Portugal
As to litigation trends, we anticipate an increase in preliminary rulings, state aid disputes and consumer, technology, and digital disputes in Portugal over the next 12 months, as a result of the developments in EU legislation in these areas. In digital/consumer disputes, we feel a particularly significant increase related to various kinds of frauds (e.g. phishing).
In civil proceedings we are also expecting the disruptions and delays we felt last year to continue, due to strikes that are already announced by court staff in a serious confrontation they’ve been maintaining with the Portuguese Government. Also, international arbitration and mediation are expected to grow in the coming year.
1. Is third party funding permissible for disputes?
Yes, third party funding is permissible for disputes in Portugal. Although it is important to note that there is no specific regulation of third-party funding in the Portuguese legal system, there is also no legal obstacle or prohibition in force. This means that it does not match any kind of standard contract in the Portuguese legal system, so it is at the parties’ discretion to define the terms. It should in any case be stressed that, although legally admissible, funding of disputes is not at all common in Portugal.
2. Are lawyers able to work on a contingent basis in the jurisdiction and are there any restrictions?
As a principle, no, lawyers are not able to work on a contingent basis. According to the rules of the Portuguese Bar Association, lawyers’ fees cannot be exclusively dependent on the outcome of the dispute. Fees must be agreed upon at a preliminary phase of the case. However, the fees can be established based on a percentage (for example, a percentage of the amount in dispute, irrespectively of the outcome) and parties can agree on an increase of the fees based on the achieved results (e.g. success fees).
3. Can the court or tribunal order one party to pay the other’s legal costs?
Yes, the court or tribunal can order one party to pay the other’s costs but some specificities must be highlighted.
According to the law, the unsuccessful party pays the successful party’s legal costs. Per “legal costs”, one should consider:
- court fees reimbursement;
- lawyers’ fees: the maximum limit is half the total amount that both parties paid as per court fees (which is really low). Therefore, if lawyers’ fees are lower than that amount (which seldom happens), they are to be paid in full; if higher, the successful party is only paid compensation up to said limit.
It should be noted however, that parties may contractually agree that lawyers’ fees in a dispute shall be reimbursed in full by the unsuccessful party. In such case, the above mentioned limit is not applicable.
4. Is insurance available to protect against adverse outcomes for funded litigation?
Given the insipient development of litigation funding in Portugal, the answer to the question should be “no” since it is not appealing for insurance companies. There is, nonetheless, a wide range of insurance possibilities available for disputes, mainly as a specific coverage within other kinds of insurance contracts (e.g. motor insurance) and there are also cases of specific insurance contracts made available by insurance companies covering various potential disputes involving the insured person.
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