Judgment no. 227/2015 of the Constitutional Court of 28 April 2015

Unconstitutionality – Joint interpretation of Articles 334 of the Labour Code and 481.2, of the Commercial Companies Code

The Court ruled unconstitutional the combined interpretation of the rules set out in Article 334 of the Labour Code and Article 481.2, introduction, of the Commercial Companies Code, in the part in which they prevent joint liability of a company headquartered outside the country, in a relationship of reciprocal holdings, control or group with a Portuguese company, for claims arising from an employment relationship established with the Portuguese company, or its rupture, due to breach of the principle of equality, set down in Article 13 of the Portuguese Constitution.

Judgment of the Supreme Court of 5 May 2015

Exclusion of partner – Fault – Conviction in criminal proceedings – Extra- procedural value of evidence – Non-contractual liability – Default interest

Summary: I - In a suit brought to seek compensation for losses caused by an unlawful action, the responsibility for any unlawful and damaging acts is only established and determined with the decision rendered by the Court, which leads the legislature to ha ve assumed for these situations, pursuant to Article 805.3 of the Portuguese Civil Code, that the default by the person responsible for production of the unlawful acts giving rise to responsibility starts on the date of service of judicial process.

II - The right to exclude a partner is a potestative right of the company.

III - The exclusion is justified when the corporate interest is undermined by a partner who, through breach of their obligations, leads to results or effects that are detrimental to the corporate purpose.  Hence the company  can only  terminate the contract in relation to a certain partner by means of exclusion, when that partner threatens the corporate interest, not as a result of breaches, but as a result of their effects.

IV - Unlawful and culpable acts, proven in a criminal conviction that has already been made final, that are the grounds for a claim for compensation in a civil action, brought against the perpetrator of the criminal act, can be used as proof of unlawfulness and the fault, even if the injured party is still obliged to prove the actual damage and link of causality.

V - In an action to exclude partners, the period for bringing the action intended  to achieve the exclusion of the partner only begins when the manager becomes aware of, or if the partner to be excluded is also a director of the company, when the partners have access to elements that form the grounds for exclusion.

VI - The company must repay the private share of the excluded partner, within 30 days from the decision ordering the exclusion becoming final.

VII - The default resulting from the obligation to compensate for unlawful acts only begins with the serving of a writ on the debtor/party in breach – see second part of Article 805.3 of the Civil Code.

Judgment of the Supreme Court of 12 March 2015

Objection to Enforcement – Commercial Company – Guarantee – Standing of Companies – Managers – Abuse of law

Summary: I - Contractual clauses that establish a particular purpose for the company or prohibit it from engaging in certain acts, do not limit the company’s capacity, but bind the company’s boards to not exceeding that purpose or not engaging in those acts.

II – A narrow interpretation of Art. 260.1 of the CCC must be adopted, according to which the company’s partners and directors (or members of other corporate boards), that enter into contracts with the company, are not third parties in relation the company, and for this reason they do not warrant the protection afforded by Art. 260.1 of the CCC.

III - It is no abuse of rights for the Company to rely on the enforceability, in relation to the judgment creditors, of the statutory clause concerning prohibition of the subscription of securities or personal guarantees, since legal persons have an autonomous  “life” within the legal order that transcends that of the natural persons that represent them and the judgment debtors acted in a personal capacity in the transactions that they entered into with the judgment creditors.

The Tribunal believed that as the judgment creditors were former partners and former- directors of the company they are not considered third parties covered by the protection of Art. 26.1 of the CCC, and the statutory limit that prohibited directors from engaging in acts or entering into contracts outside the corporate business, as would have been the subscription of the guarantee, is enforceable against them. The Court concluded that third parties can only be non-partners, and not partners or former partners.