Portugal
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
Parties typically engage in informal negotiations at the beginning of a dispute, either as a substitute for, or concurrently with, litigation or arbitration. Most extrajudicial efforts are confined to mediation where the parties in dispute, with the help of an impartial third party, the mediator, try to reach an agreement that will settle the dispute. In the mediation procedure, the parties in dispute are responsible for the decisions they make with the help of the mediator. Unlike the judge or the arbitrator, the mediator has no power of decision. In Portugal, mediation is regulated by Law no. 29/2013. Mediation usually occurs in dedicated centers which are legally enabled to mediate all proceedings. However, some exceptions exist, pertaining to specific subjects, for instance, private investors can file complaints against Portuguese intermediaries or investment funds before the Portuguese Securities Market Commission, which provides a conflict mediation service.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Yes. If the parties resort to mediation, it will suspend the deadlines for limitation and prescription of legal proceedings. If an agreement is reached, it will have the same value as a contract, and if legal proceedings are already underway, the parties can end the procedure by transaction, which occurs when the legal court ratifies the agreement.
Portugal’s regime establishes the so called “Parties’ Costs”, which includes court fees borne by the parties and 50% of all court fees paid by the parties as a compensation for Lawyers’ fees. As a rule, the party who wins the case is entitled to claim from the other party such costs. Nevertheless, if a successful claimant was able to resort to ADR but chooses to litigate before a judicial court, they will not be entitled to claim from the other party such costs, regardless of the outcome of the case (unless the counter party makes recourse to ADR impossible). This legal regime is established in our Civil Procedure Code but it is not usually applicable.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
During the last 20 years, the Government Policy Statements of all the Portuguese governments, contain a pledge to further and reinforce ADR methods in Portugal. However, this is not binding, as it is not a formal commitment. Some alternatives to the usual litigation procedure have been implemented, such as the Judges of Peace – “Julgados de Paz” – (informal courts able to decide on proceedings up to €15,000, whose sentences can be appealed to a judicial court, and where mediation can take place). In Portugal, it is mandatory that during legal procedures, before the first and final hearing, a conciliation (in-house mediation) attempt must occur in court. If achieved, it usually follows the transaction procedure. Nevertheless, it is inconsequential if an agreement isn’t made. However, since Law no. 63/2019, consumer disputes up to €5,000 are subject to mandatory arbitration.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes. The parties can agree in advance that they will resort to ADR methods in order to resolve any particular dispute that may arise, and it is common for contracts to include such clauses. This allows for a swifter resolution of such disputes as the duration of the mediation procedures is on average, three months.
When does ADR generally take place?
Since it has an extrajudicial nature, ADR can take place any time before and during the dispute but during legal proceedings, it must take place in court, before both the first, and the final hearing.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Yes. According to Law no. 29/2013 the mediator and those involved in the process are obliged to confidentiality in regard to all information obtained during the mediation process. Furthermore, they are forbidden of partaking in legal procedures concerning the dispute that was subject to mediation, either as witnesses, legal representatives, or experts. If a mediator breaks this confidentiality, they may be subject to criminal proceedings.
Does the output from ADR create precedents?
An agreement achieved through mediation has the same legal value of a contract, thus it is not binding for third parties. Disputes can still arise if the conditions that were agreed are not met. However, if the transaction process occurs, it can equal a judicial decision (enforceability process).
Who bears the costs of ADR?
Typically parties share the cost of mediation, but it can be negotiated.
Is your jurisdiction subject to any specific rules for cross border ADR?
Yes. The Cross-Border Mediation Regulations of 2011 is applicable to Portugal as a member state of the European Union. The United Nations Convention on the International Settlement Agreements Resulting from Mediation (Singapore Convention) is not in force in Portugal.
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
In Portugal, there is a requirement for mediators to have taken part in the courses offered by the Ministry of Justice. Certain matters concerning family, criminal and labor law cannot be subject to mediation, as they fall out of its legal scope.
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