In this SCC Spotlight Talk, we hear from Pacôme Ziegler, a French national qualified in France, Portugal, and England & Wales and based in London and Lisbon on the growing importance of arbitration in Portugal.

What types of disputes do you regularly see involving Portuguese parties?

Portugal’s arbitration landscape arguably has four salient features.

First, international arbitration in Portugal is generally institutional. I have seen cases in the energy, construction and engineering, financing, or transportation sectors, arising from both international trade and foreign direct investment. The 2014 resolution of the Portuguese bank Banco Espírito Santo (“BES”) by Portugal’s Central Bank continues to keep local arbitration lawyers busy.

Second, Portugal has a vibrant domestic arbitration scene. Most of its domestic arbitration cases are either ad hoc or administered by the Arbitration Centre of the Portuguese Chamber of Commerce and Industry (known as CAC-CCIP). Like the SCC, the CAC-CCIP also provides administrative support to numerous ad hoc cases (it also handles cases involving foreign parties).

Third, the Portuguese state and state entities are repeat arbitration users. This is especially true for domestic cases. Typically a third to half of CAC-CCIP cases involve a state or state entity. Many Portuguese utilities companies have foreign shareholders that push for arbitration clauses and have no qualms about arbitrating their disputes against the state. This appears similar to the SCC’s experience. Arbitration remains an attractive alternative to domestic litigation.

Fourth, investment arbitration is becoming a thing. Portugal has 33 BITs in force, some of which are with its former colonies such as Angola, Mozambique, Cabo Verde, Guinea-Bissau. Portuguese companies remain significantly invested in these territories. Indeed, Portuguese investors have filed ISDS claims against Paraguay and Angola or have threatened to do so against Mozambique. Moreover, Portugal is now facing its first known ISDS claim (arising from the resolution of BES).

What challenges do Portuguese parties typically encounter in international arbitration?

In my view these challenges are threefold.

First, language-related challenges. Too few people involved in international arbitration speak proficient Portuguese. This unduly narrows the pool of potentially suitable arbitrators for disputes for which this is relevant. For want of proficient Portuguese-speakers, parties and arbitral institutions often end up appointing Spanish speakers, on the belief that these languages are close enough for the tribunal and arbitration to run smoothly. Sometimes it does not pan out. For the same reason, the pool of suitable court interpreters, experts, and third-party funders – all of which play important roles in a party’s ability to present its case – is limited.

Second, perception-related challenges. While there are excellent international arbitration practitioners in Portugal, some local clients and law firms have been slow to acknowledge that international arbitration requires specialist skills. As a result, local practices can seep into the conduct of international proceedings. The upshot of this is (among other things) submissions burdened with surplus and strident wording, blind reliance on scholarly writings, and sloppy cross-examinations.

Last but not least, resource-related challenges. The cost of an international arbitration can be crippling for small and medium-sized Portuguese companies. These parties routinely balk at the rates applied by international law firms and professional services providers (experts, in particular), which they perceive as extortionate. They have a point. Expertise does not come cheap but it is not priceless. The SCC’s efforts to ensure efficiency of time and cost and promote alternative methods of dispute resolution enhance access to justice and to be commended.

How can the SCC better support lusophone businesses?

The role of the SCC in the region is linked to trade and investment flows between Portugal and Sweden. Things are going in the right direction, the two countries traded nearly USD 2 billion worth of goods in 2024, a 47% increase since 2014. Exports from Portugal to Sweden nearly doubled over that period.

The fact that SCC’s services are priced in euros in contrast to other major institutions will be appealing to European firms. Given the resource-related challenges outlined above, the fact that the SCC services are competitively priced will not be lost on Portuguese companies.

Moreover, the SCC’s prominent role as a forum for disputes between international investors and states may attract more attention from the Portuguese market. For example, Article 11(2)(e) of the Portugal-Angola BIT appears to allow the claimant investor to submit a dispute to the arbitration institution or in accordance with the arbitration rules it chooses. In particular, the SCC Rules may well prove attractive as they provide for emergency arbitrator proceedings also in ISDS cases (in stark contrast to other rules commonly used for treaty arbitrations). The SCC’s experience in this area may prove invaluable to the lusophone lawyers who can be trusted to have the technical wherewithal to address this issue before an SCC emergency arbitrator.

The SCC is grateful to Pacôme Ziegler for his translation of the SCC Rules into Portuguese, available here.