International arbitration in Portugal is governed by the Voluntary Arbitration Act (Law No. 63/2011 of 14 December 2011), which entered into force on 14 March 2012 (the “Arbitration Act”).
The Arbitration Act is largely based on the 2006 version of the 1985 UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”), but it also includes provisions that go beyond the Model Law, such as regarding multiparty arbitration (Article 11) and joinder (Article 36). The Arbitration Act applies to both domestic and international arbitration. In particular, it applies to all arbitrations that take place in Portuguese territory, as well as to the recognition and enforcement in Portugal of awards made in arbitrations seated abroad (Article 61).
Arbitration Agreement
The arbitration agreement must be in writing, which can be satisfied by a document signed by the parties, an exchange of letters, telegrams, faxes, or other telecommunications that provide a written record, including electronic means (Arbitration Act, Article 2).
The Arbitration Act enshrines the principle of separability of the arbitration clause from the main contract (Article 18(2)), and the arbitral tribunal’s competence to rule on its own jurisdiction (Article 18(1)).
In addition, Article 51 adopts a pro-validity approach: an arbitration agreement will be upheld if its validity is recognised under any of the following laws: (i) the law selected by the parties to govern their arbitration agreement, (ii) the law applicable to the merits of the dispute, or (iii) Portuguese law. A comparable rule exists under Swiss law (Article 178(2) of the Swiss Private International Law Act).
Arbitral Tribunal
Parties are free to appoint arbitrators in the arbitration agreement or in a subsequent document, or to agree on a procedure for appointment, including entrusting it to a third party (Arbitration Act, Article 10(1)).
Arbitrators may be challenged if there are justifiable doubts as to their impartiality or independence or if they lack agreed qualifications (Arbitration Act, Article 13(3)). Challenges are first decided by the tribunal; if unsuccessful, the challenging party may apply to the competent State court, whose decision is not subject to appeal (Arbitration Act, Article 14).
Arbitral Proceedings
The tribunal must ensure that the parties are treated equally and given a reasonable opportunity to present their case (Arbitration Act, Article 30(1)). Hearings are held if requested by a party or deemed necessary by the tribunal (Arbitration Act, Article 34(1)).
The proceedings are confidential unless the parties agree otherwise (Arbitration Act, Article 30(5)). However, as stated in Article 30(6) of the Arbitration Act, unless a party objects, awards and other decisions may be published, excluding details that might identify the parties.
The place of arbitration is determined by party agreement or, failing that, by the tribunal (Arbitration Act, Article 31(1)).
The parties are free to choose the law applicable to the substance of their dispute (Arbitration Act, Article 52(1)), usually by including a choice-of-law provision in their contract. Absent an agreement of the parties, the arbitral tribunal applies the law of the State with which the subject matter of the dispute has the closest connection (Arbitration Act, Article 52(2)).
Unless the parties agree otherwise, the arbitrators decide how arbitration costs are shared and may order one party to reimburse the other for reasonable costs and expenses (Arbitration Act, Article 42(5)).
Portuguese courts are widely acknowledged as being independent and impartial and are generally supportive of arbitration. That said, Portugal does not have a dedicated specialist court or division dealing exclusively with arbitration-related matters (unlike Singapore, for example).
Arbitral Award
The arbitral award must be made in writing and signed by the arbitrators (Arbitration Act, Article 42(1)). The award must state the reasons upon which it is based, unless the parties have agreed otherwise or the award is made on agreed terms (Arbitration Act, Article 42(3)). Unless the parties have agreed up to the acceptance by the first arbitrator on a different time-limit, the arbitrators shall deliver the final award within 12 months from the date of acceptance of the last arbitrator (Arbitration Act, Article 43(1)).
Setting Aside of Arbitral Awards
The application for setting aside an arbitral award must be filed within 60 days of the date of notification of the award (Arbitration Act, Article 46(6)).
Under Article 46(3) of the Portuguese Arbitration Act, the grounds for setting aside (annulment) of an arbitral award include: (1) lack of a valid arbitration agreement or incapacity of a party; (2) improper notice or inability to present the case; (3) the award deals with matters not contemplated by or beyond the scope of the arbitration agreement; (4) improper composition of the tribunal or procedure not in accordance with the parties’ agreement or the law; (5) the award was made in violation of requirements regarding form and content; (6) the award was notified after the maximum time limit; (7) non-arbitrability of the dispute; and (8) conflict with international public policy of the Portuguese State.
The Model Law (Article 34(2)) provides similar grounds but does not include formal defects or late notification of the award.
When assessing the grounds for setting aside an award, the State court cannot re-examine the merits of the case (Arbitration Act, Article 46(9)).
Recognition and Enforcement of Arbitral Awards
Portugal has been a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention”) since 18 October 1994.
Under Portuguese law, the grounds for refusal of recognition and enforcement of an arbitral award made in an arbitration taking place in a foreign country are set out in Article 56 of the Arbitration Act. These grounds include: (1) incapacity of a party or invalidity of the arbitration agreement; (2) lack of proper notice or inability to present the case; (3) the award deals with matters not contemplated by or beyond the scope of the arbitration agreement; (4) improper composition of the tribunal or procedure not in accordance with the parties’ agreement or the law of the seat; (5) the award is not yet binding or has been set aside or suspended by a competent authority; (6) the subject matter is not arbitrable under Portuguese law; and (7) recognition or enforcement would be contrary to the international public policy of Portugal.
Arbitral Institutions in Portugal
The main arbitral institution in Portugal for international arbitration is the Commercial Arbitration Centre (“CAC”) of the Portuguese Chamber of Commerce and Industry (Centro de Arbitragem Comercial). The CAC administers both domestic and international disputes and applies its own rules, which are open to any type of dispute, public or private, domestic or international.
Investment Arbitration
Portugal is also a party to the ICSID Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which came into force for Portugal on 1 August 1984.
Portugal has also entered into numerous bilateral investment treaties (“BITs”) that provide for arbitration of investment disputes. A list of Portugal’s BITs is available at UNCTAD’s Investment Policy Hub. However, following the Achmea judgment of the Court of Justice of the European Union, intra-EU investment arbitration based on BITs between EU Member States is considered incompatible with EU law, and most EU Member States, including Portugal, are terminating their intra-EU BITs.
Conclusion
The Portuguese Arbitration Act, closely aligned with the UNCITRAL Model Law, ensures procedural flexibility, party autonomy, and effective enforcement of awards. Portugal’s participation in the New York Convention and ICSID further strengthens its position as a reliable venue for resolving cross-border disputes.
