Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

Project finance transactions pertaining to agreements entered into with governmental authorities typically require the intervention of the relevant governmental body. In certain cases, sector-specific government approvals or authorisations may be necessary, as is the case with transactions within regulated areas (such as energy).

The approval of the Ministry of Finance may also be required where a project involves public investment or, more generally, where the PPP legal framework applies.

In this respect, reference should be made to UTAP.

Moreover, certain mergers, acquisitions or joint ventures may be subject to either EU merger control rules or Portuguese merger control rules, in the latter case requiring the non-opposition of the Portuguese Competition Authority.

No fees or charges are typically applicable as a direct result of such transactions, without prejudice to amounts that may be contractually due under concession agreements as consideration for the rights granted thereunder.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

Save for the references in questions 2 and 3 in the context of registration of security, project documents are generally valid and enforceable without any need for registration, authentication or filing with any governmental authority. However, powers of attorney and other notarial instruments executed abroad are required to be authenticated with an apostille (Hague Convention) or similar formality to be accepted by the equivalent Portuguese authorities.

To ensure a swift enforcement of a private agreement acknowledging a payment obligation, or the appropriation of a commercial pledge created pursuant to the recently enacted Decree Law 75/2017, of 26 June of 2017, it is advisable to have the same authenticated by a notary.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

International arbitration clauses are generally recognised by Portuguese courts, irrespective of the rules applying - Portuguese arbitration law or the commonly chosen rules of international centres such as the International Chamber of Commerce, the London Court of International Arbitration and the Rules of Arbitration of the United Nations Commission on International Trade Law (UNCITRAL) - or of the seat of arbitration. Foreign arbitral awards are recognised and enforced in Portugal under the applicable international treaty (see below) or generally under the New York Convention.

Portugal is a party to the following international conventions:

  • the Geneva Protocol on Arbitration Clauses of 1923;
  • the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927;
  • the New York Convention, which entered into force in Portugal on 16 January 1995;
  • the Inter-American Convention on International Commercial Arbitration, adopted in Panama on 30 January 1975; and
  • the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force in Portugal on 1 August 1984.

The enforcement of foreign awards not covered by any of these international treaties will be carried out via the general provisions of the Portuguese Arbitration Act, which closely follow the principles of the UNCITRAL Model Law and the New York Convention.

On a bilateral level, Portugal has a number of bilateral agreements with Portuguese-speaking countries that are directed at equating arbitral awards to judgments by the national courts. There are treaties in force with Guinea-Bissau, Mozambique, Angola, São Tomé and Príncipe, the Special Administrative Region of Macao (People’s Republic of China) and Cabo Verde. These bilateral agreements entered into between Portugal and other Portuguese-speaking countries equate arbitral awards to national courts’ judgments and subject both decisions to the same legal regime.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Other than in the case of concession contracts and certain project agreements entered into with public entities - which are normally required to be governed by Portuguese law - parties are in general free to choose the governing law of contracts.

Project and finance documents for projects in Portugal are typically governed by Portuguese law, although finance documents in international syndicated loans were in the past sometimes required (by lenders) to be governed by English law, with the associated security documents being commonly governed by Portuguese law. Irrespective of the governing law of the contract, Portuguese rules shall mandatorily apply to the creation and enforcement of security instruments, to insolvency and to certain company arrangements (for instance, in the context of shareholder agreements of Portuguese companies).

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

The parties may freely choose to submit any disputes to a foreign jurisdiction. However, disputes concerning collective labour rights and sports regulation are subject to mandatory domestic arbitration (Decree Law 110/2018, of 10 December 2018, which altered the Code of Industrial Property, as well as Law 62/2011, of 12 December 2011, and, consequently, intellectual property rights related to medicines are now subject to voluntary arbitration, not mandatory arbitration).