Date of the last update: 17th January 2024.

Types of class action mechanisms. General characteristics

As a mechanism for collective redress, Portuguese law has long known the institution of the so-called citizen’s action (ação popular). Its roots date back to the 16th century (introduction of the prescriptions of Ordenações Manuelinas) while today it is regulated by the Article 52 § 3 of the 1976 Constitution of the Portuguese Republic. It is used to protect collective interests in such areas as: public health, consumer protection, environment, quality of life and cultural heritage. On the statutory level, the abovementioned institution is regulated in the Citizen’s Action Law No 83/95 (Direito de participação procedimental e de acção popular), and is moreover supported by the Article 26A of the Portuguese Code of Civil Procedure (Código de Processo Civil). What is more, the pursuit of class action claims is now regulated also by the Decree-Law No. 114-A/2023 of 5th December 2023 (Decreto-Lei n.º 114-A/2023 de 5 de dezembro), which implements the Directive (EU) 2020/1828 of the European Parliament and of the Council of 25th November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC.

The citizen’s action allows for pursuing multiple individual claims within single proceedings insofar, as they are of a homogeneous nature. However, the mechanism provided for in Portuguese law stands rather for their joint examination than a typical class action. There are no courts which would have an exclusive jurisdiction to examine citizen’s actions, so administrative courts and civil courts have a general jurisdiction in such cases. Competition courts, in turn, have a jurisdiction in cases related to competition law violations.

A citizen’s action may be brought by each citizen, as well as by an association or foundation with a legal personality, but only such which is not engaged in an economic activity and which expressly declares protection of given interests in its articles of association. The citizen’s action mechanism functioning under Portuguese law is based on the opt-out model (except in the case of non-permanent residents of Portugal, who must explicitly agree to participate in the proceedings). The possibility to withdraw from the proceedings exists no later than until the end of the evidentiary proceedings and requires an explicit statement in this regard.

The premises of admissibility and the procedure

The citizen’s action is an universal instrument (the abovementioned categories of interests, which it is intended to protect, are of an exemplary nature only – hence there are no sectorial exceptions here).

Since the described mechanism constitutes a joint examination of individual claims rather than a typical class action, the provisions do not foresee any special certification procedure. An entity initiating the proceedings is not obligated to obtain a power of attorney from the other interested parties or any other explicit authorization to act in a case.

There are also no requirements in terms of the minimum number of claims that may be heard in the citizen’s action mode. However, there is a principle that claims heard jointly must arise from the same or similar event and they must be interrelated.

Upon declaring the statement of claims admissible for hearing (although there is no specific criteria in this regard), the court uses media to summon interested parties to declare, within a prescribed time limit, whether they consent or not to representation by the entity bringing the action, although silence is considered a consent. In fact, the judgement may even affect people who had no knowledge about initiation of the proceedings, whereby in specific cases the court may decide to limit the circle of those bound by resolution of the citizen’s action.

A judgement rendered in the proceedings initiated by bringing a citizen’s action is published by press. For this purpose, the court choses two magazines which probably include content followed by persons having an interest in the case. The announcement is published at the expense of the losing party.

The type of relief (legal protection) that can be obtained (court decision)

The institution of the citizen’s action may serve to receive both awarding of a judgement and a different type of verdict of a constitutive or declarative nature (in accordance with the general principles provided for in Portuguese civil procedure).

Portuguese law does not permit so-called punitive damages.

Costs and manner of financing the proceedings

The losing party is obligated to reimburse the winning party for court fees, excluding the lawyers’ fees. In case of total failure by the claimant, the court may obligate losing party to pay between 10% to 50% of costs, taking into account their economic situation as well as substantive and formal reasons for dismissing the claim (or rejecting the statement of claims).

Contingency fees rendering attorney’s fee dependent exclusively on success are not permitted. However, the outcome of the case may have an impact on the method of determining the fee amount.

For the citizen’s action the state provides consumer organisations with a financial support, e.g. by exempting them from the costs of proceedings.

The Decree Law No. 114-A/2023 explicitly authorized financing of representative actions by the third parties, but stipulated certain conditions which must be met.

Practice and significance of the institution. Development trends

A citizen’s action was mainly used in matters related to public health, environment, quality of life, consumer protection, public heritage and the public domain, although the possibility of bringing a citizen’s action is not limited to these fields. A well-known example is the action of the Portuguese Consumer Protection Association (Associação Portuguesa para a Defesa do Consumidor) against a telecommunication enterprise regarding “activation fees”. In 2003, the competent court found that these fees breached contracts between the operator and the consumers. As a compensation (apart from due damages) the entrepreneur guaranteed all potential claimants free phone calls for a certain period of time.

In recent years an increasing popularity of citizen’s action in cases connected with services related to financial instruments may be observed.

Implementation of Directive of the European Parliament and of the Council (EU) 2020/1828

The Directive (EU) 2020/1828 of The European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC was implemented by Portugal by the means of the Decree-Law No. 114-A/2023 of December 5, 2023 (Decreto-Lei n.º 114-A/2023 de 5 de dezembro).

The Decree No. 114-A/2023 does not comprehensively regulate all issues related to representative actions. For non-regulated matters, the Law on Citizens’ Actions No. 83/95 is applicable.

The Decree No. 114-A/2023 not only preserves the rights of entities which were previously authorized to bring class actions, but also expands that scope by including qualified entities. The decree also provides a procedure for designating domestic entities as qualified entities for the purpose of bringing cross-border class actions in other member states, establishing harmonized criteria that these entities will have to meet and which will be evaluated by the competent authority. For purposes of the Decree No. 114-A/2023, the competent authority is the Consumer General Directory, which will also be the national contact point for fulfilling reporting obligations to the European Commission.

Under the new regulations, an authorized entity using third-party funding must provide the court with a funding agreement and a financial summary listing the sources of funding used to support the class action. This agreement must guarantee claimant’s independence and absence of conflicts of interest. In case the financing violates the regulations, the court will summon the claimant to its refusal or to make changes to the principles of funding within a specified time period – under the pain of loss of legal standing. If financing eventually does not comply with law, the court would find that the claimant has no legals standing – but that would not affect the rights of individuals involved in the class action. An interesting solution assumes that in such a situation a prosecutor may replace the claimant and continue the proceedings.

The Decree No. 114-A/2023 preserves the existing principle that group proceedings are based on the opt-out model, except in case when a group member is a consumer residing outside of Portugal. In such a situation, the consumer must explicitly agree to participate in the proceedings.

The Decree No. 114-A/2023 imposes also certain information obligations. First of all, the  Consumer General Directory is obliged to announce, on its website: the list of qualified entities designated to bring international class actions, the list of international organizations and the information on class actions filed in Portugal.

Claimants are required to publish certain information on their websites as well.