The Issue at Hand
Jurisprudence
Analysis
Conclusion
Recently, the Fifth Civil Court of Oeiras (a court of first instance) decided that it did not have jurisdiction to consider a pleading for interim measures because the parties waived any rights to interim measures when they agreed to an arbitration clause. In reaching its decision the court said that Portuguese law does not prevent parties to a dispute dispensing with the legal protection of the courts. For example, by choosing to have disputes settled by arbitration, parties waive any rights that may have been enforced by the courts. The court went on to justify its decision by stating that the Portuguese legal system is one in which the court considers only the issues and the facts put forth by the parties - and the parties decide whether interim measures can be imposed.
The court's decision does not make sense for a number of reasons including those outlined below, and is likely to be overturned on appeal.
Surprisingly, there is only one reference to this issue in Portuguese case law. The court in Evora (1984 CJ IV, p 286) concluded that if an arbitration clause has been stipulated, interim measures cannot be imposed by the arbitral tribunal itself, but instead must be submitted to the judicial courts which have exclusive jurisdiction to decide such matters. The Evora Case involved an appeal against a decision by a judicial court to impose interim measures even though the parties had in fact agreed to an arbitration clause. The Court of Appeal ruled against the appeal and upheld the interim measure.
Until now, those in the Portuguese legal community have assumed that Portuguese law on this matter was the same as the law of other European countries and international tribunals. For example, Article 23 of the International Chamber of Commerce Rules allows - in exceptional cases - recourse to judicial courts for an interim measure, even though the parties have chosen to have disputes settled by arbitration.
A more straightforward view is taken by Article 26 of the Rules of UNCITRAL (United Nations Commission on International Trade Law). This declares that a request for interim measures is not incompatible with arbitration. The UNCITRAL Model Law is even more explicit; Article 16 declares that the two procedures are compatible, regardless of whether the interim measures are requested before or during the arbitration proceedings.
Examples of national laws that follow this same principle can be found at Article 44 of the UK Arbitration Act of 1996 and Articles 1022 and 1074 of the Netherlands Arbitration Act of 1986.
Although arbitral tribunals may impose interim measures, in most cases they do not. Therefore, the reason for the Court of Oeiras's decision is incorrect. When parties agree to submit a dispute to arbitration (before or during litigation), they simply choose between two methods of enforcing their legal rights. Whichever option they choose - judicial court or arbitral tribunal - they do not waive any kind of protection available.
The court's argument that Portuguese procedural law is based on the dispositive principle (ie, the court has no duty to investigate the facts or decide the issues) is also unsound. Under Portuguese law the procedure for resolving disputes is exclusively (or almost exclusively) the choice of the parties. For example, the parties decide whether or not to file a suit, the facts they will present, and the claims they will put forward. It is that freedom too that allows the parties to withdraw any claims if they wish. Yet, a (prior) waiver of the use of interim measures (or of any action in general) is not a question of procedure. Rather, it is an issue that must be addressed by reference to substantive law - at the level of the rights of citizens to demand justice.
The right to justice is a right of constitutional character, a so-called fundamental right. One of the consequences of that qualification is that it is a right that cannot be relinquished. That is, a person may decide not to use the right but he cannot declare that he does not have that right (by waiving it as in this case). Supporting this view, the Portuguese Civil Code expressly prohibits the advance waiver of rights ensuing from situations of contractual default.
The purpose of an interim measure is, in most cases, to ensure the efficacy of a decision to be passed on the merits of the respective action. Consequently, it is not right to prevent a party from enforcing his/her rights in an action (by not allowing interim measures) simply because that party agreed to have the dispute settled by arbitration.
In view of the foregoing, it is our opinion that Portuguese law does not remove the possibility of interim measures in arbitration proceedings. Furthermore, the refusal of interim measures is a blatant contradiction to justice. Nevertheless, until such time as the Court of Appeal clarifies this issue, it would be wise to include the following provision in any arbitration clause:
"A request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement." (UNCITRAL Rules, Article 26).
For further information on this topic please contact Nuno Morais Sarmento or Pedro Metello de Napoles at AM Pereira, Saragga Leal, Oliveira Martins, Judice e Associados by telephone (+351 21 319 7300) or by fax (+351 21 3197400) or by e-mail ([email protected]).
The materials contained on this web site are for general information purposes only and are subject to the disclaimer.