Last December, Portugal transposed Directive (EU) 2020/1828 on class actions to protect consumer interests.
Class actions are recognized in Article 52(3) of the Constitution of the Portuguese Republic as a form of active legitimacy of citizens – individually or through associations – before the courts for the defence of diffuse interests.
The law defines the following as having the right to a Popular Action: any citizen enjoying their civil and political rights, associations and foundations defending diffuse interests, and local authorities about the claims held by residents in their area.
No categorical list of diffuse legal assets can be protected through Popular Action. Still, the Constitution of the Portuguese Republic specifically mentions public health, consumer rights, quality of life, preservation of the environment and cultural heritage.
Until then, Law 83/95 of August 31 governed Portugal’s Right to Procedural Participation and Popular Action. This was configured as a procedural mechanism for collective action at the national level aimed at protecting various interests, including those relating to the consumption of goods and services.
However, the current Decree-Law no. 114-A/2023, of December 5, the result of the transposition of the Directive, brings Class Actions into the Portuguese legal system in their own right, similar to what already existed in other jurisdictions.
This new Decree-Law aims to guarantee the existence, at the European Union level and at the national level, of at least one effective and efficient Class Action procedural mechanism to obtain injunctive measures to stop, identify or prohibit an unlawful practice by professional and remedial measures, namely through compensation, reimbursement of the amount paid, price reduction, repair of the goods or termination of the contract, available to consumers in all Member States.
In addition to what was already established in the previous law, requirements relating to the independence of consumer associations and the financing of this type of action by third parties have been introduced so that they can have legal standing to bring a class action (Article 6).
To this end, associations bringing this action must now provide the court with the financing agreement and an independent and unbiased financial summary listing the funding sources used to bring the class action in question on behalf of a group of citizens (article 10).
On the other hand, the opt-out mechanism is still in place, whereby it is presumed that all citizens who hold an interest in dispute in a Class Action intend to be represented in it (without the need for their prior consent) and that they are bound by the final decision handed down unless they expressly state otherwise. However, all those not habitually resident in Portugal when the class action is filed must express their wish to be represented (article 12).
Under these terms, it will be up to the Directorate-General for Consumer Affairs to disclose to the public, via its website, the list of entities qualified to bring transnational class actions and information on ongoing and concluded efforts before national courts (Article 20).
The replication of this type of action in several countries and the increase in third-party litigation financing have made the use of Class Actions in Portugal increasingly frequent.
By providing for the possibility of cross-border Class Actions and maintaining the opt-out mechanism, the transposition of this Directive now makes Portugal an even more exciting and suitable market for Class Actions, which are an increasingly demanding form of litigation.
The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.