Alternative Dispute Resolution (ADR)

Law No. 144/2015 of September 8th transposed Directive 2013/EU of the European Parliament and of the Council of May 21st 2013 on alternative dispute resolution for consumer disputes.

The aforementioned diploma establishes the legal framework for Alternative Consumer Dispute Resolution mechanisms, creating the Consumer Arbitration Network in Portugal.

• What are consumer disputes ?

These are disputes initiated by a consumer against a supplier of goods or service provider, which concern contractual obligations resulting from sales and purchase or service provision contracts, concluded between a supplier of goods or service provider established and consumers resident in Portugal and the European Union (article 2, no. 1 of Law no. 144/2015).

• What is RAL ?

ADRs are mechanisms available to consumers and companies to try to resolve consumer disputes outside the courts, in a faster and less expensive way. ADRs include mediation , conciliation and arbitration . The ADR process begins with an attempt to reach an agreement through mediation or conciliation. However, if no such agreement is reached, the parties involved can still appeal to the Arbitration Court, through a simple and quick process.

• What are RAL entities ?

These are independent entities with specialized staff who impartially help consumers and companies reach an amicable solution. These entities are authorized to mediate, conciliate and arbitrate consumer disputes. These entities must be registered on the list provided for in article 17 of Law no. 144/2015.

• Who is responsible for managing the list of RAL entities ?

The Directorate-General for Consumer Affairs is the competent national authority for organising the registration and dissemination of the list of RAL entities (see ANNEX I ).

• How many RAL entities are there in Portugal ?

In Portugal, there are ten Consumer Dispute Arbitration Centers. Seven of these have general jurisdiction and are regional in scope, and are located in Lisbon, Porto, Coimbra, Guimarães, Braga/Viana do Castelo, Algarve and Madeira. There is also a national (supplementary) territorial center, the CNIACC – National Consumer Dispute Information and Arbitration Center. There are also two centers of specific jurisdiction specializing in the automotive and insurance sectors.

• How does a company know which RAL entity it should indicate to its consumers ?

The place where the contract for the purchase and sale of goods or the provision of services is concluded , which as a rule coincides with the place of establishment, determines the competent arbitration center.

For example:

1. A company that has only one or more commercial establishments in a given municipality must only indicate the RAL entity that is competent to resolve conflicts in that municipality.
2. A company that carries out its activity throughout the national territory must indicate all the competent entities.
3. A vehicle repair shop, an insurance company or a travel agency must indicate the specialized entities for these sectors.

• Who is obliged to inform consumers about RAL entities ?

All suppliers of goods and service providers, including those who only sell products or provide services via the Internet, are required to inform consumers about the RAL entities available or to which they have voluntarily joined or to which they are bound by law. The only providers excluded are those providing Services of General Interest without economic consideration, such as social services provided by or on behalf of the State, health services and public services for supplementary or higher education.

The obligations arising from Law No. 144/2015 apply, with the necessary adaptations, to all economic sectors not excluded by the aforementioned law, including those in which there is already specific legislation providing for an identical obligation.

• Is there any requirement to join an RAL entity ?

This law does not impose membership of any RAL entity, only establishing a duty to provide information on existing entities. However, there is the case of necessary arbitration for essential public services, such as electricity, gas, water and waste, electronic communications and postal services.

• How should companies provide this information ?

This information must be provided in a clear , comprehensible manner and appropriate to the type of goods and services being sold or provided (article 18, paragraph 2 of Law 144/2015). Therefore:

• No website of suppliers of goods or service providers, if any.
• In sales and purchase contracts or service provision contracts between the supplier of goods or service provider and the consumer, when these are in written form or constitute adhesion contracts.
• If there is no written form, the information must be provided on another durable medium, namely on a sign affixed to the wall or placed on the sales counter or on the invoice given to the consumer.

• Does the law provide for any standardized model of information to be provided to consumers ?

No. However, a proposal for the formulation of a sign is attached ( Annex II ).

• Who is responsible for monitoring compliance with the obligation to provide information to consumers ?

The Food and Economic Safety Authority and the sectoral regulators in their respective fields are responsible for monitoring compliance with these duties, instructing the respective administrative offence proceedings and deciding on these proceedings, including the application of fines and additional sanctions if necessary.

• What are the consequences of failing to comply with the duty to provide information to consumers ?

Failure to comply with the duty to provide information by suppliers of goods or service providers constitutes an administrative offence , punishable by:

• Fine between €500 and €5000 , when committed by an individual.
• Fine between €5,000 and €25,000 , when committed by a legal person.

• When does this new regime apply?

Law No. 144/2015 of 8 September came into force on 23 September 2015, and suppliers of goods or service providers had 6 months from that date to adapt to this new regime. Therefore, since 23 March 2016 , companies must have this information available to their consumers.

ATTENTION: Informing consumers about available RAL entities does not exempt suppliers of goods and service providers from providing consumers with the Complaints Book , which is mandatory under Decree-Law No. 156/2005, of 15 September.