Portugal Andrade Dias & A ssociados
202 Getting the Deal Through – Shipping 2012
Portugal
Mateus Andrade Dias
Andrade Dias & Associados
Newbuilding contracts
1 When does title in the ship pass from the shipbuilder to the
shipowner? Can the parties agree to change when title will pass?
The parties to the newbuilding contract may agree on when title in
the ship will pass from the shipbuilder to the shipowner, provided
they do so in writing as a newbuilding contract (or any amendments
thereto) governed by Portuguese law has to be produced in writing,
as per articles 12 and 16 of Decree-Law 201/98.
In the absence of such agreement between the parties, title in
the ship shall pass from the shipbuilder to the shipowner when the
shipbuilder delivers the new ship and the shipowner accepts the new
ship, except for the materials supplied by the shipowner for the newbuilding,
which are considered owned by the shipowner, pursuant to
article 16 of Decree-Law 201/98.
A newbuilding contract is governed by the written clauses of
the contract, by Decree-Law 201/98 and, in subsidiary terms, by the
general rules applicable to construction or repair contracts (articles
1207 to 1230 of the Civil Code) provided that said general rules do
not contradict the specific rules of Decree-Law 201/98.
2 What formalities need to be complied with for the refund guarantee to
be valid?
The newbuilding contract should have a written clause stipulating
the duty of the shipbuilder to provide a refund guarantee to the shipowner
as a guarantee of repayment of pre-delivery instalments paid
by the shipowner. This does not prevent the parties from agreeing,
after the signature of the newbuilding contract, on the said security
requirement.
The formalities required for the refund guarantee depend on the
type or nature of the refund guarantee agreed and on the conditions
stipulated in such refund guarantee and also on the person who is
acting as the refund guarantor (a bank or an insurance company or
the builder itself).
For example, a bank guarantee must be issued in a written document
that must include the following information:
• the identity of the guarantor, of the guaranteed and of the
beneficiary;
• that it is a refund guarantee (cause of the guarantee);
• the amount guaranteed (a fixed amount or several instalments or
even subject to determination under certain conditions);
• the period of its duration and validity;
• the conditions of its enforceability and alterations; and
• the applicable law and competent jurisdiction to consider issues
or disputes related to the said guarantee.
3 Are there any remedies available in local courts to compel delivery of
the vessel when the yard refuses to do so?
Article 25 of Decree-Law 201/98 establishes that the shipbuilder has
a retention lien by operation of law over the newbuilding to guarantee
his claims arising out from the building of the new ship. The Civil
Code also contains rules on retention liens (articles 754 to 761).
Article 756 of the Civil Code states that no such retention lien
exists (or that it is unlawful, if exercised) when the claims (on which
the builder is supporting his retention lien) were incurred or caused
to be made in bad faith by the builder, or when the party against
whom it is being exercised has offered, in or out of court, sufficient
security to guarantee the claims of the builder.
If and when the builder is lawfully exercising his retention lien,
the shipowner may start court proceedings offering security. Pending
such proceedings, the shipbuilder is notified by the court to declare
whether the security offered is satisfactory and sufficient. It shall rest
with the judge to make the ultimate decision on the type, nature and
amount of the security to be provided.
If and when the builder is unlawfully exercising a retention lien,
the shipowner can elect to do any combination of the following:
• commence proceedings to obtain a judgment against the builder
ordering payment of all losses and damages caused to the shipowner
by the said unlawful retention lien of the ship, and also
ordering delivery of the ship;
• if, under the newbuilding contract, title has already passed onto
the shipowner, enforce the newbuilding contract in a special
enforcement proceeding aimed at obtaining delivery of the ship;
or
• apply for a provisional order to be issued by the judge aimed at
obtaining the provisional delivery of the ship pending and subject
to a final resolution of the dispute.
The use of any of the above remedies will have to be assessed on the
basis of the particular circumstances of the case. The builder will
normally refuse delivery alleging a retention lien. Any of the said
remedies should be then used in conjunction with the offering, (either
in or out of court), of security to the builder.
4 Where the vessel is defective and damage results, would a claim lie
in product liability against the shipbuilder at the suit of the shipowner;
a purchaser from the original shipowner; or a third party that has
sustained damage?
With regard to building defects, the shipbuilder guarantees the ship
for a period of one year, commencing from the date of acceptance
of the ship. The shipbuilder is obliged to correct the defect or to
replace the defective equipment, pursuant to article 24 of DecreeLaw 201/98. The shipowner must convey to the builder the defects
detected within 30 days counted from the date of their discovery, as
per article 26 of Decree-Law 201/98. The test results, the approval
and the acceptance by the shipowner without any reservation does
www.gettingthedealthrough.com 203
Andrade Dias & A ssociados Portugal
not exempt the shipbuilder from liability to correct defects, save
where the shipowner knew of them. The apparent defects are presumed
to be known by the shipowner, according to article 27 of
Decree-Law 201/98. If the defects are not corrected by the shipbuilder,
the shipowner can demand for a price reduction according
to equity or cancel the newbuilding contract if the defects make the
ship inadequate for the purpose or aim to which she was destined,
according to article 28 of Decree-Law 201/98. The correction, price
reduction or cancellation remedies are cumulative to any compensation
for damages. The rights of correction of the defects or price
reduction or cancellation or compensation for damages are, if not
exercised, time-barred within two years commencing from the date
of delivery of the ship. The two-year time bar commences from the
date of discovery of a latent defect by the shipowner, pursuant to
article 30 of Decree-Law 201/98.
A purchaser from the original shipowner will have to exercise
any possible rights pursuant to the contract for the sale and purchase
entered into with the original shipowner and pursuant to articles
913 to 922 of the Civil Code that rule on the sale and purchase of
defective goods. This will not prevent the builder, shipowner and
purchaser of the defective ship from agreeing on an assignment to
the purchaser of the newbuilding contract or of the relevant rights
and duties arising from the latter.
A third party that has sustained damage (eg, personal injury)
arising from a defective ship will have to rely on the rules of tort to
seek compensation for damages. Normally said rights will be exercised
against her owner.
Ship registration and mortgages
5 What vessels are eligible for registration under the flag of your
country? Is it possible to register vessels under construction under
the flag of your country?
Portugal uses a dual system of registration for merchant ships. It is
dual in two senses:
• a merchant ship can be registered on the Conventional Registry
or in the International Shipping Registry of Madeira;
• a merchant ship registered on the Conventional Registry has to
be registered at the Harbour Master’s Office and at the Commercial
Registry;
• a merchant ship registered on the International Shipping Registry
of Madeira has to be registered at its Technical Commission and
at the Commercial Registry of the Free Trade Zone of Madeira;
• the Harbour Master’s Office and the Technical Commission are
technical registries aimed at publicising the technical features of
ships, while the Commercial Registries are public registries aimed
at publicising, before third parties, the legal situation of assets,
namely her ownership, onus and encumbrances. Ships registered
under one of these systems of registration sail under the Portuguese
flag; and
• the main differences between Conventional Registry and International
Shipping Registry of Madeira rest on the fact that the
latter has less requirements on nationality of crewmembers and
shipowners, and their crews, do not have to comply with social
security compulsory dues.
Merchant ships, oil rigs and merchant yachts will all be eligible for
registration either at the Conventional Registry or at the International
Shipping Registry of Madeira. Pleasure yachts are only eligible
for registration at the International Shipping Registry of Madeira and
at the Harbour Master’s Office, as they are not eligible for registration
at the Commercial Registry within the Conventional Registry.
Pursuant to article 77 of the Harbour Master’s Office Regulation,
small boats existent on board, (even if they are life rafts), small auxiliary
fishing boats and small beach boats without engines or sails
to be used within 300 metres of the low tide line are exempt from
registration. Theoretically and with the exclusion of the above-mentioned
boats, all merchant ships are eligible for registration at the
Harbour Master’s Office.
Merchant ships or merchant yachts under construction may be
registered at the Conventional Registry or at the International Shipping
Registry of Madeira.
6 What are the requirements for company formation?
The most common legal structures used are both of limited liability,
one being a limited liability company by quotas (Lda) and the other
a limited liability company by shares (SA). The Lda company is no
longer required to have a minimum quota capital. The quota holders
can determine what capital will the company have. The SA has to
have a minimum share capital of €50,000. A company can be incorporated
by private written contract (signed with legalised signatures
of the signatories) save where the capital is being met by an immoveable
asset (an estate) where, in this case, public deed is in principle
required for the incorporation. The incorporation of the company is
subject to, inter alia, registration at the Commercial Registry and subject
to online publication at the Ministry of Justice’s official website.
7 Is dual registration and flagging out possible and what is the
procedure?
Dual registration is admissible within the Portuguese legal framework,
as per Decree-Law 287/83 and Decree-Law 96/89.
The Conventional Registry and the International Shipping Registry
of Madeira admit flagging in of merchant ships under the following
conditions:
• the merchant ship needs to be bareboat-chartered by a Portuguese
bareboat charterer duly licensed to undertake the commercial
sea carriage business; and
• the bareboat charter party contract needs to stipulate a purchase
option in favour of the charterer and it (the flagging in) will be
subject to a duration permission that shall not exceed five years,
renewable.
A written permission application should be lodged by the charterer
and be accompanied by: original or certified copy of the bareboat
charter party contract with purchase option; written note describing
the advantages to the Portuguese economy and to the applicant that
arise from flagging in a foreign vessel; statement from the owner
authorising the flagging in; statement from the underlying registry
allowing the flagging in; certificate of ownership, liens and encumbrances
of the ship; statement from the mortgagee authorising the
flagging in; and copy of the tonnage certificate and copy of her safety
and classification society certificates. A registration number, call sign
and tonnage certificate should be requested from the Portuguese
authorities after issuance of the permission.
A written registration application should then be lodged and
accompanied by:
• proof of the Portuguese nationality of the bareboat charterer and
of its licence to operate as a sea carrier;
• proof that the bareboat charter party is recorded at the Commercial
Corporate Registry of the charterer;
• proof of permission for the dual registration; and
• proof of the temporary registration number, call sign and tonnage
certificate and certificate of ship’s survey.
The documents lodged with the permission application do not need
to be attached with the registration application. A certificate of registration
is issued upon completion of the registration process.
Article 18 of Decree-Law 96/89 states that the Technical Commission
may allow flagging out of bareboat chartered ships. The
procedure and requirements will mainly depend on the law of the
state flagged in.
Portugal Andrade Dias & A ssociados
204 Getting the Deal Through – Shipping 2012
8 Who maintains the register of mortgages and what information does it
contain?
If the ownership of the ship is registered in Portugal, the mortgage
will be registered at the Technical Commission and at the Commercial
Registry of the Free Trade Zone of Madeira, if she is registered
at the International Shipping Registry of Madeira, or at the Commercial
Registry, if registered at the Conventional Registry.
Identification of the mortgagor, mortgagee, principal, interest
and expenses shall be recorded.
If the ship is flagged in to Portugal, the mortgage will not be
registered at the Technical Commission or at the Harbour Master’s
Office.
Limitation of liability
9 What limitation regime applies? What claims can be limited? Which
parties can limit their liability?
Portugal is a contracting state to the International Convention for the
Unification of Certain Rules relating to the Limitation of the Liability
of Owners of Seagoing Vessels, 1924. The claims listed in article 1 of
the 1924 Convention may be limited. The owner can limit liability
arising from the said claims.
Portugal is also a contracting state to the International Convention
relating to the Limitation of the Liability of Owners of Seagoing
Ships, 1957 and of the 1979 Protocol Amending the Limitation of
Shipowners’ Liability, 1957.
Pursuant to article 1 of the 1957 Convention, the following
claims may be limited:
• loss of life of, or personal injury to, any person being carried in
the ship, and loss of, or damage to, any property on board the
ship; and
• loss of life of, or personal injury to, any other person, whether
on land or at sea, loss of or damage to any other property or
infringement of any rights caused by the act, neglect or intent
of any person on board the ship for whose act, neglect or intent
the owner is responsible or of any other person not on board the
ship for whose act, neglect or intent the owner is responsible for,
provide, however, that in this last case, the act, neglect or intent
is one which occurs in the navigation or the management of the
ship or in the loading, carriage or discharge of her cargo or in the
embarkation, carriage or disembarkation of her passengers.
Paragraph (c) of article 1 has been excluded by reservation.
The owner, armador, armador manager, master, members of the
crew and other servants of the owner, armador or armador manager
acting in the course of their employment can limit liability arising
from the above claims, provided that the total limits of liability of
the owner and all such other persons in respect to personal claims
and property claims arising on the same occasion shall not exceed
the amounts determined in accordance with article 3 of the 1957
Convention. The armador is the person or entity that executes, in
its own interest, all the legal and material acts necessary for the ship
to be in a position to undertake her voyage – namely, equips, mans,
clears and provides the ship to undertake her voyage, under article 1,
paragraphs (c) and (d) of Decree Law 202/98. Pursuant to article 2 of
Decree Law 202/98 and subject to proof to the contrary, the following
persons or entities are presumed to be the armador of the ship:
owner; beneficiary of a dual registration; and bareboat charterer. The
Protection & Indemnity Club or the Hull & Machinery Underwriters
can also limit liability under the 1957 Convention, as has been
decided in past judgments issued by the Portuguese courts.
The 1957 Convention became internal law by force of DecreeLaw 49028. A Limitation Fund Regulation was created by Decree
49029.
Article 12 of Decree-Law 202/98 states that the owner, in addition
to the limitation of liability provisions contained in any international
conventions applicable in Portugal, and where the claims
at stake are other than the ones stated in the said international conventions,
may limit his liability to the ship and to the value of the
freight at risk by abandoning the latter to the creditors and in order
to establish a limitation of liability fund.
10 What is the procedure for establishing limitation?
There is no specific regulation applicable to the 1924 Convention.
The fund will be calculated based on the value of the ship, the freight
and the accessories of the ship.
The Limitation Fund Regulation was established to allow application
of the 1957 Convention. The fund can be established in any
way admitted by civil law to grant security. It will be established
by means of lodging of a written application that must refer to: the
event that has caused the damages; the amount of the limitation fund,
calculated in accordance with article 3 of the 1957 Convention; the
way in which the fund will be established and the amount to reserve
pursuant to article 3, paragraph 4 of the 1957 Convention. The
application must be attached with a list of the known creditors and
information on their claims and domiciles and with the supporting
elements for calculation of the amount of the fund, namely a tonnage
certificate and a tonnage admeasurement statement in respect of the
engine room space.
The amounts to which the applicant can limit his liability under
article 3 of the 1957 Convention shall be an aggregate amount
of 66.67 units of account for each ton of the ship’s tonnage if the
occurrence has only given rise to property claims. Where the occurrence
has only given rise to personal claims, an aggregate amount of
206.67 units of account for each ton of the ship’s tonnage. Where
the occurrence has given rise to both personal claims and property
claims, an aggregate amount of 206.67 units of account for each
ton of the ship’s tonnage, of which a first portion amounting to 140
units of account for each ton of the ship’s tonnage, shall be exclusively
appropriated to the payment of personal claims and of which
a second portion amounting to 66.67 units of account for each ton
of the ship’s tonnage shall be appropriated to property claims. Provided,
however, that in cases where the first portion is insufficient
to pay the personal claims in full, the unpaid balance of such claims
shall rank rateably with the property claims for payment against the
second portion of the fund.
The unit of account is the special drawing right as defined by the
International Monetary Fund. The amounts shall be converted into
the national currency on the date that the shipowner has constituted
the limitation fund, made the payment or given a guarantee that,
under the law of that state, is equivalent to such payment. The relevant
currency for Portugal is the Euro. Tonnage will be calculated
as follows:
• in the case of steamships or other mechanically propelled ships,
the net tonnage shall be taken with the addition of the amount
deducted from the gross tonnage on account of engine room
space for the purpose of ascertaining the net tonnage; and
• in the case of all other ships, the net tonnage shall be taken.
Security has to be given either in the form of cash, mortgage or letter
of guarantee.
Pursuant to article 13 of Decree-Law 202/98, the same procedural
rules applicable to the establishment of the limitation fund
under the 1957 Convention shall apply to the limitation fund ruled
by Decree-Law 202/98, fully adapted to the provisions of the latter.
The value of the freight at risk must be stated in the application and
security for the said value of the freight should be provided by the
applicant. A bailee is appointed and the judicial sale of the ship is
ordered.
www.gettingthedealthrough.com 205
Andrade Dias & A ssociados Portugal
11 In what circumstances can the limit be broken?
As per article 2 of the 1924 Convention, the owner shall not be
allowed to limit his liability if the obligation arises out of acts or
faults of the owner itself or in regards to obligations referred to in
article 1(8), where the owner has expressly authorised or ratified
such obligation; the obligation arises out of the engagement of the
crew and other persons in the service of the vessel. If the owner or a
part-owner of the vessel is at the same time master thereof, then he
cannot claim limitation of liability for his faults other than his faults
of navigation and the faults of persons in the service of the vessel.
As per article 1 of the 1957 Convention, the applicant shall not
be allowed to limit his liability if the occurrence giving rise to the
claim resulted from the actual personal fault of the applicant.
An appeals judgement issued with No. 444/2008 by the 2nd Section
of the Constitutional Court in proceedings No. 80/2008 on 23
September 2008 and published on 28 October 2008, has considered
the limitation of liability under the 1957 Convention unconstitutional
under certain specific circumstances. It has been ruled that:
A compensation that covers merely 3.75 per cent of the claim must
be considered as a clear insignificant compensation, if one bears in
mind that the total amount of the recognised damages to the claimants
reaches €65,785.04. The disproportion between this last value
and the compensation given is so apparent that the latter can only
be considered miserable […]
In fact, it happens that it is the amount of the fund, in the
maximum total of €8,267.41, that is, in the outset, insignificant,
although we are facing a liable 100 tons net tonnage ship (even if the
claimants had received the total amount of the fund, they would be
merely receiving coverage of 12.5 per cent of their claim). To allow
that a ship, regardless of her tonnage, can blamefully collide with
another ship, and even sink her, resting only obliged to compensate
the caused property damages up to the amount of €8,267.41 clearly
poses a risk to the core of the constitutional right of compensation
for damages, inherent to the constitutional principle of democratic
and the rule of law governed state as the possibility of its application
results in a unacceptable disproportion between the value of the
property damages and the compensation given.
The situation is much more serious where the claimants can not,
under the 1957 limitation of liability convention, obtain any other
compensation for the suffered damages, namely from the agents,
servants or employees that acted negligently because the latter’s can
use the same limitation of liability against the claimants (article 6(2)
and (3) of the 1957 limitation of liability convention) [...]
It is decided then to rule unconstitutional the provision regarding
the constitution of the limitation of liability fund with the amount
stated in article 3, paragraph 1, sub paragraph a) of the 1957 Convention
[...] when the compensation arising from the distribution of
the fund amount by the creditors covers merely 3.75 per cent of the
amount of the recognised to certain plaintiff’s claims, with a total
amount of €65,785.04.
It is then decided to grant the appeal in this point ordering the
reform of the appealed judgment in accordance with the unconstitutionality
judgment.
As can be inferred from the described judgment, shipowners may
well be prevented to limit their liability under the 1957 Convention
within the Portuguese jurisdiction, or it is at least very likely that they
will see their limitation right very limited. The outcome of this judgment
was that the owners were prevented to limit their liability and
because the damages and their amount were considered proved in
the proceedings, the full amount of them was recognised. The entire
implication in future limitation of liability cases is yet to be seen. It is
also yet to be seen what percentage relation will have to exist above
3.75 per cent between the amount distributed and the amount of
the claim. However, shipowners may consider from this judgment
onwards that this will be an issue raised by any claimant in order to
try to break the limitation of liability.
Port state control
12 Which body is the port state control agency? Under what authority
does it operate?
IPTM is the port state control agency. It is governed by DecreeLaw 146/2007 and by Ordinance 544/2007. IPTM is a public body
empowered of administrative and financial autonomy pursuing tasks
of the secretary of state of public works, transport and communication.
IPTM operates under the supervision and custody of the secretary
of state of public works, transport and communication.
Its aim is to regulate, check and exercise functions of coordination
and planning of the port and maritime sector and supervise
and regulate activities developed in this sector. Its tasks are, inter
alia, to promote the application and check the compliance with the
laws, regulations, rules and technical requirements applicable within
its tasks, namely, of national and international rules related to the
port and maritime sector, without prejudice of jurisdiction of other
entities.
13 What sanctions may the port state control inspector impose?
As per Decree-Law 195/98, the sanctions will not normally be
imposed by the inspector of the IPTM. The sanctions will normally
be imposed by the harbour master following a mandatory technical
opinion of the IPTM.
The following sanctions may be imposed: detention; stoppage of
operations (eg, cargo discharge); refusal of entry and stay in Portuguese
ports; and fines of up to €25,000.
14 What is the appeal process against detention orders or fines?
A detention sanction can be appealed by means of an application
addressed to the Maritime Court. The appeal does not suspend the
effects of the detention sanction. The same can be followed to oppose
fines.
Classification societies
15 Which are the approved classification societies?
The approved classification societies are: American Bureau of Shipping;
Bureau Veritas; Det Norske Veritas; Germanischer Lloyd;
Lloyd’s Register; RINA; and RINAVE.
16 In what circumstances can a classification society be held liable, if at
all?
Pursuant to article 11 of Decree-Law 321/2003, the Portuguese state
shall have the right to seek compensation from the approved classification
society when liability is imputed to the former arising out
of any incident, by a final and non-appealable judgment issued by a
court or an arbitral tribunal, together with an indemnity application
by the damaged parties and, where said liability arises, inter alia,
from loss or damage, death or personal injury and if it has been
proved in the said court or tribunal that said damages were caused
by intentional act or omission or by gross negligence of the approved
society, their directors, employees, agents or other persons that act
on her behalf. The minister with supervision over maritime safety
may limit the maximum amount to be paid by the approved society.
The process of approval of a classification society is subject to the
entering into of a written agreement between the Portuguese state
and the relevant classification society where a provision envisaging
the mentioned liability shall be inserted.
Portugal Andrade Dias & A ssociados
206 Getting the Deal Through – Shipping 2012
A classification society can theoretically be held liable under the
general rules of tort if and where all requirements of this source of
obligations are verified, including: faulty (intentional or negligent)
and illicit act or omission; damage; causation between the act or
omission and the damage; and a special relation between the classification
society and her inspector that needs to be qualified as of
comissão, pursuant to article 500 of the Civil Code. We presume that
the intricate issue would be to ascertain what event has caused the
damage. Some professors of law are of the opinion that the rules of
tort are of public policy and hence cannot be subject to limitation of
liability clauses where the damage was caused by an intentional or
with gross negligent conduct.
A classification society can also theoretically be held liable under
the specific rules of tort for counsels, recommendations or information
where the said classification society has assumed liability for
damages or when there was a contractual or a statutory duty to
provide counsels, recommendations or information and the latter
have been given with negligence or intent or when the act or omission
of the classification society or its inspector constitutes a criminal
offence.
Collision, salvage, wreck removal and pollution
17 Can the state or local authority order wreck removal?
Yes. Pursuant to article 5 of Decree-Law 64/2005, the following
entities may order wreck removal: harbour master; port administration;
relevant administrative state entity with jurisdiction over an
environmental protected area; and administrative state entity with
jurisdiction over the River Douro.
18 Which international conventions or protocols are in force in relation to
collision, salvage and pollution?
With regard to collision, the international conventions in force are:
• the International Convention for the Unification of Certain Rules
Concerning Civil Jurisdiction in Matters of Collision, Brussels,
1952;
• the International Convention for the Unification of Certain Rules
of Law with respect to Collision between Vessels, Brussels, 1910;
and
• the International Convention for the Unification of Certain Rules
Relating to Penal Jurisdiction in Matters of Collision or Other
Incidents of Navigation, 1952.
With regard to salvage, the international convention in force is the
Convention Relating to the Unification of Certain Rules of Law
Relating to Assistance and Salvage at Sea, 1910. Portugal is not a
contracting state of the 1989 International Convention on Salvage
but has introduced most of the convention’s provisions into internal
law by means of Decree-law No. 203/98 published on 10 July
1998.
With regard to pollution, international conventions and protocols
in force include:
• the Protocol of 1992 to Amend the International Convention on
Civil Liability for Oil Pollution Damage, 1969 (CLC Protocol
1992);
• the Protocol of 1992 to Amend the International Convention on
the Establishment of an International Fund for Compensation
for Oil Pollution Damage, 1971 (Fund Protocol 1992);
• the Protocol of 2003 to Amend the International Convention on
the Establishment of an International Fund for Compensation
for Oil Pollution Damage, 1992 (Fund Protocol 2003); and
• the Protocol of 1978 Relating to the International Convention
for the Prevention of Pollution From Ships, 1973 (MARPOL
73/78), its optional annexes III, IV, V and the 1997 Protocol on
annex VI.
19 Is there a mandatory local form of salvage agreement or is Lloyd’s
standard form of salvage agreement acceptable? Who may carry out
salvage operations?
There is no mandatory local form of salvage agreement. The salvage
agreement merely needs to be entered into in writing, which includes
its insertion in letters, telegrams, telexes, faxes and other equivalent
procedures created by modern technologies, pursuant to article 2(2)
of Decree-Law 203/98. As per article 1 of Decree-Law 203/98, salvage
is defined as all act or activity that aims to render help to ships,
crafts or other assets, including freight at risk, when in peril at sea. A
salvor is defined as one who renders help to assets in peril at sea.
Ship arrest
20 Which international convention regarding the arrest of ships is in force
in your jurisdiction?
The International Convention for the Unification of Certain Rules
Relating to the Arrest of Seagoing Ships, 1952 is in force.
21 In respect of what claims can a vessel be arrested? In what
circumstances may associated ships be arrested?
A vessel can be arrested under the 1952 Convention based on one
of the maritime claims identified in article 1 (1)(a) to (q) of the 1952
Convention. Pursuant to article 8(2) of the 1952 Convention, a ship
sailing under the flag of a non-contracting state can be arrested for
one of the maritime claims listed in the former. The governing law of
the claim has no implications on the possibility of having an arrest
order granted, if the arrestor can produce in court sufficient evidence
of the existence of a maritime claim. Until a judgment of late 2009, as
a general principle of law, it was not possible to arrest an associated
ship. The Lisbon Admiralty Court has, however, on said judgment
accepted the arrest of two vessels under the doctrines of associated
ship arrest and of ‘piercing of the corporate veil’. The arrest orders
issued in the first instance were withdrawn pursuant to an out-ofcourt
settlement agreement and hence were not tested at appeal. They
did, however, paved the way to allow further arrests in use of said
doctrines.
Outside the scope of application of the 1952 Convention, that
is to say, to obtain security for an unlisted claim – such as, insurance
premiums or P&I calls – an applicant arrestor can make use of the
Civil Procedure Code. Aside from a jurisdiction issue that needs to
be carefully assessed in the outset, the applicant arrestor must satisfy
an additional test in what regards to evidence. The applicant arrestor
shall have to produce evidence of the existence of a well-grounded
fear of losing security for its claim whether because the debtor is
insolvent or whether because he is dissipating his assets in order to
damage creditors. This test is not required if the application is presented
based on the 1957 Convention and tends to be somewhat
difficult to comply with under the Civil Procedure Code.
An arrest order issued by a Portuguese judge is merely aimed at
allowing the creditor to obtain security for its claim. An arrest order
is fully dependent on a main proceeding on the merits, started to
obtain a judgment or an award, or fully dependent of an enforcement
proceeding if the said judgment or award exists already.
22 What is the test for wrongful arrest?
Pursuant to article 390(1) of the Civil Procedure Code and article
621 of the Civil Code, if an arrest order is considered unfounded or
expires by reasons imputed to the arrestor, he will be liable for damages
caused with fault to the arrestee, provided the arrestor has not
acted with the normal prudence required. The arrest order expires,
inter alia, when the main proceeding on which it is fully dependent is
not commenced within a certain given time or if it is stalled by negligence
of the applicant for more than 30 days. The ultimate failure of
www.gettingthedealthrough.com 207
Andrade Dias & A ssociados Portugal
the claim (ie, final and non-appealable judgment refusing the claim)
is not, per se, sufficient to base a wrongful arrest claim.
23 Can a bunker supplier arrest a vessel in connection with a claim for
the price of bunkers supplied to that vessel pursuant to a contract
with the charterer, rather than with the owner, of that vessel?
Pursuant to article 1(1)(k) of the 1957 Arrest Convention a claim
arising from supplies of products – such as bunkers – or materials
done to a ship for her operation or maintenance wherever the
said supplies are performed constitute a maritime claim under the
1957 Arrest Convention. Subject to the provision of article 3(1) of
the 1957 Arrest Convention an applicant arrestor or creditor can
arrest the ship in respect of which the claim refers to or arises from.
Under article 3(4) of the 1957 Arrest Convention, in the case of
the existence of a charter party where the nautical management has
been passed from the owner to the charterer and when merely the
charterer is liable in persona, the creditor may arrest the ship insofar
as the claim refers to or arises from or any other ship owned by the
charterer. This rule has been interpreted by the courts to include voyage
or time charterers and hence to allow arrest orders against the
supplied ship where only charterers are liable in persona.
A bunker supplier can therefore arrest a vessel in connection
with a claim for the price of bunkers supplied to that vessel pursuant
to a contract with the charterer, rather than with the owner, of
that vessel.
24 Will the arresting party have to provide security and in what form and
amount?
The judge can request the arrestor to provide security and to depend
the granting of the arrest order on the provision of the said security.
Security can be produced inter alia in cash or bank guarantee. The
judge will ultimately assess the sufficiency and quality of the security
offered. This is not common practice in our courts and hence it is
difficult to convey what amount will be required as security by the
judge.
25 Who is responsible for the maintenance of the vessel while under
arrest?
The judge will appoint a bailee, who will be obliged to keep, guard,
administer and maintain the vessel. Such responsibilities have, up
until now, been minimal.
26 Must the arresting party pursue the claim on its merits in the courts
of your country or is it possible to arrest simply to obtain security and
then pursue proceedings on the merits elsewhere?
No. It is possible to arrest simply to obtain security and then pursue
proceedings on the merits elsewhere. However in some situations this
may not be the case taken into consideration article 7 of the International
Convention for the Unification of Certain Rules Relating to
the Arrest of Seagoing Ships, 1952, which is in force in Portugal.
Judicial sale of vessels
27 Who can apply for judicial sale of an arrested vessel?
The arresting party, the arrested party or the bailee can all apply for
judicial sale of an arrested vessel.
28 What is the procedure for initiating and conducting judicial sale of a
vessel? How long on average does it take for the judicial sale to be
concluded following an application for sale? What are the court costs
associated with the judicial sale? How are these costs calculated?
The judicial sale of any vessel can not, as a general principle, be
performed in the arrest procedure but only in the enforcement procedure
where a creditor is enforcing a judgment. Considering, however,
that the process of obtaining a judgment may take considerable
time, the former judge of the Lisbon Admiralty court has long been
authorising the anticipated sale of arrested vessels within the arrest
procedure. The test for issuance of the sale order is accomplished
when the arrested ship’ value is depreciating due to poor or lack of
maintenance or due to any other reason.
The sale procedure will run as follows:
• the applicant must request in writing to the judge to grant permission
for the anticipated sale of the vessel stating reasons in
support that (and providing evidence of) her value is depreciating.
It should also propose a minimum sale value and attach
evidence of her market value;
• the judge will hear the parties to the proceedings and will authorise
or refuse the sale. The authorisation order will be issued if the
parties agree on the sale or, failing said agreement, if the judge
is convinced about the depreciation of the vessel pursuant to his
consideration of the evidence produced or attached in court that
show that her value is decreasing. The judge shall not authorise
in any case the anticipated sale if the action on the merits has not
yet been started;
• the authorisation order will:
• define the type of judicial sale (ships are usually sold by private
treaty sale that needs to be approved by the judge);
• nominate the person in charge of the sale process;
• define the minimum sale value; and
• define the duration of the sale process.
The minimum sale value will be determined taking into consideration
the evidence attached by the applicant of the sale or taking into
consideration a possible evaluation to her value ordered by the judge
to be performed by a third-party expert;
• the sale responsible normally drafts and publicizes a sale flyer
containing ship’s particulars that is promoted locally and
internationally;
• the presented bids are sent by the sale responsible to court and
passed to all parties to the proceedings. The parties may oppose
to their acceptance but ultimately the decision will rest with the
judge; and
• the sale responsible will draft an out of court sale and purchase
agreement once the judge has accepted the relevant bid. The
judge issues a final order approving the sale once the price has
been deposited. The final approval order allows the delivery of
the ship to the purchaser;
The process may be concluded in a period of six months counted
from the date of the application.
The sale responsible will be entitled to a fee that shall cover
remuneration and shall be determined by the judge in a percentage
of up to 5 per cent of the sale proceeds. The sale responsible shall also
be entitled to a reduced amount to cover transport costs.
29 What is the order of priority of claims against the proceeds of sale?
A Portuguese judge may apply three alternative lists of priority of
claims:
(i) the priority list contained in the law of the jurisdiction or state
under which flag the ship sails or, in case of dual registration,
where her ownership is registered;
Portugal Andrade Dias & A ssociados
208 Getting the Deal Through – Shipping 2012
(ii) the priority list contained in the International Convention for
the Unification of Certain Rules Relating to Maritime Liens and
Mortgages, 1926 when the ship sails under a contracting state
flag and that can be described as follows:
• legal costs due to the state, and expenses incurred in the common
interest of the creditors in order to preserve the vessel
or to procure its sale and the distribution of the proceeds of
sale; tonnage dues, light or harbour dues, and other public
taxes and charges of the same character; pilotage dues; the
cost of watching and preservation from the time of the entry
of the vessel into the last port; other taxes and social security
dues;
• claims arising out of the contract of engagement of the master,
crew, and other persons hired on board;
• remuneration for assistance and salvage, and the contribution
of the vessel in general average;
• indemnities for collision or other accident of navigation, as
also for damage caused to works forming part of harbours,
docks, and navigable ways, indemnities for personal injury
to passengers or crew, indemnities for loss of or damage to
cargo or baggage;
• claims resulting from contracts entered into or acts done by
the master, acting within the scope of his authority, away
from the vessel’s home port, where such contracts or acts are
necessary for the preservation of the vessel or the continuation
of her voyage, whether the master is or is not at the
same time owner of the vessel, and whether the claim is his
own or that of the ship-chandlers, repairers, lenders, or other
contractual creditors; and
• mortgages, hypothecations and other similar charges on the
vessel duly effected in accordance with the law of the contracting
state to which the vessel belongs; or
(iii) the priority list contained in article 578 of the Commercial Code
that is described as follows:
(i) court costs made in the common interest of the
creditors;
(ii) taxes and social security dues;
(iii) salvage rewards;
(iv) claims secured by mortgages or pledges over ships;
(v) pilots and towing expenses for entry into port;
(vi) tonnage, anchorage, public health, light and other harbour
dues;
(vii) expenses made with the keeping of the vessel and storage
of her appurtenances;
(viii) master and crew wages;
(ix) repair costs of the vessel, her appurtenances and
equipment;
(x) reimbursement of the price of the cargo that the master
was forced to sold;
(xi) insurance premiums;
(xii) the outstanding price of the last purchase of the vessel;
(xiii) repair costs of the vessel, her appurtenances and equipment,
in the three years previous to the voyage at
issue and counted from the date of termination of the
repairs;
(xiv) costs related to shipbuilding contracts;
(xv) the insurances premiums over the ship, if entirely covered,
or over the covered part or her appurtenances not
mentioned in paragraph (xi); and
(xvi) indemnities due to the shippers for shortage or damage
of goods.
Claims mentioned in (i) to (xi), excluding the claims mentioned in
(iii), are those incurred in the last voyage and because of it.
30 What are the legal effects or consequences of judicial sale of a
vessel?
The judicial sale of a vessel extinguishes all prior liens and encumbrances
over a ship and thereby provides the purchaser clean title.
31 Will judicial sale of a vessel in a foreign jurisdiction be recognised?
Yes. The question to know will be to ascertain if said recognition
will be automatic or subject to a recognition of the order that has
accepted or approved the sale.
32 Is your country a signatory to the International Convention on Maritime
Liens and Mortgages 1993?
No. Portugal is a contracting state to the International Convention
for the Unification of Certain Rules Relating to Maritime Liens and
Mortgages, 1926.
Carriage of goods by sea and bills of lading
33 Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some
variation in force and have they been ratified or implemented without
ratification? Has your state ratified, accepted, approved or acceded
to the UN Convention on Contracts for the International Carriage of
Goods Wholly or Partly by Sea? When does carriage at sea begin and
end for the purpose of application of such rules?
The International Convention for the Unification of Certain Rules
Relating to Bills of Lading, Brussels, 1924, is in force. The Hague
Rules became internal law by means of Decree-Law 37748 of 1 February
1950. The Hague Rules apply mandatorily where the bill of
lading was issued in the territory of a contracting state.
Decree-Law 352/86 will apply, in subsidiary terms (in respect of
issues not dealt by the conventions) to the international conventions
in force in Portugal, to the contracts for the carriage of goods by
sea. Decree-Law 352/86 rules, inter alia, on pre-loading and postdischarge
responsibilities and liabilities, on package and unit limitation
calculation and amounts and on limitation periods. Decree-Law
352/86 inserted into internal law some of the Visby Protocol amendments
in regard to package and unit calculation. It has inserted the
Hamburg Rules’ limitation period of two years to be applied merely
outside the scope of application of the Hague Rules because regarding
liabilities arising out in connection with the Hague Rules the
one-year limitation period is to be applied. The Hague Rules must be
applied in conjunction with Decree-Law 37748 and especially with
Decree-Law 352/86.
Portugal has not ratified, accepted, approved or acceded to
the UN Convention on Contracts for the International Carriage of
Goods Wholly or Partly by Sea (Rotterdam Rules).
Pursuant to article 1(e) of the Hague Rules, carriage of goods
by sea encompasses the time elapsed, as from the time the goods
are loaded on board the ship up to the moment they are discharged
from the ship, that is to say, as from and up to the moment they have
passed the ship’s rail ‘tackle to tackle’. Under article 6 of Decree-Law
352/86 the carrier’s liability for the goods in respect of the period
elapsed between receipt and loading of the goods is ruled by the
provisions of the bailment contract contained in the Civil Code. The
bailment contract regime is applied also as from the moment the
goods have been discharged onwards. It is fair to conclude, then,
that carriage by sea commences and ends as from and up to the
moment the goods have passed the ship’s rail at her loading and
discharge ports.
www.gettingthedealthrough.com 209
Andrade Dias & A ssociados Portugal
34 Are there conventions or domestic laws in force in respect of road, rail
or air transport that apply to stages of the transport other than by sea
under a combined transport or multimodal bill of lading?
In respect of road carriage, Portugal is a contracting state to the
Convention on the Contract for the International Carriage of Goods
by Road signed at Geneva on 19 May 1956 (CMR Convention). Portugal
has also in force an internal regime that is applicable to internal
road carriages and that is contained in Decree-Law 239/2003,
published on 4 October 2003. The most relevant difference between
these two regimes rests in the limitation of liability limits applicable
to non-intentionally caused losses or damages to goods. Pursuant to
article 23 of the CMR Convention, the road carrier shall not be liable
for more than 8.33 units of account per kilogram of gross weight in
short, being the unit of account, the special drawing right, calculated
under paragraph 7 of article 23 of the CMR Convention and duly
converted into Euros. Differently, pursuant to article 20 of DecreeLaw 239/2003, the carrier shall not be liable for more than €10 per
kilogram of gross weight of the goods in short or damaged.
In respect of rail carriage, Portugal is a contracting party to the
Convention concerning International Carriage by Rail (COTIF) of 9
May 1980 in the version of the Protocol of Modification of 3 June
1999. Decree-Law 58/2008, published on 26 March 2008, contains
the internal regime applicable to internal rail carriage.
With regards to air carriage, Portugal is a contracting state to
the International Convention for the Unification of Certain Rules
Relating to International Air Carriage, Warsaw 12 October 1929
and of The Hague, Guatemala and Montreal Protocols. Portugal
is also a contracting state of the International Convention for the
Unification of Certain Rules Relating to International Air Carriage,
Montreal 28 May 1999. European Union Regulation No. 889/2002
of the Parliament and of the Council should be applied within the
European Union.
35 Who has title to sue on a bill of lading?
The initial party (shipper or receiver) to the contract for the carriage
of goods by sea or an assigned third party on the rights of the former;
the holder of a bill of lading where a bearer bill of lading was issued;
the named consignee where a not to order bill of lading was issued;
or the named consignee or the endorsee where a bill of lading was
issued at the order.
36 To what extent can the terms in a charter party be incorporated into
the bill of lading? Is a jurisdiction or arbitration clause in a charter
party, the terms of which are incorporated in the bill, binding on a
thirdparty
holder or endorsee of the bill?
Pursuant to freedom of contract principles, between owner and charterer
the terms of the charter party can be incorporated into a bill
of lading.
The said incorporation will be in principle ineffective with regard
to the third-party holder or endorsee as he is not a party to the charter
party being merely a party to the contract for the carriage of goods by
sea titled by the bill of lading. This will not be the case with regard
to the clauses of the charter party reproduced in the bill of lading, or
in the case that the former is attached to the latter. In these two last
cases, the clauses may be effective depending on the interpretation of
the clauses of the contracts. The same reasoning is valid for a jurisdiction
or an arbitration clause in a charter party, the terms of which
are incorporated in the bill. In addition, subparagraph (b) of article
29 of Decree-Law 352/86 states that ‘within the relations between
carrier and third-party holder of the bill of lading, with prejudice
of what on the contrary may be stated in the charter party, where
the bill of lading has been issued pursuant to the charter party, the
rules of Decree-Law 352/86 will prevail’. Article 30 of Decree-Law
352/86 states that the Portuguese courts will have jurisdiction for
actions arising from carriage of goods by sea if, inter alia the port of
loading or discharge is located in Portuguese territory, or the head
office, branch or agency of the shipper, receiver or consignee or the
carrier are located in Portugal.
Law 31/86 states that the arbitration clause has to be produced
in writing and inserted in a document signed by the parties or contained
in exchange of letters, telexes, telegrams or other means of telecommunication
of which there persists evidence in writing, whether
these instruments directly contain the arbitration convention itself, or
whether there is a clause in them referring to any document in which
said convention is contained. We presume that this will be applied
where the contracting parties are all the same for both contracts or
where the arbitration clause of the charter party is reproduced in the
bill of lading or if the former is attached to the latter, subject always
to the interpretation of both contracts.
37 Is the ‘demise’ clause or identity of carrier clause recognised and
binding?
The identity of the carrier clause is normally a standard one. Standard
forms of contracts are governed by Decree-Law 446/85. It is
defensible to sustain that the said clause will be valid and binding
where evidence is produced in court that cargo interests knew or
ought reasonably to have known of the existence and extent of said
clause. Note however that only the carrier of the goods can issue bills
of lading, as per subparagraph 5 of article 8 of Decree-Law 352/86.
Pursuant to paragraph 1 of article 10 of Decree-Law 352/86, bills of
lading issued by one who does not have the condition of a sea carrier
are null and void. Whoever, not being the sea carrier of the goods,
issues a bill of lading, is liable for damages caused to the shipper and
to others interested in the goods, pursuant to paragraph 2 of article
10 of Decree-Law 352/86. This does not prevent an agent of the carrier
to sign bills of lading on behalf of the carrier. Under article 28 of
Decree-Law 352/86, if the bill of lading is considered null and void
or if the sea carrier is not identifiable by the wording of the bill of
lading, the carrying ship will be liable in rem before cargo interests
under the same terms as the carrier.
38 Are shipowners liable for cargo damage where they are not the
contractual carrier and what defences can they raise against such
liability? In particular, can they rely on the terms of the bill of lading
even though they are not contractual carriers?
Article 7 of Decree-Law 352/86 states that the intervention of a port
operator or of any other agent of the contractual carrier in any operation
related to the cargo does not remove or exempt liability of the
contractual carrier before cargo interests. The contractual carrier
becomes entitled to act against the said port operator or agent in
recourse or redress. Article 800 of the Civil Code and article 377
of the Commercial Code states that the debtor (contractual carrier)
is liable before the creditor (other party to the sea carriage contract
– shipper, receiver or holder of the bill) for the acts and omissions of
his representatives, servants, agents or the persons or entities that he
uses to perform the carriage as if the said acts were performed by the
debtor itself. Ultimately, however, if the bill of lading is considered
null and void or if the sea carrier is not identifiable by the wording of
the bill of lading, the carrying ship will be liable in rem before cargo
interests under the same terms as the carrier.
39 What is the effect of deviation from a vessel’s route on contractual
defences?
Clauses inserted in a bill of lading allowing the carrier to deviate from
the vessel’s route are valid and enforceable against cargo interests.
Article 4(4) of the Hague Rules allows this deviation.
Portugal Andrade Dias & A ssociados
210 Getting the Deal Through – Shipping 2012
40 What liens can be exercised?
A lien can only operate by force of law and not by contract under
Portuguese law.
The carrier enjoys a retention lien by operation of statutory law
over the carried goods to secure any claims arising from the carriage
by sea, as per article 21 of Decree-Law 352/86. When the carrier
intends to exercise its retention lien, a notice must be served on the
receiver or on the consignee within the time limit of the subsequent
15 days after arrival of the ship in port. The carrier may elect to leave
the goods on board or to have them discharged and deposited. The
carrier shall be prevented to claim any compensation for the ship’s
stoppage if he elects to leave them on board and shall be obliged
to assure their diligent keeping and maintenance. The keeping and
maintenance costs shall run on cargo’s interest. The carrier shall have
a duty to start proceedings within the time limit of 30 days after
serving the notice informing cargo interests that he is exercising his
retention lien. When the cargo is of a perishable nature, the carrier
is entitled to apply to the court for permission to perform the anticipated
sale of the cargo. The carrier must also serve a notice to cargo
interests if they are known, informing that it will apply for permission
to have the cargo sold. The order shall be issued ex parte but the
counterparty may prevent the anticipated sale by offering adequate
security. The carrier shall have a retention lien over the sale proceeds
but the court can order the deposit of the said proceeds.
A priority lien (that is to say, a right to be paid by distribution
of sale proceeds with priority over common claims) over the ship,
freight, cargo and ship’s accessories is given by article 2 of the International
Convention for the Unification of Certain Rules relating
to maritime liens and mortgages, Brussels 10 April 1926 (of which
Portugal is a contracting state) and by articles 578, 580 and 582 of
the Commercial Code to a wide variety of claims. These priority liens
operate by force of law.
41 What liability do carriers incur for delivery of cargo without production
of the bill of lading and can they limit such liability?
Assuming that the carrier has delivered cargo to someone that has
no lawful rights over the cargo, the carrier will be liable for breach
of the contract of the carriage of goods by failing to perform, in full,
the said contract.
As per article 20 of Decree-Law 352/86, if more than one person,
with sufficient title, claims for delivery of the cargo, the goods will
remain at the custody of the entity that has received them, up until
the court decides who has the right to receive them. In the case of
perishable goods, the carrier may sell the goods following permission
from the court and notice to the counterparty.
The carrier cannot limit his liability for wrongful delivery of the
cargo as the provisions contained in the Hague Rules and in DecreeLaw 352/86 in respect of limitation of liability are merely applicable
to loss or damage to cargo.
42 What are the responsibilities and liabilities of the shipper?
The shipper will be liable before the carrier for unpaid freight
and for any damages arising from omissions or mistakes in cargo
statements.
Jurisdiction and dispute resolution
43 Which courts exercise jurisdiction over maritime disputes?
The Lisbon Admiralty Court exercises jurisdiction over disputes that
have some sort of material connection with Portugal’s mainland. The
relevant material connections arise inter alia from: the port where
the ship is anchored; the port where the goods where loaded or
discharged; and where the tortuous event happened. Where such
connection is linked to the Azores or Madeira Islands territory, the
Civil Court shall have jurisdiction.
44 In brief, what rules govern service of court proceedings on a defendant
located out of the jurisdiction?
Three sets of rules may apply:
• European Union Regulation 1393/2007;
• the Hague Convention Related to Service and Notices Abroad of
Judicial and Non-Judicial Acts in Civil and Commercial Matters,
1965; or
• the Civil Procedure Code.
EU Regulation 1393/2007 envisages four forms of service of papers
that can be described as follows:
• via appointed authorities;
• via diplomatic or consular channels (that can be used either to
transmit papers between appointed authorities or to serve papers
directly);
• via registered courier with acknowledgment of receipt or via an
equivalent procedure; or
• via direct service.
Each member state presented statements about the terms in which it
would apply the said EU Regulation. The statements can be found
on the European Commission’s web site (http://ec.europa.eu). Each
member state has declared what type of service of papers it accepts.
A plaintiff starting proceedings in Portugal against an EU-domiciled
defendant should comply with the relevant member state rules where
the defendant is domiciled.
The Hague Convention Related to Service and Notices Abroad
of Judicial and Non-Judicial Acts in Civil and Commercial Matters,
1965 envisages an identical structure as of the EU Regulation
1393/2007. The relevant contracting state party’ requirements need
to be ascertained on a case-by-case basis.
Under the Civil Procedure Code, service of court proceedings is
done by a letter (attached with the relevant papers to serve, which
are the points of claim and the attached documents) drafted by the
court and sent by the latter via registered courier with acknowledgement
of receipt to the defendants’ address. Note that this procedure
is used in arrest proceedings even if the defendant is domiciled in an
EU member state or in a state that is a contracting state party of the
Hague Convention.
45 Is there a domestic arbitral institution with a panel of maritime
arbitrators specialising in maritime arbitration?
No.
46 What rules govern recognition and enforcement of foreign judgments
and awards?
Rules governing recognition and enforcement of foreign judgments
include:
• Council Regulation (EC) No. 44/2001;
• the Agreement between EU and Denmark on Jurisdiction and the
Recognition and Enforcement of Judgments in Civil and Commercial
Matters;
• the Convention on Jurisdiction and the Enforcement of Judgements
in Civil and Commercial Matters, Brussels, 1968;
• the Convention on Jurisdiction and the Enforcement of Judgements
in Civil and Commercial Matters, Lugano, 1988;
• several Conventions with most of the former Portuguese colonies
on jurisdiction (and arbitration); and
• the Civil Procedure Code.
www.gettingthedealthrough.com 211
Andrade Dias & A ssociados Portugal
Rules governing recognition and enforcement of arbitral awards are
found in:
• the New York Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, 1958;
• the Geneva Convention on Execution of Foreign Arbitral Awards,
1927; and
• the Civil Procedure Code.
Under general terms, what can be said is that a judgment or an award
will be recognised and enforced more easily if issued in a state or
country covered by one of the above-mentioned international rules
than if they have been produced on a state where said provisions
are inapplicable. The Civil Procedure Code shall apply exclusively
when no international rules are in force. A recognition order cannot
be issued without prior service of the defendant if the application is
lodged merely under the Civil Procedure Code. The arguments to
oppose to the recognition request are wider if only the Civil Procedure
Code is in use than if an application has been lodged pursuant
to an international set of rules.
47 What remedies are available if the claimants, in breach of a
jurisdiction clause, issue proceedings elsewhere?
There are no remedies available in the Portuguese jurisdiction. There
is no such tool as an anti-suit injunction.
48 What remedies are there for the defendant to stop domestic
proceedings that breach a clause providing for a foreign court or
arbitral tribunal to have jurisdiction?
Where the clause is binding under Portuguese law, the defendant
may apply in the points of defence for the formal dismissal of the
proceedings based on breach of the said clause and hence on lack of
jurisdiction of the Portuguese courts or arbitral tribunals. This will
not, however, release a defendant from the onus to oppose the claim
based on its merits. Under civil procedure rules a defendant must
concentrate all its defence efforts in the points of defence. The points
of defence are presented at an early stage of the proceedings and
hence a defendant will be forced to argue all defences – both formal
and on the merits defences – at an initial stage of the proceedings.
This will be so even if the proceedings are then subsequently dismissed
based on breach of a valid and enforceable jurisdiction clause.
A defendant is forced to use all its weapons in the points of defence
because he will not have a second chance to oppose the merits if the
jurisdiction or arbitration clause is considered inapplicable.
Limitation periods for liability
49 What time limits apply to claims? Is it possible to extend the time limit
by agreement?
A limitation period can be qualified under Portuguese law as a prescription
or a caducity limitation period. The main differences lie in
the fact that a prescription limitation period cannot be extended by
agreement and will only be interrupted with service of court proceedings
on the defendant. A caducity limitation period can be extended
by agreement and it will be interrupted merely by the filing of papers
in court.
The most relevant time limits are: tort: three years (prescription);
contract: 20 years (prescription) and carriage of goods by sea: one
year (Hague Rules) or two years (Decree-Law 352/86) (caducity).
50 May courts or arbitral tribunals extend the time limits?
No.
Miscellaneous
51 Is it possible to arrest bunkers in your jurisdiction or to obtain an
attachment order or injunction in respect of bunkers?
Pursuant to article 1(1)(2) of Decree-Law No. 201/98, a ship is
defined as a floating craft aimed at water navigation. The following
are constituent parts of the ship: her main and auxiliary engines;
appliances; fittings; lifesaving equipment; accessories; and further
equipment existing on board necessary for her operation other than
goods or merchandise carried on board as her cargo. It has been
therefore generally understood that the arrest order of a ship includes
all the above-mentioned constituent parts. It has been also generally
understood that bunkers are included in the described constituent
parts and hence are covered by an arrest order over a ship. Theoretically
speaking this may not be the case where the bunkers on board
do not belong to her owner. Therefore, the theoretical possibility of
having an exclusive arrest of the bunkers can be advanced. To date
we have not seen this tested, and this understanding may face the
impediment arising from the fact that the arrest order issued over a
ship includes her bunkers, and hence the only possibility available is
to have her lawfully arrested in full and not merely to have her bunkers
arrested. Note, however, that this may be a non-issue as most of
the situations where it is requested to arrest merely her bunkers are,
most of the time, situations where it is possible to arrest the ship for
the claim at stake (eg, claims arising from a time charter party where
bunkers belong to the charterer). Therefore it may be that in most of
the cases the arrest of the entire ship will be a way to obtain security
for a claim related to her bunkers.
Any fuel or oil that is on board as cargo of the ship can be separately
arrested.
52 Can external factors, such as the recent global restriction on the
availability of credit, affect the legal rights and liabilities of the parties
to a shipping contract?
Pursuant to the principle enshrined in our contract law provisions, all
contracts are to be strictly complied with, clause-by-clause or pointbypoint, under the principle pacta sunt servanta contained in article
406 of the Civil Code. Pursuant to this proviso a contract (or a clause
of a contract) can only be modified or terminated by agreement of
the parties or by force of some other residual provision contained in
statutory law.
The effect of any external factors such as the recent global restriction
on the availability of credit on the legal rights and liabilities of
the parties will depend firstly on what the parties have agreed in this
respect.
Theoretically speaking two general provisions or doctrines may
be advanced under contract law: termination or modification of a
contract caused by change in the circumstances that served as the
basis for the parties to enter into a contract; and frustration or objective
impossibility (non-imputable to the debtor) of a debtor to perform
its duties or obligations under the contract.
Under article 437 of the Civil Code:
If the circumstances over which the parties have based their decision
to contract have suffered an abnormal (subsequent) change, the damaged
party may elect to terminate the contract or to have it modified
under equity as long as the compliance with its contractual duties
breaches the principles of good faith and are not covered by the
inherent risks of the contract.
The counterparty may oppose the valid termination of the contract
by accepting the contract’s modification.
Pursuant to article 790 of the Civil Code:
A contractual obligation shall terminate or be cancelled where the
performance of it becomes impossible by a cause not imputable to
the debtor.
Portugal Andrade Dias & A ssociados
212 Getting the Deal Through – Shipping 2012
These general principles of Portuguese contract law have been
inserted in the following particular provisions applicable to specific
contracts.
Building or ship repair contracts
Pursuant to article 1227 of the Civil Code (provision contained in the
rules applicable to the construction or repair contracts – articles 1207
to 1230 of the Civil Code – but applicable to a ship building or repair
contract by force of Decree-Law 201/98), if the performance of the
repair or of the construction work becomes impossible by cause not
imputable to any of the parties, article 790 of Civil Code shall apply
– that is to say, the obligation shall be terminated. The owner shall
be required, however, to indemnify the builder or the repairer of the
works performed and to support the expenses incurred.
Voyage charter parties
Subject to article 14 of Decree-law No. 191/87, if the voyage or
voyages cannot be initiated on the date or seasons agreed between
the parties by a cause not imputable to the owner or to the charterer,
any of the parties may terminate the contract without incurring any
liability whatsoever for any possible damages that may arise from
said termination.
Time and bareboat charter parties
Pursuant to article 30 of Decree-law No. 191/87 freight shall not be
due during the periods in which the commercial use of the ship is
impossible by cause or any reasons not imputable to the charterer.
Carriage of goods by sea
Subject to article 13 of Decree-law No. 352/86, if the voyage cannot
be performed on the agreed date or season by a cause not imputable
to the carrier, any of the parties may terminate the contract of
carriage without incurring any liability whatsoever for any possible
damages that may arise from said termination. Pursuant to article 15
of Decree-law No. 352/86, if the shipper fails to present the goods
for loading to the carrier at the agreed place and time, the contract
is considered to be terminated; the shipper, however, is obliged to
perform payment of freight. If the shipper terminates the contract
after having delivered the goods to the carrier he will be obliged to
pay freight and the expenses that the carrier has incurred with the
goods.
There is no specific provision for the contract for the sale and
purchase of a ship as it exists for the above-mentioned other contracts.
The general principles contained in articles 437 and 790 of
the Civil Code may be applied.
53 Are there any other noteworthy points relating to shipping in your
jurisdiction not covered by any of the above?
Portugal is not a contracting party to the Athens Convention Relating
to Carriage of Passengers and Their Luggage by Sea, 1974 or
the SDR Protocol 1976. Carriage of passengers is merely ruled by
Decree-Law 349/86. This may need to be taken into account, considering
the enormous trend of increase in cruise ship calls at Portuguese
ports. This may soon be changed pursuant to the publication
of EU Regulation 392/2009 of the Parliament and of the Council on
the liability of carriers of passengers by sea in the event of accident.
Portugal is a contracting state to the International Convention for the
Unification of Certain Rules Relating to Maritime Liens and Mortgages,
1926. Portugal is not a contracting party to the Hazardous
Noxious Substances Convention 1996 or of the Bunkers Convention
2001.
Mateus Andrade Dias mateus@diaslawyers.com
Rua António Maria Cardoso Tel: +351 21 346 81 34
No. 25, 5th floor Fax: +351 21 347 37 46
1250-026 Lisbon www.diaslawyers.com
Portugal
A Maritime, Port and Transport Law Association was recently
incorporated by some shipping and transport law practitioners.
The aim of the Association is to promote, study and improve said
branches of the law and also to promote and obtain uniformity
in the application of those areas of the law, both locally and
internationally. The Association aims to increase the number
of associates and apply for membership to some international
forums or associations, such as the Comité Maritime International.
Update and trends
Shipping 2012 I SSN 1759-0744
Air Transport
Anti-Corruption Regulation
Arbitration
Banking Regulation
Cartel Regulation
Climate Regulation
Construction
Copyright
Corporate Governance
Corporate Immigration
Dispute Resolution
Dominance
e-Commerce
Electricity Regulation
Enforcement of Foreign
Judgments
Environment
Foreign Investment and
National Security
Franchise
Gas Regulation
Insurance & Reinsurance
Intellectual Property &
Antitrust
Labour & Employment
Licensing
Life Sciences
Merger Control
Mergers & Acquisitions
Mining
Oil Regulation
Patents
Pharmaceutical Antitrust
Private Antitrust Litigation
Private Equity
Product Liability
Product Recall
Project Finance
Public Procurement
Real Estate
Restructuring & Insolvency
Right of Publicity
Securities Finance
Shipping
Tax on Inbound Investment
Telecoms and Media
Trademarks
Vertical Agreements
For more information or to
purchase books, please visit:
www.gettingthedealthrough.com
Annual volumes published on:
®
The Official Research Partner of
the International Bar Association
Strategic research partners of
the ABA International section