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Considered by its investors as ‘the best place in the world to invest’,[1] Portugal seems to have found an answer to its economic and financial crisis. By offering incentives to businesses and favourable tax regime for foreign nationals, it has been able to attract a substantial number of foreign citizens, both from the European Union and the rest of the world. What about arbitration?

A Model Law country

Arbitration in Portugal is governed by Law 63/11 of 14 December (the Law),[2] which came into force in March 2012.[3] Drafted by local practitioners[4] and subject to wide public discussion before its final approval, the Law clearly – and intentionally[5] – follows the standard established by UNCITRAL Model Law (the Model Law). In order to better define some of the Model Law’s solutions (deemed too vague), several changes were implemented to the latter’s text in order to accommodate Portugal’s legal tradition, but maintaining the Model Law matrix. The Law generally applies to both domestic and international arbitration, although some minor additional provisions regulate specific aspects of the latter. It is therefore a monist law.

Seven years after its enactment, arbitration practitioners around the world have praised its content, and it is safe to say that there are no major application problems. Moreover, arbitration continues to grow steadily as the favourite dispute resolution method. If the choice of arbitration was, in a large scale on its early days, a consequence of the inefficiency of state courts, the same no longer holds true. Arbitration currently represents the best suitable way to resolve commercial disputes, particularly in relation to complex disputes requiring a reasonable degree of specialisation.

Trends and recent developments

Arbitration involving corporate disputes

Although hardly anyone disputes the arbitrability of these cases, some scholars defend they have particular characteristics that may make it impossible, in practice, for arbitration to function with all the necessary security.

Once again, the arbitral community decided to take the initiative and proposed an amendment to the arbitration regime. In 2016, a task force was set up within the Portuguese Arbitration Association, which resulted in a draft law regulating arbitration involving corporate disputes. This text was subject to discussion in the legal community and was subsequently sent to the Ministry of Justice, for further discussion in the parliament.

Together with that project, a draft regulation for institutionalised arbitration for these kinds of disputes was also prepared and subject to public discussion.

The project was well-received and further developments on the passing of the legislation are expected over the course of next months.

Public law

There is a long-standing tradition of arbitration in the administrative field, with the Portuguese state actively promoting the inclusion of arbitration agreements in all sorts of administrative contracts. As a consequence, many state-related disputes have been solved through arbitration over the past years.

Specifically, the state and state entities may enter into arbitration agreements involving private law disputes (as opposed to public law), as long as the concerning entities are authorised by law.

Criticisms have been raised against administrative arbitration – which are not alien to the left-wing government currently in office – which led recently to a change to Portuguese public contract’s law.[6] It now provides the possibility of an appeal in all arbitration cases exceeding €500,000. This new provision was not supported by the arbitration community, as it represents an exception to the voluntary arbitration regime, where parties have to expressly opt in for the right to appeal. Because of its importance, Portuguese practitioners are mobilised to revert the present situation.

Importantly, despite this step against one of the main characteristics of arbitration (a final and binding award), Portuguese public law can still be considered as pro-arbitration, since arbitration clauses are possible in virtually all contracts. As a result, the Portuguese system continues to be considered as one of the most advanced in relation to public law.

Non-commercial arbitration

Arbitration’s success is so meaningful that it has extended to other fields of law. For example, tax disputes between private citizens, or companies, and tax authorities[7] are now being solved through arbitration. Even though the state, in this particular case, maintains some degree of control over the appointment of arbitrators, it is nonetheless a good sign of favor arbitratis in Portugal.

Following the same trend, since 2011[8] a category of patent disputes over medical drugs are mandatorily resolved through arbitration. Although these types of procedures cannot be seen as voluntary arbitration (particularly because the purpose of the measure was to clear these disputes from state courts), it is again evidence of how arbitration is perceived as an efficient alternative dispute resolution mechanism.

These last types of disputes, often involving global pharmaceutical companies and generic drugs manufacturers, have given rise to hundreds of disputes in recent years. Despite its specific characteristics, they were able to generate a substantial number of decisions from state courts of appeal, creating a steady flow of case law addressing arbitration issues.

Institutional arbitration

Despite the fact that institutional arbitration centres have existed for many years, and that international centres are widely accepted, ad hoc proceedings continue to be quite popular in Portugal. Although not measurable by official statistics, practitioners state that ad hoc arbitrations continue to lead the preference of parties to new cases.

In an effort to change that situation, the Commercial Arbitration Centre of the Portuguese Chamber of Commerce and Industry (the national leading centre) (the Centre) under the chairmanship of PLMJ’s founding partner and international arbitrator José-Miguel Júdice, has substantially revised its arbitration rules. The new version of the rules came into force on 1 March 2014.[9] The main goal was to adapt the rules so they would reflect those commonly used in international proceedings, contributing to accelerating proceedings and making them more cost-effective.

Together with the new rules, a Code of Ethics was also adopted, making express reference to the International Bar Association Guidelines on Conflicts of Interest in International Arbitration.

Moreover, in 2015, the Centre implemented more transparent rules for the selection of arbitrators, in accordance with the best international practices.

Finally, fast-track arbitration rules and mediation rules were approved and came into force in 2016.[10]

Besides the Portuguese Chamber of Commerce and Industry, other institutions administrating arbitration exist, notably the Centre for Conciliation, Conflict Mediation and Arbitration and the Commercial Arbitration Institute of the Oporto Commercial Association.

Approach of state courts of appeal

Since the enactment of the law, we have started to see appellate court’s decisions setting aside awards on the grounds of conflicts of interest, making wide reference to international standards such as the International Bar Association (IBA) Guidelines on Conflicts of Interests in International Arbitration.[11]

Although this may seem at first glance a Pandora’s box, this example is actually evidence of the positive contribution of the new Law to the improvement of arbitration practice and to the maturity of the arbitral community.

Furthermore, the new legislation has been serving the purpose of evidencing the support given by state courts of appeal to arbitration, highlighting a clear favor arbitratis.

The subjects addressed in each case vary substantially, but there are some matters recurrently being addressed and, fortunately, consistently decided.


State courts have systematically refused to analyse allegations of nullity of arbitration clauses, on the grounds that such competence belongs exclusively to arbitral tribunals; only in cases where it is evident that there is no valid and operative arbitration clause may a state court decide on the matter directly.[12]

Conflicts of interest, independence and impartiality

There is a substantial number of recent judicial decisions setting aside awards on the grounds of conflicts of interest, but also addressing independence and impartiality, and making wide reference to international standards such as IBA Guidelines on Conflicts of Interests in International Arbitration.[13]

Portuguese international public policy

State courts have been careful in highlighting the exceptional nature of Portuguese international public policy (as opposed to internal mandatory rules) as grounds to set aside or refuse enforcement.[14]

Costs and arbitrators’ fees

The previous legislation did not address the issue of the arbitrator’s fees. The new arbitration law requires that they are agreed upon and provides the parties with the opportunity to challenge the amount charged if there is no prior agreement. As a consequence, many decisions have been issued on the matter.[15]

Access to justice

The financial crisis was instrumental to generate a number of situations in which respondents (or even claimants) tried to avoid arbitration based on lack of financial conditions to resort to the proceedings. Precedents are very case-specific.[16]

Set aside

Courts have been reaffirming that the scope of the proceedings to set aside an arbitral award is limited and cannot entail a review of the merits or a rehearing of the case.[17]

Law 63/11 of 14 December


Under the Law, any dispute regarding economic interests may be submitted to arbitration (article 1). In addition, non-economic matters may also be referred to arbitration, provided they concern issues that the parties have the right to settle. Finally, arbitral tribunals may also be requested to interpret, complete, adapt or supplement existing contracts.

Besides dealing with disputes involving the state and state entities, as seen above, the Portuguese legislation extends the possibility of arbitration to other fields of law, such as tax disputes and, in limited cases, employment disputes.

Arbitral clause and negative effect of the arbitration agreement

The Law reproduces the doctrine arising out of the New York Convention and the UNCITRAL Model Law. Although it demands a written agreement, it also interpret the term ‘written’ in the widest possible way (article 2).

As to the negative effect of the arbitration agreement, the principle of Kompetenz-Kompetenz is firmly established in articles 5, 18 and 19, except in cases where the state court concludes that the arbitration agreement is clearly null and void, became inoperative or is incapable of being performed. Special emphasis is given to the fact that, regardless of any proceedings in state courts, arbitration may commence or continue, and the parties cannot file a claim in the state courts with the sole purpose of discussing the validity of an arbitration agreement. Judicial courts widely accept this system and have been consistently upholding arbitration clauses,[18] even when non-signatory parties are involved.[19]

The arbitral tribunal

The constitution of the arbitral tribunal (articles 8 to 16) has received special attention in the Law and several changes were adopted in comparison with the previous legislation. However, one could say that such changes simply reflect what has been the recent trend in international arbitration.

The tribunal will be composed of an uneven number of arbitrators or, if the parties are silent, three. These arbitrators must be independent and impartial, and have the duty to reveal any circumstances that, in the eyes of the parties, may affect such independence and impartiality.

If the parties fail to appoint one or more arbitrators, then, unless they have designated another entity for this purpose (such as an arbitration centre),[20] state courts will have the power to make the appointment at the request of the most diligent party. When making appointments, judicial courts shall take into account all relevant circumstances to ensure that an independent and impartial arbitrator is appointed. In the case of international arbitrations, the law establishes that state courts, if requested to appoint the chairman or a sole arbitrator, should consider the convenience of appointing arbitrators with a different nationality from that of the parties, applying the ‘neutrality’ rule.

In the case of multiple parties (article 11) and failure of one of the sides to agree on the name of the arbitrator, state courts will appoint the missing arbitrator. This rule, in principle, will not compromise the appointment of the arbitrator chosen by the other party. As an exception, if the state court is convinced that the parties have conflicting interests and that justice will be better served, it may appoint all the arbitrators. Therefore, the Dutco doctrine is accepted to a certain extent.

If a party wants to challenge an arbitrator (and he or she is not the sole arbitrator), the challenge request shall be submitted to the arbitral tribunal (articles 13 and 14). If the challenged arbitrator does not step down, the tribunal will decide with the participation of the challenged arbitrator. In case of rejection of the request, the challenging party may resort to state courts, but the arbitral proceedings may follow their normal course.

The legislation also contains a specific provision on arbitrators’ fees (article 17), which requires the parties to settle this question in writing before the tribunal is fully constituted. If that agreement is not concluded but the proceeding continues, the arbitrators will rule on their own fees, but the parties are entitled to challenge them in the state courts.

Interim measures and provisional orders

This specific matter generated some discussion, to the extent that there were doubts in face of the 1986 law as to whether arbitral tribunals could issue interim measures and, in the affirmative, what types of measures could be ordered.

One of the main concerns when drafting the new law was to avoid any links to the Civil Procedure Law (to the extent that many practitioners applied those rules directly to arbitration, thus strangling the procedure). Thus, it was agreed that the interim measures should be regulated independently from the procedural law. As a result, Chapter IV of the UNCITRAL Model Law text was fully adopted, making it part of the arbitration legislation (articles 20 to 29).

Ultimately, the solutions now established in the arbitration law can, in some cases, go beyond what is possible under civil procedural rules.

Conduct of the proceedings

As mentioned above, the drafters had the intention of setting a clear line between arbitration and civil procedure, in order to avoid a tendency in applying civil procedure provisions in arbitration proceedings.

Therefore, Chapter V of the Law (articles 30 to 38) reflects this dissociation. The parties are free to agree on the rules of the procedure and, failing such agreement, the tribunal will conduct the proceedings as it deems fit, in accordance with the principles of due process.

Taking a clear stand in a long worldwide tradition, the Law expressly states that arbitral proceedings are confidential (article 30.5), without prejudice to the possibility of publishing final awards and other decisions, provided that all elements identifying the parties are removed.

Article 35 addresses default by one party and states that the failure of a party to contest a pleading or appear at a hearing will not be deemed an admission of facts. Therefore, the arbitral tribunal should continue the proceedings on ex parte basis.

Article 36 focuses on third-party intervention – which is permitted, provided the third party is bound by the arbitration agreement. If the third party is not an original party to the arbitration agreement, its intervention shall only be valid if accepted by the other parties to the arbitration, for the purposes of those arbitration proceedings. The intervention may take place before or after the constitution of the tribunal, but in the latter case, the intervening party is prevented from challenging the constitution of the arbitral tribunal. In any event, the tribunal may always refuse the intervention if it considers that it may disrupt the conduct of the proceedings.

Article 37 regulates tribunal appointed experts. Although this was an issue covered by the UNCITRAL Model Law, it is a substantial evolution in view of what would happen in accordance with civil procedural law, where the parties would each appoint an expert and the tribunal a third expert, and the three would agree on the result of the joint work.

Finally, article 38 regulates assistance by state courts, particularly in the production of evidence. The parties may apply for such assistance, but only after obtaining the leave of the arbitral tribunal.

Award and closing of the proceedings

Unless the parties authorised the tribunal to decide ex aequo et bono, the award will be taken in accordance with the applicable law (article 39) and the decision can only be appealed if the parties expressly agree so (except in cases involving public contracts, as referred above). As we will see below, in international arbitration, the solution has specific characteristics.

Article 43 deals with the time limit to render the award. Contrary to the previous legislation, the Law establishes a 12-month limit for arbitrators to render an award. They are also entitled to extend the time limit, unless both parties oppose. Finally, the arbitration agreement remains valid even if the time limit to render the award is exceeded.

Similarly, within the 30 days following the notification of the award, the parties may ask for the correction of the award (in respect of clerical and similar errors) and for the interpretation of any part of the award that it considers obscure or ambiguous (article 45.1 and 45.2). More interesting is the possibility of the parties to ask the tribunal to render an additional award regarding claims or parts of claims they consider not to have been addressed in the award (article 45.5).

Challenging the award

Except when the parties explicitly admitted the possibility of appeal, as well as in arbitrations involving public contracts, awards are final and not subject to any review by state courts. Therefore, the only possible judicial intervention is through an annulment proceeding. The grounds for setting aside an award are in line with the principles established by the New York Convention regarding the recognition and enforcement of foreign awards. The proceedings will take the form of an appeal and be judged by the appellate court.

After extensive debate, the Law included the possibility for the courts to set aside an award on public policy grounds (but limited to the international public policy of the country).

Article 46.8 states that, at the request of one of the parties, state courts have the power to send the award back to the arbitral tribunal so it has the opportunity to address a specific matter, avoiding the setting aside of the award. This is a provision without precedent in the Portuguese system, but one that may be an effective solution that benefits the parties and avoids the need to start a new arbitration after the setting aside of an award.

International arbitration

Chapter IX of the Law covers international arbitration. As mentioned above, and despite the existence of this chapter, the Portuguese system cannot be classified as dualist, to the extent that the regime applicable to domestic and international arbitration is substantially the same (as expressly determined by article 49.2). Therefore, this chapter is a good evidence of how committed the Portuguese legislation was in enacting an arbitration-friendly regime, aiming to attract international disputes to its territory.

Following French law, Portuguese law considers that international arbitration is the one that concerns interests of international trade (article 49.1).

Article 50 addresses the inadmissibility of pleas based on the domestic law of a party. This means that a state or a state-controlled entity cannot invoke provisions of its internal law to challenge the arbitration agreement.

Similarly, article 51 sets the substantial validity of the arbitration agreement. Under this article, an agreement may be submitted to arbitration if the requirements established in that respect are fulfilled, either by:

  • the law chosen by the parties to govern the arbitration agreement;
  • the law applicable to the merits of the case; or
  • Portuguese law.

The law applicable to the merits is regulated by article 52. The tribunal shall apply the law chosen by the parties and, failing such choice, the law having the closest connection with the dispute. The article also makes express reference to the contractual terms agreed by the parties and the relevant trade usages.

Regarding the possibility of appeal, the rule is once more that there is no appeal unless the parties expressly agree otherwise (article 53). However, even if such agreement exists, the appeal has to be brought before another arbitral tribunal, and the rules and terms applicable have to be set in advance (this provision is not applicable to cases involving public contracts). This is an innovative provision that aims to limit the intervention of state courts in international arbitration.

Recognition and enforcement of foreign awards

All foreign awards must be recognised (ie, an exequatur must be obtained) before they can become effective in Portugal. This matter is covered by the New York Convention, so the scope of application of article 55 is reduced. In any event, the provisions of articles 55 to 57 are very similar to the ones contained in articles IV, V and VI of the New York Convention.

State courts

Articles 59 and 60 of the Law address the jurisdiction of state courts in all matters where their intervention may be required in accordance with the Arbitration Law.

Contrary to the previous legislation, the competence for ruling on important arbitration related matters has been centred in the appellate courts (second instance courts). The aim is to have, in the near future, specialised appellate courts devoted to arbitration, as currently happens in France. The competence of the courts of appeal covers:

  • the appointment and challenges of arbitrators;
  • challenges against arbitrators’ fees; and
  • any appeals (where admissible) or requests to set aside.

Confirming the favor arbitratis, some of these procedures were classified as expedited proceedings.

For all other matters, from interim measures to assistance in the production of evidence, the competence remains within first instance courts, as they are more suited for these types of proceedings.

Portugal as an international venue for Portuguese-speaking countries

Portugal has an arbitration legislation consistent with international best practices and standards. As noted above, the law clearly favours arbitration, and the tradition of Portuguese courts has been to uphold the great majority of arbitral awards brought before them. The country has a vast legal community and a number of lawyers actively involved in arbitration, both as counsel and arbitrators.

Located at the western side of Europe, it maintains a strong relationship with all Portuguese-speaking countries in Africa (Angola, Cape Verde, Guinea-Bissau, Mozambique and São Tomé and Príncipe), as well as with Brazil, Macau and Timor. As for the mentioned African countries, most of them still have their legal system based on the Portuguese matrix. Together with a common language, the same legal approach places Portuguese practitioners in a privileged position to contribute to the development of international arbitration in those countries.

Those factors, together with its location and easy access, facilities and available resources (including a large and experienced arbitral community) not to mention its good weather, moderate prices and general attractiveness, place Portugal – with Lisbon in the pole position – in an ideal position to function as a venue for international arbitration.

For historical and cultural reasons, Lusophone countries are the obvious candidates. However, Portugal’s next challenge is to widen the scope of users to other countries.

In sum, now that you have taken the time to read this article to the end, the next step is to try Portugal as a seat of arbitration.


[1] Liz Alderman, ‘Portugal Dared to Cast Aside Austerity. It’s Having a Major Revival’. The New York Times, 22 July 2018.

[2] English, French and Spanish translations of the law are available at http://arbitragem.pt/legislacao/.

[3] The previous law was Law 31/86 of 29 August 1986. Although not specifically based on any other law, it was inspired by French law and it contained solutions not substantially different from the ones adopted in other countries, despite some particularities of the law that were a consequence of our civil procedural tradition. In fact, the main evidence of the success of that law was that it remained in force for 25 years, with only a minor amendment, and allowed arbitration to flourish.

[4] The Board of Directors of the Portuguese Arbitration Association, working pro bono. The author of this text was among the seven drafters.

[5] When discussing the revision of Law 31/86 of 29 August 1986, there were many opinions on the path to follow including simply amending the law or approving a completely new document. Eventually, the latter option prevailed and the decision was taken to base the new text on the UNCITRAL Model Law. One of the purposes of changing the law was to make Portugal a more interesting seat for international arbitration, and that would be more easily achieved with a law following an internationally accepted standard.

[6] See article 476 of the Code of Public Contracts, as amended by Decree-Law 111-B/2017, of 31 August.

[7] See Decree-Law 10/2011 of 20 January, as amended by Laws 64-B/2011 of 30 December, 20/2012 of 14 May and 66-B/2012 of 31 December.

[8] Law 62/2011 of 12 December.

[9] An English version is available at www.centrodearbitragem.pt/images/pdfs/Legislacao_e_Regulamentos/Regulamento_de_Arbitragem/Rules_of_Arbitration_2014.pdf.

[10] An English version is available at www.centrodearbitragem.pt/images/pdfs/Legislacao_e_Regulamentos/Fast%20Track%20Arbitration%20Rules%20english.pdf.

[11] Decision of the Lisbon Court of Appeal of 24 March 2015, Case No. 1361/14.0YRLSB.L1-1; Decision of the Oporto Court of Appeal of 03 June 2014, Case No. 583/12.2TVPRT.P1; all available at www.dgsi.pt.

[12] Decisions of the Supreme Court of Justice of 20 March 2018, Case No. 1149/14.8T8LRS.L1.S1, of 8 February 2018, Case No. 461/14.0TJLSB.L1.S1; Decisions of the Lisbon Court of Appeal of 20 June 2017, Case No. 5365/15.7T8LSB-D.L1-7, of 06 April 2017, Case No. 461/14.0TJLSB.L1-2, of 12 October 2016, Case No. 2130/14.2T8CSC.L1-4, of 29 September 2015, Case No. 827/15.9YRLSB-1 and of 24 March 2015, Case No. 1361/14.0YRLSB.L1-1; Decision of the Oporto Court of Appeal of 3 June 2014, Case No. 583/12.2TVPRT.P1; Decision of the Évora Court of Appeal of 8 September 2016, Case No. 204/14.9T2GDL.E1; all available at www.dgsi.pt.

[13] Decisions of the Supreme Court of Justice of 21 June 2016, Case No. 301/14.0TVLSB.L1.S1, of 12 May 2016, Case No. 710/14.5TVLSB-A.L1.S1 and of 9 July 2015, Case No. 1770/13.1TVLSB.L1.S1; of the Appeal Court of Lisbon of 13 September 2016, Case No. 581/16.7YRLSB.-1, 7 July 2016, Case No. 508/14.0TBLNH-A.L1-2; all available at www.dgsi.pt.

[14] Decisions of the Supreme Court of 26 September 2017, Case No. 1008/14.4YRLSB.L1.S1, of 27 April 2017, Case No. 93/16.9YRCBR.S1, of 14 March 2017, Case No. 103/13.1YRLSB.S1 Decisions of the Lisbon Court of Appeal of 14 April 2016, Case No. 2455/13.4YYLSB-A.L1-2 and of 15 March 2016, Case No. 871/15.6YRLSB-7; all available at www.dgsi.pt.

[15] As examples, see Decision of 30 May 2017, Case No. 39/16.4YRLSB-1, of 14 July 2016, Case No. 660/16.0YRLSB-2; Decision of 12 February 2015, Case No. 1551/14.5YRLSB-8; Decision of 15 January 2015, Case No. 1362/14.8YRLSB.L1-8; Decision of 4 December 2014, Case No. 1181_14.1YRLSB.L1-6; Decision of 1 July 2014, Case No. 200/14.6YRLSB-7; Decision of 29 April 2014, Case No. 1337/13.4YRLSB-7; Decision of 13 February 2014, Case No. 1053/13.7YRLSB-2; Decision of 13 February 2014, Case No. 1068/13.5YRLSB-6; Decision of 06 February 2014, Case No. 866/13.4YRLSB-2; Decision of 3 October 2013, Case No. 747/13.1YRLSB.L1-8; Decision of 10 September 2013, Case No. 297/13.6YRLSB-7; Decision of 11 June 2013, Case No. 955/12.2YRLSB-7; Decision of 2 May 2013, Case No. 157/13OYRLSB; Decision of 11 July 2013, Case No. 537/13.1YRLSB; all of the Lisbon Court of Appeal and all except the last two available at www.dgsi.pt.

[16] See, for example, Decision of the Lisbon Court of Appeal of 22 September 2015, Case No. 1212/14.5T8LSB.L1-7, available at www.dgsi.pt.

[17] See, for example, Decision of 19 March 2017, Case No. 1052/14.1TBBCL.P1.S1, and of 22 September 2016, Case No. 660/15.8YRLSB.L1.S1, both from the Supreme Court and available at www.dgsi.pt.

[18] Decision of 28 May 2015, Case No. 2040/13.0TVLSB.L1.S1; Decision of 2 June 2015, Case No. 1279/14.6TVLSB.S1; both of the Supreme Court. Decision of the Lisbon Court of Appeal of 4 November 2014, Case No. 194466/12.2YIPRT.L1-7; all available at www.dgsi.pt.

[19] Decision of the Lisbon Court of Appeal of 24 March 2015, Case No. 7666/13.0TBOER.L1-1; Decision of the Oporto Court of Appeal of 10 February 2015, Case No. 3795/13.8TBMTS.P1.; all available at www.dgsi.pt.

[20] The LAV accepts, with almost absolute flexibility, the rules of national and international centres, and therefore many of the articles of the LAV have only subsidiary application in the case of institutional arbitration.

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