An extract from The Class Actions Law Review, 4th Edition
Procedurei Types of action available
Popular action comprises the right for an aggrieved party or parties to request the applicable compensation, in the cases and under the terms provided for by law. In particular, popular action may be taken to promote the prevention, cessation or judicial prosecution of offences against public health, consumer rights, the quality of life, or environmental and cultural heritage preservation. In addition, the right to popular action may also be exercised to safeguard property owned by the Portuguese state, autonomous regions or local authorities.
Popular action applications can be filed before the administrative or the civil courts. The choice of court depends on the interest in question and on whether the interest or right, and the damage caused, is related to a public or a private entity.
Popular action may take any of the forms set out in the Civil Procedure Code and the Administrative Procedure Code.
To initiate a popular action, the claimant must file the claim before the competent court.
Except for Paragraph 4 of Article 22, Law 83/95 does not provide specific rules regarding limitation periods applicable to popular actions. In addition, the statute of limitations regime in the Portuguese Civil Code applies.
However, one particular rule concerning the statute of limitations applicable to popular actions relates to the right to compensation for tort. This right expires three years from the date the judgment is final and is no longer subject to appeal.ii Commencing proceedings
There are three requirements that must be fulfilled for an association or a foundation to be able to file a claim on behalf of a group of citizens: (1) the association or foundation must have legal personality; (2) the defence of the relevant interest in the popular action to be filed must be an activity covered by the foundation or the association's corporate purpose as set out in its articles of association; and (3) the association or foundation cannot carry out an activity that could, in any way, be deemed as competing with an activity carried out by a corporate entity or a liberal professional.
In addition to citizens, associations or foundations created to defend any relevant interest, Law 83/95 also allows local authorities or the public prosecutor to file a claim on behalf of a group of people with a relevant interest. Under Portuguese law, there is no specific definition of a class. In contrast with US law, Portuguese law does not determine class by preliminary certification and there are no prerequisites to be fulfilled for the proceedings to qualify as a popular action.
Moreover, the new rules governing actions for damages for infringements of competition law establish that popular actions for such damages may also be filed by an association or foundation acting within the scope of consumer protection, or by an association of undertakings whose members are parties injured by the competition law infringements in question, even if the corporate purpose of the association does not include the defence of competition.
As prescribed in Article 15 of Law 83/95, once a popular action claim is filed with the court, if a member of the class in question disagrees with the proceedings submitted, that person must opt out of the action.
After being summoned to accept or refuse the claim, the members of the class that have had no involvement in the proceedings will have three options: (1) they can declare that they ratify the proceedings at the current stage and accept the claimant's representation; (2) they can say nothing, in which case their silence will be deemed as acceptance; or (3) they can declare their refusal of the claimant's representation and thereby not be bound by the decisions that follow.
The right to opt out of a popular action may be exercised until the end of the evidence production stage of the proceedings by submitting a statement to the court.
Law 83/95 does not foresee a minimum number of claims to be filed.
Portuguese law only requires the claim to be filed by an individual and does not exclude overseas claimants. Hence, popular action claims may be brought by Portuguese citizens or foreigners in, or residing in, Portugal. In accordance with the Portuguese constitutional principle of equal treatment, any person has the right to lodge a claim before a court irrespective of their national origin or citizenship.iii Procedural rules
Once a claim is filed, the interested parties are summoned to join the proceedings, if they wish to, or to declare that they do not agree to be represented by the claimant that initiated the popular action. The judge will determine the deadline for interested parties to inform the court of their acceptance or refusal.
The summons to accept or refuse the claim issued to any potential members of the class covered by the claim will be publicly announced by the media or through a public notice, if the interests in question concern general interests or can be geographically recognised. The personal identification of the class of persons covered by the claim does not need to be provided in the summons. The potential members of the class covered by the claim may be referred to as holders of the relevant interests. The summons should also identify: the case file and the first claimant that submitted the claim, when there are several; the defendant or defendants; the subject matter of the popular action; and the grounds for the claim.
When the interested parties cannot be specifically identified, the summons should refer to the relevant scope of people. This scope should be determined based on the specific circumstances and features that the people have in common, the geographic area where they live or the group or community that they are part of. However, the court is not bound by the way in which the application identifies the class of persons covered by the claim.
Recently, the Portuguese Supreme Court of Justice issued a decision that determined that a popular action should be declared inadmissible if the defendants have grounds to raise specific arguments of defence against individual claimants.
Since popular actions are aimed at the defence of diffuse interests, particular circumstances with respect to each claimant must be disregarded. In addition, the Supreme Court held that the claimant who files the claim on behalf of the class cannot represent the class if there is a conflict of interest between the claimant and any member of the class. While the parties must provide the necessary evidence to the court, judges have a more active role in Portugal than they do in adversarial systems, such as in the United States. Judges conduct the trial and have the power to question witnesses and also require the production of evidence.
The Portuguese civil litigation system, as opposed to the US legal system, is characterised by written procedure. The parties lodge their claim, defence and replies (if applicable). As a general rule, the judge only intervenes after all written pleadings have been filed and, when necessary, calls for a pretrial hearing. At the pretrial hearing, the judge will verify if the procedural prerequisites have been fulfilled. If so, the judge will determine the subject matter of the case and the key issues that are to be subject to evidence. At the final hearing the judge will hear the witnesses' testimony, as well as the parties and the experts' clarifications, if requested. The hearing will end with the parties' closing arguments and be followed by the final judgment.
As provided by Law 83/95, in popular actions the judge is more independent than in civil procedure actions. The judge is not dependant on the evidence submitted by the parties and may require the parties to provide additional evidence.
In addition, if the judge believes that it is highly unlikely that the application will succeed, the judge can preliminarily refuse the claim. However, before reaching a decision of this kind, the public prosecutor must be heard and the judge should carry out the preliminary assessments deemed necessary or requested by the parties or the public prosecutor.
The public prosecutor may replace the claimant when the claim is withdrawn and settled or the claimant acts harmfully against the relevant interests to be defended.
When an appeal does not suspend the effect of the initial decision, the judge may rule in favour of suspension to prevent irreparable damage.
When the final judgment in a popular action is final and no longer subject to appeal (when it has the force of res judicata), the decision will be binding against all interested parties. Apart from the members of the class who expressly opted out of the proceedings, all remaining members who declared their acceptance or who did not opt out will be bound by the court's judgment.
The final judgment will be published in two newspapers, chosen by the judge, which are presumed to be read by the parties with a relevant interest in the subject. This publication must be made at the expense of the losing party. Failure to comply with this obligation will result in liability for disobedience. Instead of publishing the full text of the judgment, the judge may determine that only extracts of its key points are to be published. According to a recent decision of the Lisbon Court of Appeal dated 15 February 2018, if a preliminary injunction is filed before the court as part of a popular action, the publication of the judgment regarding the preliminary injunction in two newspapers is not compulsory.
There is no difference between the time taken for popular actions and other actions in Portugal, where the average length of civil proceedings is three years though some actions last for several years.
The trial is heard and decided by a single judge, without a jury.
Pursuant to Portuguese law, as a general rule, no punitive damages are awarded for popular actions. All types of damages may be recoverable, including general and special damages and compensation for loss of profit. The law does not impose a maximum limit on the damages that the court may award: the quantum is fixed taking into account the losses suffered by the claimants.
The remedies available in popular actions include compensation for damage, specific performance, penalties for non-performance and injunctions.
When it is not possible to identify the holders of the interests in question, the court fixes a global quantum to be awarded for civil liability.
When the class of persons covered by the claim has been identified, those people will be entitled to compensation under the general rules of Portuguese civil liability law.
Where the limitation period for compensation has expired, any damages awarded will be provided to the Ministry of Justice. These damages will be held in a special account and allocated to pay attorney expenses and support legal aid for popular action rights holders, who may lawfully request it.
The Securities Code provides that when compensation is not paid because of a statute of limitations or the inability of the court to identify the injured parties, payment should revert to the guarantee fund for the transaction giving rise to the claim or, if such a fund does not exist, to the investors' compensation system.
The claimant is exempt from paying preliminary costs and judicial costs are only due after the final judgment. Under Portuguese law, the losing party must reimburse the court fees borne by the winning party. If the claimant's claim is totally or partially upheld, the claimant will be exempt from paying court fees. However, if the court refuses the claim, the judge will determine the court fees to be paid. This varies between 10 per cent and 50 per cent of the regular fees. The judge should take into consideration the claimant's financial situation and the substantial or formal grounds for the refusal of the claim.
Law 83/95 provides for the joint liability of claimants involved in the proceedings.
As in most Member States of the European Union, the use of contingency fees (also known as pactum de quota litis) is prohibited in Portugal (by Article 106 of the Portuguese Bar Association Statute and Article 3.3 of the Code of Conduct for Lawyers in the European Union). Contingency fees are defined as the agreement between a lawyer and client, entered into prior to the final conclusion of the case, whereby the client undertakes to pay to the lawyer a share of the damages awarded, regardless of whether the amount awarded represents payment in cash or in kind.
Nonetheless, lawyers and their clients can previously agree that the fees to be awarded are based on the value of the case's subject matter or that, apart from the fees awarded based on other criteria, the lawyer will be entitled to additional fees related to the outcome of the case.iv Settlement
In Portugal, there are no specific rules regarding the settlement of popular actions, so the general requirements set out in the Civil Procedure Code apply.
In accordance with Paragraph 3 of Article 290 of the Civil Procedure Code, when the parties to a popular action enter into a settlement agreement, the agreement must be submitted to the court for approval.
To approve the settlement of the popular action, the court must assess if the class of people covered by the claim was adequately and lawfully represented.
The settlement agreement will only be binding on, and enforceable in relation to, those who subscribe to it. The members of a class that refuse to subscribe to the agreement or that have expressly opted out of the popular action will not be bound by the settlement.