement the freezing order (for example, registry, notifications to banks and/or third parties, physical apprehension of assets).
After the apprehension is concluded, the respondent is summoned and may challenge/appeal the freezing order.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The applicant should pay the Court fees in advance. However, at the end of the freezing order, the Court will order who should pay for the costs of obtaining the freezing order (Court fees and other disbursements). Each party usually bears its own legal costs (lawyers’ fees) but the applicant may ask the Court to order that the respondent make a contribution.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
Where a freezing order affects third parties’ assets, they may challenge the request arguing their legitimate rights over the assets affected by the freezing order. At the Court’s discretion various protections may be included in the freezing order, such as:
(i) a third party is not prevented from exercising any rights of set-off arising prior to its notification of the freezing order;
(ii) a third party does not need to enquire as to the application of any money withdrawn by the respondent if the withdrawal appears to be permitted by the freezing order;
(iii) a freezing order only affects third parties outside of the jurisdiction in certain circumstances;
(iv) as regards assets outside of the jurisdiction, a freezing order does not prevent a third party from complying with (a) what it reasonably believes to be its obligations under the law of the country where the assets are located or the law of any contract between itself and the respondent or (b) any orders of the Courts of the country where the assets are located;
(v) applicants undertake to pay the reasonable costs of any third party which have been incurred as a result of the order, and to compensate them for any loss caused by it.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent who disobeys a freezing order may be held in contempt of Court and may be imprisoned or fined.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
A third party may be held liable – within a separate civil claim – where they knowingly help or permit the respondent to breach the terms of the freezing order.
17. Can a freezing (or equivalent) order be enforced abroad?
In general, the Portuguese Courts cannot issue freezing orders affecting assets located abroad, unless permitted by a convention/treaty/EU regulation to which Portugal is a party.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
In general, no, unless permitted by a convention/treaty/EU regulation to which Portugal is a party.
Contacts
Sofia Ferreira Enriquez Partner Lisbon, Portugal Eversheds Sutherland sfenriquez@eversheds-sutherland.net www.eversheds-sutherland.pt Fábio de Jesus Loureiro Partner Lisbon, Portugal Eversheds Sutherland fdejesusloureiro@eversheds-sutherland.net www.eversheds-sutherland.pt
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