Meet the Law | General principles for the creation and regulation of regulatory sandboxes (Technology Free Zones)

Last April 21^st, Resolution of the Council of Ministers no. 29/2020 was published in Diário da República, establishing the general principles for the creation and regulation of regulatory sandboxes, baptized as Technology Free Zones ("ZLT").

It is an initial and essential step to create conditions for the dynamization of new technologies - from artificial intelligence to blockchain, bio and nanotechnology, Internet of Things, big data and 5G network - especially in regulated sectors such as the financial or energy sector.

This resolution aims to position Portugal definitively as a country open to innovation and experimentation and to foster the development and testing of emerging technologies and includes the following new features:

Establishment of the general principles for the creation and regulation of ZLT
Following the first steps already taken, a two-pronged approach is now decided:

• Establishing the general principles for the creation and regulation of ZLT, which allow the development of a legislative framework common to all sectors and which promotes and facilitates research, demonstration and testing activities, in a real environment, of innovative technologies; and
• Sectoral analysis, in the regulated sectors, according to their respective specificities, of the need to create their own framework, namely by making the regulatory framework applicable to the sector in question more flexible, in terms to be defined by the Government in articulation with the supervisory authorities of each sector.

It is therefore expected, firstly, the establishment of a general and transversal framework for experimentation with innovative technologies in Portugal, and, secondly, possible sectoral frameworks that will take into account the specific needs of strategic and more regulated sectors.

The legal framework and the regulatory frameworks to be implemented should be guided by the following principles and objectives:

• Definition of a regulatory model that provides legal certainty and transparency;
• Care is given to the specific needs of the various sectors of the economy, in particular those that are subject to greater regulation;
• The safety of persons and goods, consumer protection, respect for privacy and personal data protection rules;
• Transparency and non-discrimination, valuing pioneering projects and ensuring that existing ZLT are integrated into the initiative;
• The promotion of territorial cohesion, based on the constitution of innovation poles, in more remote or peripheral areas;
• The publication of project results;
• The ethical and responsible use of technologies;
• The incorporation of accessibility and usability requirements of products and services as critical and eligibility factors in ZLT.   

The promotion and development of ZLT was established as one of the priorities under the Action Plan for the Digital Transition approved on the same date, through Council of Ministers Resolution no. 30/2020.

The promotion and coordination of the ZLT was entrusted to the Portuguese Mission Structure, which was created on the same date, through Council of Ministers Resolution no. 31/2020, and has a mandate of three years.