PORTUGAL LAW AND PRACTICE Contributed by: Joana Torres Fernandes, José Manuel Pereira da Costa, Danielle Avidago, Javier Mateo, António Pratas Nunes, Joana Loureiro Veríssimo, Madalena Mourão and David Serras Pereira, LVP Advogados
1. Legal System 1.1 Legal System and Judicial Order
Overall, the Portuguese legal system is characterised by judicial independence, codification, specialised court jurisdictions and a clear hierarchical appeal structure. Proceedings are mainly conducted in writ - ing, although oral hearings and trial sessions play an important role in evidentiary matters, particularly in civil, criminal and certain administrative cases. Alternative dispute resolution mechanisms are also widely used. Arbitration is common in commercial disputes and certain administrative and tax matters, particularly through the Administrative Arbitration Centre (CAAD). Peace Courts ( Julgados de Paz ) pro - vide simplified procedures for lower-value civil dis - putes and place particular emphasis on mediation and consensual resolution. 2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments Foreign investment in Portugal, in general, does not require approval from the authorities. However, a screening mechanism applies specifically to non- EU/EEA investors (including EU entities controlled by third-country persons) who seek to acquire control (direct or indirect) over strategic assets. These assets are essential for national defence, security and the supply of essential services. The Portuguese government evaluates investments based on whether they pose a real and sufficiently grave threat to national security or the continuity of essential services, namely if: • it affects physical security and operational avail - ability of the assets; • the investor has the ability to fulfil public service obligations; • it affects the protection of sensitive data and tech - nological assets; and • it is linked to third-country governments that do not respect the rule of law, connections to crimi - nal organisations or a history of disrupting public services in other countries. Approval does not necessarily need to be obtained prior to completion of the investment.
Portugal follows a civil law system, rooted in the conti - nental European legal tradition and primarily based on codified statutes rather than judicial precedent. The legal framework is strongly influenced by Roman law and legislative codes, with the Constitution as the supreme source of law. Other key sources include stat - utes enacted by parliament, decree laws approved by the government, regulations, international treaties and European Union law, which has particular relevance in areas governed by EU competence. Although court decisions are not generally binding as precedent, case law, especially from the higher courts, is influential in the interpretation and application of legal rules. The judicial system is organised into separate juris - dictions, mainly judicial courts, which hear civil and criminal matters, and administrative and tax courts, which decide public law disputes involving public authorities, administrative acts, public contracts, tax - ation and related matters. In addition, there are spe - cialised bodies, including the Constitutional Court, which reviews constitutional matters, and the Court of Auditors, which supervises public expenditure and financial legality. The judicial courts operate under a three tier hierarchi - cal structure: • first instance courts, known as Tribunais de Comar- ca , which hear cases initially; • courts of Appeal, known as Tribunais da Relação ; and • the Supreme Court of Justice, which is the highest court within the ordinary judicial jurisdiction. Similarly, the administrative and tax jurisdiction is structured around first instance administrative and tax courts, the Central Administrative Courts, divided between North and South, and the Supreme Admin - istrative Court. Appeals are generally available sub - ject to procedural rules, thresholds and admissibility requirements, depending on the type of proceedings and the value or legal relevance of the case.
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