Alternative Consumer Dispute Resolution
The 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 in consumer matters.
The aforementioned legislation establishes the legal framework for Alternative Dispute Resolution in Consumer Matters mechanisms, creating the Consumer Arbitration Network in Portugal.
- What are consumer disputes?
They are disputes initiated by a consumer against a goods supplier or service provider, concerning contractual obligations arising from contracts of sale or provision of services entered into between a goods supplier or service provider established in Portugal and consumers residing in Portugal and the European Union (Article 2(1) of Law No. 144/2015.
- 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 more affordable way. 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 may still resort to the Arbitration Tribunal through a simple and fast process.
- What are ADR entities?
They are independent entities with specialised staff that impartially help consumers and businesses reach an amicable solution. These entities are authorised to conduct mediation, conciliation, and arbitration of consumer disputes. The aforementioned 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 ADR entities?
The Directorate-General for Consumers is the national authority responsible for organising the registration and publication of the list of ADR entities (see ANNEX I).
- How many ADR entities are there in Portugal?
In Portugal, there are ten Consumer Dispute Arbitration Centres. Seven have general jurisdiction and regional scope, located in Lisbon, Porto, Coimbra, Guimarães, Braga/Viana do Castelo, the Algarve, and Madeira. There is also a centre with national territorial scope (supplementary), the CNIACC - National Centre for Information and Arbitration of Consumer Disputes. There are also two centres with specific jurisdiction specialising in the automotive sector and the insurance sector.
- How does a business know which ADR entity it should indicate to its consumers?
The place where the contract of sale of goods or the provision of services was concluded, which generally coincides with the location of the establishment, determines the competent arbitration centre.
For example:
- A business that has only one or more commercial establishments in a given municipality should only indicate the ADR entity that has jurisdiction to resolve disputes in that municipality.
- A business that operates throughout the national territory should indicate all competent entities.
- A vehicle repair shop, an insurance company, or a travel agency should indicate the specialised entities for those sectors.
- Who is obliged to inform consumers about ADR entities?
All goods suppliers and service providers, including those that only sell products or provide services via the Internet, are obliged to inform consumers about the available ADR entities or those that have voluntarily joined or to which they are bound by law. Only providers of General Interest Services without economic consideration are excluded, such as social services provided by the state or on its behalf, 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 the aforementioned law, including those where specific legislation already exists providing for an identical obligation.
- Is there any mandatory membership in an ADR entity?
The present law does not impose membership in any ADR entity, only establishing an obligation to provide information about the existing entities. However, there is a requirement for mandatory arbitration for essential public services, such as electricity, gas, water and waste, electronic communications, and postal services.
- How should businesses provide this information?
This information must be provided in a clear, understandable and appropriate manner for the type of good or service being sold or provided (Article 18(2) of Law No. 144/2015). Thus:
- On the website of goods suppliers or service providers, if one exists.
- In the contracts of sale or provision of services between the goods supplier or service provider and the consumer, when these are in written form or constitute contracts of adhesion.
- If there is no written form, the information must be provided on another durable medium, namely on a sign posted on the wall or placed on the sales counter, or on the invoice delivered to the consumer.
- Does the law provide a standardised model of information to be provided to consumers?
No. However, a proposed wording for 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 sector regulatorsin their respective fields are responsible for monitoring compliance with these duties, initiating the respective administrative offence proceedings, and deciding those proceedings, including the application of fines and ancillary sanctions if necessary.
- What is the consequence of failing to comply with the obligation to provide information to consumers?
Failure by goods suppliers or service providers to comply with the obligation to provide information constitutes an administrative offence, punishable by:
- A fine between €500 and €5000, when committed by an individual.
- A fine between €5000 and €25,000, when committed by a legal entity.
- When does this new regime apply?
Law No. 144/2015 of 8 September entered into force on 23 September 2015, and goods suppliers or service providers had 6 months from that date to adapt to this new regime. Thus, since 23 March 2016 businesses must have this information available to their consumers.
ATTENTION: Informing consumers about the available ADR entities does not exempt goods suppliers and service providers from providing consumers with the Complaints Book, which is mandatory under Decree-Law No. 156/2005 of 15 September.