RAL

ALTERNATIVE DISPUTE RESOLUTION (ADR) FOR CONSUMER DISPUTES

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

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

What are consumer disputes?
They are disputes initiated by a consumer against a supplier of goods or provider of services, concerning contractual obligations arising from contracts for the sale of goods or provision of services, entered into between established suppliers of goods or providers of services and consumers residing in Portugal and in the European Union (article 2, no. 1 of Law no. 144/2015).

What is ADR?
ADR refers to mechanisms available to consumers and businesses to try to resolve consumer disputes outside of court, in a faster and less expensive way. ADR includes mediation, conciliation, and arbitration. The ADR process begins with an attempt at agreement through mediation or conciliation. However, if such an agreement is not reached, the parties can still resort to the Arbitration Tribunal, through a simple and quick process.

What are ADR entities?
They are independent entities, with specialized staff, who impartially help the consumer and the company reach an amicable solution. These entities are authorized to mediate, conciliate, and arbitrate consumer disputes. These entities must be registered in 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 competent national authority to organize the registration and dissemination of the list of ADR entities (see ANNEX I).

How many ADR entities exist in Portugal?
In Portugal, there are ten Consumer Conflict Arbitration Centres. Seven of these have general competence and regional scope, located in Lisbon, Porto, Coimbra, Guimarães, Braga/Viana do Castelo, Algarve, and Madeira. There is also a national territorial scope (subsidiary) centre, CNIACC – National Centre for Information and Arbitration of Consumer Conflicts. There are also two centres with specific competence specialized in the automotive sector and the insurance sector.

How does a company know which ADR entity it should indicate to its consumers?
The place where the contract for the sale of goods or the provision of services is concluded, which usually coincides with the location of the establishment, determines the competent arbitration centre.

For example:

A company that has only one or more commercial establishments in a given municipality should only indicate the ADR entity that is competent to resolve conflicts in that municipality.
A company 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 specialized entities for these sectors.

Who is obliged to inform consumers about ADR entities?
All suppliers of goods and providers of services, including those who only sell products or provide services via the Internet, are obliged to inform consumers about the available ADR entities or those to which they have voluntarily adhered or to which they are bound by law. Only providers of Services of General Economic Interest without economic compensation, such as social services provided by the state or on its behalf, health services and public complementary or higher education services, are excluded.

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

Is there any obligation to join an ADR entity?
This law does not impose adherence to any ADR entity, only establishing a duty to inform about existing entities. However, there is the case of mandatory 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, understandable, and appropriate manner for the type of goods and services being sold or provided (Article 18, No. 2 of Law No. 144/2015). Thus:

On the website of goods suppliers or service providers, if applicable.
In contracts for the sale of goods or the provision of services between the supplier of goods or provider of services and the consumer, when these take 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 posted at the sales counter or on the invoice given to the consumer.

Does the law provide for a standardized model for information to be provided to consumers?
No. However, a proposed wording for a sign is attached (Annex II).

Who is responsible for overseeing compliance with the obligation to provide information to consumers?
The Food and Economic Security Authority and the sectoral regulators, in their respective areas, are responsible for overseeing compliance with these duties, initiating the corresponding administrative offense proceedings, and deciding on these proceedings, including the application of fines and ancillary sanctions if necessary.

What is the consequence of non-compliance with the duty to provide information to consumers?
Non-compliance by suppliers of goods or providers of services with the duty to provide information constitutes an administrative offense, punishable by:

A fine between €500 and €5,000, when committed by a natural person.
A fine between €5,000 and €25,000, when committed by a legal person.

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 providers of services had 6 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: Informing consumers about available ADR entities does not exempt suppliers of goods and providers of services from providing consumers with the Complaints Book, which is mandatory under Decree-Law no. 156/2005, of September 15.