Debt collection made easier - Law number: 147/2015

The Portuguese insurance legal framework has set out to implement the Directive 2014/51/UE, commonly addressed as Solvency II. Its financial legal requirements mainly target insurance companies aiming to stabilise and strengthen the financial system.

As a key issue this act involves the three pillars of the Solvency II Directive, through the creation of quantitative requirements that guarantee the creditors protection (for example, solvency capital), as well as qualitative requirements to assure convergence of supervision methods (e.g. systems devised to insure suitability and qualification of the company’s administrators, risk managers, auditors and actuaries) and new information duties towards the supervisor (e.g. annual report on the insurance company’s solvency and financial status). 

Despite the approach to the Solvency II Directive, this new legal regime creates a penal procedure for crimes related with the insurance and pension funds activity, which are to be processed by the supervisor. 

A game changer on debt collection law? - Judgement 480/2015 

With the 2013 civil procedure code revision, the list of enforceable instruments has shortened, as a way of preventing unjust executions. Before this new code was revised the Portuguese list of enforceable titles was regarded as one the most generous in Europe and this new legal standpoint aimed to converge with Europe’s recent legal trend by eliminating private documents based enforcements of the courts. 

Soon after its entry in force, this new procedure was soon regarded as a vicious blow to financial institutions and debt collection agencies and ultimately as a failed attempt to reduce bureaucracy. As creditors titled by private documents – moreover, financially powerful ones – would have to resort to more expensive and slow moving civil lawsuits to collect their debts. 

Only six months after its entry in force, the new civil procedure code was deemed as unconstitutional by the Constitutional Court judgement. This decision determined that the unauthenticated private documents - issued before September 2013 - were enforceable titles. Another similar judgement followed and the 480/2015 came to be the final stand, ruling in favour of the enforceability of private documents issued before September 2013 and the contrary interpretation of the new civil procedure became a generally binding declaration of unconstitutionality. 

This legal game-changer could not withstand the fact that the confidence and solidity of contractual obligations are a supporting pillar of the financial system.