ALTERNATIVE DISPUTE RESOLUTION (ADR)

ALTERNATIVE DISPUTE RESOLUTION FOR CONSUMER DISPUTES (ADR)

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

This law establishes the legal framework for Alternative Dispute Resolution mechanisms for consumer disputes, creating the Consumer Arbitration Network in Portugal.

1. What are consumer disputes?

These are disputes initiated by a consumer against a supplier of goods or services, relating to contractual obligations arising from contracts for the sale of goods or the provision of services, concluded between suppliers of goods or services established in Portugal and consumers residing in Portugal and the European Union (Article 2(1) of Law No. 144/2015).

2. What is ADR?

ADR refers to mechanisms available to consumers and businesses to attempt to resolve consumer disputes outside of court, in a faster and less expensive manner. ADR includes mediation, conciliation, and arbitration. The ADR process begins with an attempt to reach an agreement through mediation or conciliation. However, if no agreement is reached, the parties can still resort to the Arbitration Court through a simple and quick process.

3. What are ADR entities?

They 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.

4. Who is responsible for managing the list of ADR entities?

The Directorate-General for Consumers is the national authority responsible for organizing the registration and publication of the list of RAL entities (see ANNEX I).

5. How many ADR entities are there in Portugal?

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

6. How does a company know which ADR entity it should refer its consumers to?

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

For example:

♣ A company that has only one or more commercial establishments in a given municipality should only indicate the RAL entity that has jurisdiction to settle disputes in that municipality.

♣ A company that operates throughout the national territory should indicate all the competent entities.

♣ A vehicle repair shop, an insurance company, or a travel agency must indicate the entities specialized in those sectors.

7. Who is required to inform consumers about ADR 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 ADR entities available to them, whether they have voluntarily joined them or are bound by law. The only exceptions are providers of services of general interest without economic compensation, such as social services provided by or on behalf of the state, health services, and public complementary or higher education services.

The obligations arising from Law No. 144/2015 apply, with the necessary adaptations, to all economic sectors not excluded by that law, including those where specific legislation already provides for the same obligation.

8. Is there any requirement to join an ADR entity?

This law does not require membership of any ADR entity, establishing only a duty to provide information about existing entities. However, arbitration is required for essential public services, such as electricity, gas, water and waste, electronic communications, and postal services.

9. How should companies provide this information?

This information must be provided in a clear and comprehensible manner, appropriate to the type of goods and services sold or provided (Article 18(2) of Law No. 144/2015). Thus:

♣ On the website of the suppliers of goods or service providers, if any.

♣ In purchase and sale or service provision contracts between the supplier of goods or service provider and the consumer, when these are in writing or constitute adhesion contracts.

♣ If there is no written form, the information must be provided in another durable medium, namely on a sign affixed to the wall or displayed at the sales counter or on the invoice delivered to the consumer.

10. Does the law provide for any standardized model for the information to be provided to consumers?

No. 

11. Who is responsible for enforcing compliance with the obligation to provide information to consumers?

The Food and Economic Safety Authority and sectoral regulators in their respective areas are responsible for enforcing compliance with these obligations, investigating administrative offenses, and deciding on such cases, including the application of fines and additional penalties if necessary.

12. 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 infraction, punishable by:

♣ A fine of between 500.00€ and 5.000,00€, when committed by a natural person.

♣ A fine of between 5.000,00€ and 25.000,00€, when committed by a legal person.

13. When does this new regime apply?

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

ATTENTION: Consumer information about available ADR 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 September 15.