The consequences of the absence, insufficiency or irregularity of a power of attorney are set out in Article 40 of the Portuguese Code of Civil Procedure. This article reads as follows:

"The absence of power of attorney, or the insufficiency or irregularity thereof, can be raised at any time (during the proceedings) at the request of the other party and ex officio by the court...

The judge specifies the time limit within which the power of attorney must be produced (by the defaulting party), or the fault corrected and any previous actions ratified. If, at the end of this time limit, the situation has not been rectified, all judicial acts performed by the attorney in the proceedings lose their effect. The attorney shall be ordered to pay the legal fees, and, if he is found to have acted culpably, must be held liable for the damages caused.

The legal consequences of Article 40 are often catastrophic for a party which fails to produce the power of attorney in due time. Under Portuguese procedural law, failure to produce a power of attorney is treated as though the party did not intend to defend itself, and the defence is thus withdrawn.

However, there appears to be an intrinsic contradiction in Portuguese law on this issue.

The contract of mandate is governed by Articles 1157 and following of the Portuguese Civil Code, and in particular Article 1163, which governs "the tacit approval of the performance or non-performance of a mandate".

According to Article 1163:

"Once the performance or non-performance of a mandate is communicated by the mandatary to the principal, the absence of a response by the principal in due time shall be considered as approval of the performance, even where the mandatary went beyond or against the instructions of the principal."

The general rule is that if the principal fails to respond, this is treated as tacit approval of the performance of the mandate. In order to reject the performance, the principal should expressly disclaim the mandatary's actions in due time, thus sidestepping the risk of implicit approval.

However, should this rule also apply to the mandate to act in court? If the rule does in fact apply, the failure of a party to respond in order to approve a power of attorney to act on its behalf should be construed as implicit approval of the granting of those powers. As such, the existence of a mandate to act in court should be deemed proven in cases where the party, when served with notice to ratify the legal acts performed by the mandatary, chooses not to disclaim them, despite the failure to produce a power of attorney in court.

Several arguments based on Portuguese law support this argument.

The first is that written power of attorney is no longer the instrument which supports an attorney's authority to represent the client in court. The rules governing the mandate - and more specifically, the mandate to act in court (Article 53 of the Statute of the Bar) - do not specify a required form for such a contract.

Admittedly, Article 35(a) of the Civil Procedural Code does stipulate that a mandate to act in court can be granted only by way of "an official instrument or by a private document, in accordance with the Notarial Code and the relevant law", and thus specifies a required form in order to grant power of attorney. However, this provision is a legislative anachronism.

In the first half of the 20th century, the Civil Procedural Code was consistent with the Civil Code, which dated back to 1867. Article 1355 of this Civil Code provided that the mandate to act in court should be executed in writing, and that the power of attorney was the document through which the mandate itself gained form (Article 1319). However, following the enactment of the 1966 Civil Code, the mandate became regulated as a contract where representative powers are not considered necessary.

Yet while the Civil Code has been updated in this respect, Article 35 of the Civil Procedural Code has remained unchanged. Therefore, while Article 35 reflected the regime set out in the 1867 Civil Code, it now conflicts with the Civil Code which is currently in force.

Nonetheless, the Civil Procedural Code cannot dictate the form of the mandate to act in court, since power of attorney is no longer considered to be a written expression of this mandate. If the powers granted to an attorney result from the mandate to act in court itself, then the power of attorney is merely a document which is useful in order to specify the representative powers granted to the attorney, in accordance with Article 260 of the Civil Code.

This difference between a mandate to act in court and power of attorney was explained by the Lisbon Court of Appeal on November 1973.

A second argument is that the consequences of failure to produce a power of attorney may conflict with the fundamental principle enshrined in Article 20 of the Portuguese Republic, which provides: "Everyone is entitled to access to the law and to the courts for the defence of his or her legitimate rights." To order the withdrawal of a defence that was submitted in due time, just because that party failed to produce a power of attorney, violates this principle and is thus unconstitutional.

For further information on this topic please contact Miguel Esperan├ža Pina at Goncalves Pereira, Castelo Branco e Associados by telephone (+351 21 355 3800) or by fax (+351 21 353 2362) or by email ([email protected]).