Use of arbitration in Portugal in decline – Cuatrecasas

While there has been an increase in court disputes in Portugal – particularly in relation to banking and capital markets – the use of arbitration in the country is in decline, according to Miguel Esperança Pina, partner at Cuatrecasas, Gonçalves Pereira.

He explains that the decrease in the amount of arbitration is largely due to the absence of major transactions in Portugal. Disputes relating to large deals are generally the types of cases that go to arbitration, with small scale contentious matters more likely to go to court, according to Esperança Pina. “We are feeling the consequences of the economic crisis now due to the lack of big transactions and contracts,” he says. “Although companies are in favour of alternative dispute resolution (ADR) and include arbitration clauses in their contracts, the decrease in large deals in the Portuguese market means there is little arbitration taking place.” Esperança Pina adds that the strict confidentiality rules associated with arbitration open it up to a lot of political criticism and, consequently, there is a lack of governmental support.
However, Esperança Pina believes there is strong support for ADR among legal professionals and clients alike. This is partly because of the challenges litigation poses for clients, such as the increase in court fees in recent years and the fact it is a more lengthy process, which makes it a more expensive choice. That said, the increase in real estate investment in Portugal has resulted in greater demand for litigation lawyers. “Most of our work used to originate from corporate matters but now we are finding a wider range of work related to banking, capital markets and real estate, for example.” Meanwhile, Esperança Pina says that, in addition to the domestic market, Portuguese litigation lawyers are also in demand in other Portuguese-speaking jurisdictions.