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The arbitration process is voluntary in nature, which means the parties voluntary accept dispute resolution through arbitration. In case the parties have not previously agreed to resort to Arbitration Court, they are free to submit it at any time.
The arbitration decision, which can also be cancelled, is binding on the parties in settling their difference and it is equivalent to litigation. The arbitration has a much more rigorous and sophisticated process due to the possibility of appointing the arbitrators by the parties.
Voluntary arbitration is governed by the Voluntary Arbitration Law (“LAV – Lei de Arbitragem Voluntária”), according to the Law Nº 31/86 of August 29th (amended by Decree-Law Nº 38/2003 of March 8th).
Arbitration decisions are considered equal to those taken by normal courts and are enforceable by them. Unless the parties have renounced the right of appeal or have authorized the arbitrator to reach an impartial and fair judgment, an appeal can be made against arbitration decisions to the Court of Appeal.
Unless parties decide differently, in domestic arbitrations, the arbitrators must judge according to Portuguese Law.
The Institutionalized Arbitration is carried out by entities authorized by the Ministry of Justice to engage in such activity. These entities are named Arbitration Centers (“Centros de Arbitragem”).
The Arbitration Centers are located in cities across the country. They can have national or local scope or even being specialized in certain activities/ industries.
Conciliation is a dispute resolution methodology that generally precedes arbitration within the framework of Institutionalized Arbitration. If conciliation does not solve the disagreement, either party may submit it to arbitration.
Voluntary Arbitration Law (VAL) differentiates domestic arbitration from international arbitration, creating a special legal regime applicable to international arbitration. International arbitration may be carried out in case of settling disputes international trade-related.
The parties are free to choose the applicable law or they may decide the arbitrators must reach an impartial and fair judgment. If the parties have not made any of the possible choices, the arbitrators may apply the regulatory framework they considered as the most appropriate.
When the parties choose for an impartial and fair judgment, they can agree that the dispute may be settled through general rules and general principles of law, including the Lex Mercatoria, or even the UNIDROIT Principles.
Unless the parties agree differently, an appeal cannot be made against international arbitration decisions.
It should be noted that the VAL will only apply to arbitrations taking place in the Portuguese territory. In other situations, the law governing the arbitration may vary from case to case.
Recognition and Enforcement of Foreign Arbitral Awards
Portugal is a signatory of Convention on the Recognition and Enforcement of Foreign Arbitral Awards – the “New York Convention” of 1958, having chosen to apply the Convention only to recognition and enforcement of awards made in the territory of another Contracting State.
This convention is one of the most relevant on an international level, given the high number of signatory states. In addition, through its applicability, it is possible for the parties of a judicial relation to recognize and enforce the arbitral awards in the territory where the liable party has its assets based, provided that this country has also joined the New York Convention.
An application for the recognition and enforcement of foreign arbitral award must be filed with the following documents: the original duly authenticated award (or authenticated copy thereof) and the original arbitration convention (or certified copy thereof). The New York Convention also establishes the grounds for the rejection of the recognition and enforcement of foreign arbitral awards.
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