Class actions in Portugal

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Under Portuguese Law, collective actions may consist in injunction procedures (Ação Inibitória) and in class actions (Ação Popular), which is an opt-out procedure. In the present guide, we will use the expression class action to refer to Ação Popular.

There is no specific opt-in system for bringing class actions in Portugal. However, the Portuguese Civil Procedure Code 1 Articles 32, 33 and 36, Portuguese Civil Procedure Code.  foresees the possibility of claimants joining their claims in a single proceeding in situations where: 

1. Their claims deal with common issues or are subject to the same facts or applicable law; 
2. There are no procedural constraints that would impede a judge from ruling on the group of claims altogether; or 
3. The involvement of all the interested parties is necessary for the decision to retain a practical effect.

Joining multiple claims can be decided both before and after the lawsuits are filed. In the first case, all requests commence in a single proceeding. Alternatively, when several proceedings are already pending before different courts, claimants may still request the court to amass several proceedings in a single claim 2 Article 267, Portuguese Civil Procedure Code.  and the court has the discretion of granting the petition.

In accordance with Article 52 of the Portuguese Constitution, every citizen, individually or through associations whose purpose is to defend the interests in question, is granted the right to submit a class action under the terms provided by the law, including the right to claim on behalf of the injured party or parties, namely to:

1. promote the prevention, cessation or prosecution of violations against public health, consumer rights, quality of life, preservation of the environment and cultural heritage;
2. ensure the protection of the assets of the State, autonomous regions and local authorities. 

The class action procedure is regulated in detail by Law no. 83/95, of 31 August, as amended by Decree-law no. 214-G/2015, of 2 October (“Law 83/95”). This action can only be brought in relation to specified breaches of substantive law as noted in Article 52 as referred to above which may include special regimes under consumer protection law (Law 24/96 of 31 July) and competition law (Law 23/2018 of 5 June) for instance.

According to Law 83/95, class actions can be filed by citizens, qualifying associations or foundations, local authorities or by the public prosecutor.  

Once a claim is filed, the interested parties are summoned to either join the proceedings or to declare that they do not agree to be represented by the claimant initiating the popular action. After being summoned to accept or refuse the claim, the members of the class that have had no involvement in the proceedings will have three options: (1) they can declare that they ratify the proceedings at the current stage and accept the claimant's representation; (2) they can say nothing, in which case their silence will be deemed acceptance; or (3) they can declare their refusal of the claimant's representation and thereby not be bound by the decisions that follow.

The right to opt-out of a class action may be exercised until the end of the evidence stage of the proceedings by submitting a statement to the court.

Individual claimants (i.e., citizens with political and civil rights), with or without a direct interest, can bring a claim provided that the claim is not purely individual (i.e., that collective interests are at stake). An interested organisation, such as an association, foundation or city council, can also make a claim as outlined below.

In order for associations or foundations to be eligible to bring such proceedings, Portuguese law requires that the association or foundation:

1. have legal personality;
2. expressly include in the respective articles of association objectives for the defence of relevant interests in these types of actions; and
3. cannot carry out an activity that could, in any way, be deemed as competing with an activity carried out by a corporate entity or a liberal professional.

As for the city council, it may only bring such proceedings if they are related to interests of those who reside in the municipality area.

This mechanism was not very common in Portugal and was used little with the exception of consumer protection claims.

According to statistical reports on the exercise of civil class actions before first instance courts, only 220 cases were finalised from 2007 to 2020 3 Carried out by the Portuguese Directorate-General for Justice Policy: https://estatisticas.justica.gov.pt/sites/siej/pt-pt/Paginas/Processos-civeis-findos-nos-tribunais-judiciais-de-1-instancia.aspx. , and in 2019 alone only eleven class actions were concluded.

In recent years due to the resolution mechanism applied to some Portuguese Banks, investors in financial instruments (e.g., shares and bonds) have submitted class actions against Supervising Authorities and securities issuers.

Since 2020, a recently incorporated consumer association has filed a number of multi-million euro class actions. In 2020 alone, this association filed two class actions with the value of 400 million euros each, claiming for compensation due to alleged damages caused to consumers and to alleged anti-competitive practices.   

According to the Portuguese Constitution and Law 83/95, class action may be taken to promote the prevention, cessation or judicial prosecution of offences against public health, consumer rights, quality of life, or environmental and cultural heritage preservation. In addition, the right to popular action may also be exercised to safeguard property owned by the Portuguese state, autonomous regions or local authorities.

In addition to the above, there are other domains where class actions may take place such as Environmental Policy Law 4 Law 19/2014 of 14 April. , Consumer Protection Law 5 Law 24/96 of 31 July. , Cultural Heritage Law 6 Law 107/2001 of 8 September. , the Securities Code 7 Decree-Law 486/99 of 13 November.  and rules governing actions for damages on infringements of competition law 8 Law 23/2018 of 5 June. . 

Claimants may obtain redress according to the type of action brought. This includes injunctions, 9 Injunction claims are foreseen in Article 10 of the Consumer Protection Law and Article 25 of the Regime concerning general contractual terms (Decree-Law 446/85 of 25 October).  compensation for losses incurred and damage suffered, specific performance and penalties for non-performance.

The court will award damages based on the losses suffered by a party had the tort event not occurred when compared with the party's losses in the current scenario where the tort did occur. The court may also assess the intangible damage suffered by claimants, such as psychological distress, health, freedom, integrity, etc. Civil Law Jurisdictions usually refer to the latter category of damages as non-patrimonial or moral damages.

The law does not impose a maximum limit on the damages a court may award: the quantum is fixed by considering the losses suffered by the claimants.

The availability of “punitive damages" as a category of damages and its admissibility has been the subject of debate. Although punitive damages have not traditionally been awarded in Portugal, recent case law recognises some form of punitive damages. 10 See Decisions of the Supreme Court of Justice dated 25 February 2014, in Case No. 287/10.0 TBMIR. S1, and 19 May 2010, in Case No. 4784/06.4TBVCT.G1.S1, available at www.dgsi.pt. This is based on certain legal criteria used to determine the value of compensation, such as the degree of guilt and economical situation of the agent, the economical situation of the victim and other relevant circumstances in the case.

There are principles set out in the directive that could lead to an amendment of the Portuguese legislation, such as: 

1. the losing party in a collective redress action reimburses the necessary legal costs borne by the winning party (i.e., the loser-pays principle); 
2. at the outset of the proceedings, the claimant must declare the origin of the funds to be used to support its legal action; and
3. opt-in systems, as opposed to the opt-out system applicable in Portuguese class actions. 

There are no specific rules regarding the settlement of class actions, other than the ones that provide for the replacement of the claimant with the public prosecutor where the case is settled. Therefore, the general requirements apply as set out in the Civil Procedure Code.

In accordance with Paragraph 3 of Article 290 of the Civil Procedure Code, the settlement agreement entered into by the parties must be submitted for the approval of the court.

Paragraph 3 of Article 290 in the Civil Procedure Code establishes that the parties must submit their settlement agreement for the court’s approval. The court’s review is in principle limited to the following two aspects: that the settlement agreement only dealt with waivable rights; and that the parties who execute the settlement agreement have legal standing to do so.

No. There are no specific rules on jurisdiction for class action procedures or any territorial limitations on who may be members of the class.

Apart from the above limitations on eligibility to bring class actions and representative actions, there are no other significant limitations.

There is no mechanism for previous certification of a class action. However, after receiving the statement of claim, having heard the public prosecutor and having made all required inquiries, the judge can immediately dismiss the case if the claim is likely to be rejected.

The Portuguese Supreme Court of Justice has already issued a decision that a class action should be declared inadmissible if the defendants have grounds to raise specific arguments of defence against individual claimants.

Since class actions are aimed at the defence of diffuse interests, particular circumstances in respect to each claimant must be disregarded. In addition, the Supreme Court held that the claimant who files the claim on behalf of the class cannot represent the class if there is a conflict of interest between the claimant and any member of the class. 11 See Decision of the Supreme Court of Justice dated 8 September 2016, in Case No. 7617/15.7T8PRT.S1, available at www.dgsi.pt.    

There is no specialist courts for class actions. 

Class actions can be filed in administrative or civil courts. The choice of court depends on the object of and parties to the claim. For instance, the challenging of acts committed by public entities acting as such (with ius imperii) or the request for compensation from those entities must be submitted to administrative courts; on the other hand, the proceedings against private entities must be filed with civil courts. The Competition Court is the one with jurisdiction to decide a class action submitted due to the alleged infringement of competition rules.

The discovery or disclosure procedure in common law systems does not exist as such in Portuguese Law. On the other hand, there are no specific provisions for taking evidence applicable to class actions.

There is no obligation to disclose documentary evidence prior to the beginning of court proceedings (i.e., an order for pre-trial disclosure), but a party may file a claim intended to obtain documents arguing that the entity holding those documents refuses to disclose them and arguing the need to have access to the same.

On the other hand, if relevant documents are in possession of a future counterparty and there are grounds to believe that they may be destroyed or become unavailable for any reason, an injunction can be filed to identify these documents and to prevent the party from denying its existence later on. If such an injunction is granted, parties are obliged to provide the information and documents requested. 

During the trial, the court can, at the request of the parties or at its own discretion, summon any parties or third parties to disclose documents although there is no obligation to disclose documentary evidence. If a party refuses to disclose documents with no legitimate grounds, the court will assess such conduct for evidentiary purposes and may reverse the burden of proof. 

For public entities, Procedure Code of Administrative Courts specifically provides for bringing court proceedings and/or filing interim urgent proceedings to obtain documents and information. 12 Articule 104.º, Law 15/2002 of 22 Februabry  

The only distinction is that even if an appeal has no suspensive effect on the initial decision, the judge may rule in favour of suspension to prevent irreparable damage or damage that is difficult to remedy.

As far as we are aware, no specific Portuguese case law addresses this issue.

Considering the interests intended to be protected by the Portuguese Constitution and the opt-out mechanism in which Portuguese class actions are based, the court is unlikely to uphold an arbitration clause with a class action waiver. 

In Portugal, regulations prohibit contingency fees (i.e., fees exclusively dependent on the outcome of a certain dispute or by which the client agrees to pay a certain part of the outcome, also known as pactum de quota litis). These regulations include Article 106 of the Portuguese Bar Association Statute and Article 3.3 of the Code of Conduct for Lawyers in the EU.

The outcome of the proceedings may, however, be considered when establishing lawyers’ fees since it can be previously agreed that the fees to be awarded are based on the value of the case's subject matter or that, apart from fees based on other criteria, the lawyer will be entitled to additional fees related to the case's outcome.

The claimant is exempt from paying preliminary costs, and judicial costs are only due after the final judgment. In the event that the claim is totally or partially upheld, the claimant will be exempt from paying court fees. If, however, the claim fails completely, the claimant will be ordered to pay an amount to be determined by the judge (i.e., between 10% and 50% of the costs that would normally be due, depending on his financial situation and on the material or procedural reason of the dismissal).

Law 83/95 provides for the joint liability of claimants involved in the proceedings.

There are no specific regulations regarding third party funding of class actions and for a long time third party funding was rarely used in Portugal.  

More recently, third party funders are showing a growing interest in Portugal and funding class actions. The claimant has disclosed that some of the multi-million euros class actions recently filed in Portugal and referred to in the answer to question 4 above are financed by third party funders. 

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