Commercial mediation in Portugal
What is the status of mediation in this jurisdiction?
Mediation is a recognised Alternative Dispute Resolution mechanism for civil and commercial disputes, regulated by Law 29/2013, dated 19 April 2013 (“Mediation Law”, establishing the general principles applicable to mediation held in Portugal, as well as the legal regimes for civil and commercial mediation, for mediators and for public mediation) and can be accessed through public or private mediation services. With regard to public mediation services, such services are available at special courts (Julgados de Paz), organised in accordance with Law no. 78/2001 of 13 June 2001.
In addition to civil and commercial disputes, mediation is also available for family, consumer rights, employment and criminal matters.
Order (Portaria) no. 344/2013 of 27 November 2013 sets out the general requirements for registration as a mediator, whilst Order (Portaria) no. 283/2018 of 19 October 2018 which provides for public mediation services, sets out the procedure for the selection of mediators.
How is a mediation conducted?
Mediation proceedings in civil and commercial disputes may be initiated:
(i) before proceedings are filed at court, by the parties themselves; or
(ii) after the judicial proceedings have begun, either at the judge’s suggestion (provided that none of the parties expressly opposes it) or with the agreement of the parties. In these situations, court proceedings will be suspended for a maximum period of three months. If an agreement is reached that shall be subject of the approval of the Court, otherwise, the proceedings will resume.
In both cases the parties must agree on the appointment of a mediator registered with the relevant mediation service (whether of public or private nature) at which the mediation proceedings will take place. When mediation is held in a Julgado de Paz, if no agreement is reached, a mediator will be officially appointed by the Julgado de Paz.
The proceedings will commence with a pre-mediation session where the designated mediator will set out the advantages of mediation and detail the nature and terms of the mediation proceedings. The parties must then confirm their agreement to submit the resolution of their dispute to mediation by way of a consent agreement that includes the rules by which the mediation process will be governed.
Once the consent agreement has been formalised, the mediation session will take place with the mediator attempting to assist the parties to reach a mutually acceptable settlement of their dispute.
It is not mandatory for the parties to be legally represented by lawyers at a mediation unless the party is illiterate, does not speak Portuguese or is in a position of manifest disadvantage.
The settlement reached by the parties will be treated in the same manner as a judicial decision if it is conducted by a registered mediator according to the law and executed by legally capable parties. However, there are some specific formalities in a public mediation, as the agreement reached by the parties shall be sent by the mediator to a judge of the Julgado de Paz for confirmation. In any case, if the mediation (public or private) was conducted after the judicial proceedings had already been commenced, the agreement shall be sent to the judge in charge of the judicial proceedings for approval.
On average, mediation proceedings last about three months. In the case of a public mediation, each party pays € 25 per mediation session, and either €110 in case the parties reach an agreement or € 90 in case no agreement is reached. In private mediation, the parties must agree to pay the mediator’s remuneration.
Is there any obligation on litigants to mediate?
No. Even if the parties have a pre-existing contractual arrangement to mediate a dispute, they are not obliged to follow that Alternative Dispute Resolution process. Unlike in arbitration proceedings, any of the parties are free to cease mediation at any point and initiate legal action before the judicial courts.
However, if the parties have a pre-existing contractual arrangement – and unless both parties agree otherwise after the dispute has arisen – they must at least start mediation proceedings before commencing court proceedings. Otherwise, the defendant may argue the existence of a mediation clause to the court and the judge may suspend the proceedings and submit the proceedings to mediation.
It should be emphasised that mediation is encouraged both by an increasing public awareness campaign organised by the Portuguese Government and private mediation associations, and by the Portuguese judicial courts whenever they are asked to settle a dispute.
Furthermore, under the Portuguese Bar Association Code of Conduct, lawyers have an obligation to encourage their clients to reach an amicable resolution of their disputes before accepting instructions to take a case before the judicial courts.
Does the court have powers to support a mediation?
No. However, the Portuguese Civil Procedure Code provides that the court may, on its own motion, suspend judicial proceedings and submit the dispute to mediation, provided that the parties do not expressly oppose that. In addition, as referred to above, if the parties have a pre-agreement to mediate, the judge will suspend the proceedings and send the parties to mediation if the defendant so requests.
The parties may also decide to submit the dispute to mediation at any point during the proceedings and may suspend the proceeding for a period of up to three months to do so, provided that this does not delay any scheduled final hearing.
Are mediations confidential?
Does failure to mediate attract adverse cost consequences?
How are settlement agreements enforced?
In general, the settlement agreements will be enforceable without further judicial confirmation, provided that the:
(i) dispute can be legally subject to mediation;
(ii) parties have legal capacity to execute the settlement agreement;
(iii) mediation process is held in accordance with the law;
(iv) settlement agreement does not violate public order; and
(v) mediation is conducted by an authorised mediator.
Even if these conditions are fulfilled, the parties may agree to submit the agreement to the court for confirmation.
However, in some cases it is mandatory for settlement agreements to be confirmed by a judge. As referred to above, this will be the case when parties commenced mediation only after filing judicial proceedings or when a mediation is held in a Julgado de Paz. Settlement agreements are enforceable in the same manner as judicial decisions of the first instance judicial courts.
Is there a system of accreditation and/or regulatory body for mediators?
At present there is no regulatory body for mediation. Nevertheless, in order to be eligible to be added to the lists of certified mediators maintained by the Ministry of Justice, mediators will need to (i) be fully entitled to exercise his or her civil and political rights, (ii) complete a mediation course recognised by the Portuguese Ministry of Justice and (iii) master the Portuguese language.
In addition, to be appointed to the public mediation service available in the Julgados de Paz, mediators must also be over 30 years of age, possess a college degree in Law and have no criminal record. In order to be appointed, mediators shall attend a specific course and will be selected from their performance on that course.
In any case, Mediators are legally obliged to carry out their activities with independence, impartiality, credibility, competence, confidentiality and diligence, always maintaining high ethical standards.
A private organisation, the Association of Portuguese Mediators, is responsible for supervising the conduct of its associates and for ensuring their compliance with the code of ethics approved by it.