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Shipping
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Contributing editor: Jonathan Lux 2011

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 contents

® Introduction Martin A Clausen Maersk Line 3

Australia Maurice Thompson with Danella Wilmshurst HWL Ebsworth Lawyers 4
Brazil G
 odofredo Mendes Vianna, Camila Mendes Vianna Cardoso and Lucas Leite Marques
Shipping 2011 Law Offices Carl Kincaid – Mendes Vianna Advogados Associados 13
Contributing editor: Canada John W Bromley and Michael J Posnikoff Bull, Housser & Tupper LLP 22
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Robyn Hetherington England & Wales Jonathan Lux, Anna Fomina and Ina Gueorguieva Ince & Co 58
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Andrade Dias & Associados Portugal
Portugal
Mateus Andrade Dias
Andrade Dias & Associados
Newbuilding contracts
1 When does title in the ship pass from the shipbuilder to the
shipowner? Can the parties agree to change when title will pass?
The parties to the newbuilding contract may agree on when title in
the ship will pass from the shipbuilder to the shipowner, provided
they do so in writing as a newbuilding contract (or any amendments
thereto) governed by Portuguese law has to be produced in writing,
as per articles 12 and 16 of Decree-Law 201/98.
In the absence of such agreement between the parties, title in
the ship shall pass from the shipbuilder to the shipowner when the
shipbuilder delivers the new ship and the shipowner accepts the new
ship, except for the materials supplied by the shipowner for the new-
building, which are considered owned by the shipowner, pursuant to
article 16 of Decree-Law 201/98.
A newbuilding contract is governed by the written clauses of
the contract, by Decree-Law 201/98 and, in subsidiary terms, by the
general rules applicable to construction or repair contracts (articles
1207 to 1230 of the Civil Code) provided that said general rules do
not contradict the specific rules of Decree-Law 201/98.
2 What formalities need to be complied with for the refund guarantee to
be valid?
The newbuilding contract should have a written clause stipulating the
duty of the shipbuilder to provide a refund guarantee to the shipowner
as a guarantee of repayment of pre-delivery instalments paid by the
shipowner. This does not prevent the parties from agreeing, after the sig-
nature of the newbuilding contract, on the said security requirement.
The formalities required for the refund guarantee depend on the
type or nature of the refund guarantee agreed and on the conditions
stipulated in such refund guarantee and also on the person who is
acting as the refund guarantor (a bank or an insurance company or
the builder itself).
For example, a bank guarantee must be issued in a written docu-
ment that includes the following information:
• the identity of the guarantor, of the guaranteed and of the
beneficiary;
• that it is a refund guarantee (cause of the guarantee);
• the amount guaranteed (a fixed amount or several instalments or
even subject to determination under certain conditions);
• the period of its duration and validity;
• the conditions of its enforceability and alterations; and
• the applicable law and competent jurisdiction to consider issues
or disputes related to the said guarantee.
3 Are there any remedies available in local courts to compel delivery of
the vessel when the yard refuses to do so?
Article 25 of Decree-Law 201/98 establishes that the shipbuilder
has a retention lien by operation of law over the newbuilding to
www.gettingthedealthrough.com
guarantee his claims arising out from the building of the new ship.
The Civil Code also rules on retention liens (articles 754 to 761).
Article 756 of the Civil Code states that no such retention lien
exists (or that it is unlawful, if exercised) when the claims (on which
the builder is supporting his retention lien) were incurred or caused
to be made in bad faith by the builder, or when the party against
whom it is being exercised has offered, in or out of court, sufficient
security to guarantee the claims of the builder.
If and when the builder is lawfully exercising his retention lien,
the shipowner may start court proceedings offering security. Pending
such proceedings, the shipbuilder is notified by the court to declare
whether the security offered is satisfactory and sufficient. It rests
with the judge to make the ultimate decision on the type, nature and
amount of the security to be provided.
If and when the builder is unlawfully exercising a retention lien,
the shipowner can elect to do any combination of the following:
• commence proceedings to obtain a judgment against the builder
ordering payment of all losses and damages caused to the ship-
owner by the said unlawful retention lien of the ship, and also
ordering delivery of the ship;
• if, under the newbuilding contract, title has already passed onto
the shipowner, enforce the newbuilding contract in a special
enforcement proceeding aimed at obtaining delivery of the ship;
or
• apply for a provisional order to be issued by the judge aimed at
obtaining the provisional delivery of the ship pending and subject
to a final resolution of the dispute.
The use of any of the above remedies will have to be assessed on the
basis of the particular circumstances of the case. The builder will
normally refuse delivery alleging a retention lien. Any of the said
remedies should be then used in conjunction with the offering, (either
in or out of court), of security to the builder.
4 Where the vessel is defective and damage results, would a claim lie
in product liability against the shipbuilder at the suit of the shipowner;
a purchaser from the original shipowner; or a third party that has
sustained damage?
With regard to building defects, the shipbuilder guarantees the ship
for a period of one year, commencing from the date of acceptance
of the ship. The shipbuilder is obliged to correct the defect or to
replace the defective equipment, pursuant to article 24 of Decree-
Law 201/98. The shipowner must convey to the builder the defects
detected within 30 days commencing from the date of their discov-
ery, as per article 26 of Decree-Law 201/98. The test results, the
approval and the acceptance by the shipowner without any reserva-
tion does not exempt the shipbuilder from liability to correct defects,
save where the shipowner knew of them. The apparent defects
are presumed to be known by the shipowner, according to article
27 of Decree-Law 201/98. If the defects are not corrected by the
205
Portugal Andrade Dias & Associados
shipbuilder, the shipowner can demand for a price reduction accord-
ing to equity or apply for the cancellation of the newbuilding con-
tract if the defects make the ship inadequate for the purpose or aim
to which she was destined, according to article 28 of Decree-Law
201/98. The correction, price reduction or cancellation remedies are
cumulative to any compensation for damages. The rights of correc-
tion of the defects or price reduction or cancellation or compensa-
tion for damages are, if not exercised, time-barred within two years
commencing from the date of delivery of the ship. The two-year time
bar commences from the date of discovery of a latent defect by the
shipowner, pursuant to article 30 of Decree-Law 201/98.
A purchaser from the original shipowner will have to exercise
any possible rights pursuant to the contract for the sale and purchase
entered into with the original shipowner and pursuant to articles
913 to 921 of the Civil Code that rule on the sale and purchase of
defective goods. This will not prevent the builder, shipowner and
purchaser of the defective ship from agreeing on an assignment of
the newbuilding contract or of the relevant rights and duties arising
from the latter.
A third party that has sustained damage (eg, personal injury)
arising from a defective ship will have to rely on the rules of tort to
seek compensation for damages. Normally said rights will be exer-
cised against her owner.
Ship registration and mortgages
5 What vessels are eligible for registration under the flag of your
country? Is it possible to register vessels under construction under
the flag of your country?
Portugal uses a dual system of registration for merchant ships. It is
dual in two senses:
• a merchant ship can be registered on the Conventional Registry
or in the International Shipping Registry of Madeira;
• a merchant ship registered on the Conventional Registry has to
be registered at the Harbour Master’s Office and at the Com-
mercial Registry;
• a merchant ship registered on the International Shipping Registry
of Madeira has to be registered at its Technical Commission and
at the Commercial Registry of the Free Trade Zone of Madeira;
• the Harbour Master’s Office and the Technical Commission are
technical registries aimed at publicising the technical features of
ships, while the Commercial Registries are public registries aimed
at publicising, before third parties, the legal situation of assets,
namely her ownership, onus and encumbrances. Ships registered
under one of these systems of registration sail under the Portu-
guese flag; and
• the main differences between Conventional Registry and Inter-
national Shipping Registry of Madeira rest on the fact that the
latter has less requirements on nationality of crewmembers and
shipowners, and their crews do not have to comply with social
security compulsory dues.
Merchant ships, oil rigs and merchant yachts will all be eligible for
registration either at the Conventional Registry or at the Interna-
tional Shipping Registry of Madeira. Pleasure yachts are only eligible
for registration at the International Shipping Registry of Madeira and
at the Harbour Master’s Office, as they are not eligible for registra-
tion at the Commercial Registry within the Conventional Registry.
Pursuant to article 77 of the Harbour Master’s Office Regulation,
small boats existent on board, (even if they are life rafts), small
auxiliary fishing boats and small beach boats without engines or
sails to be used within 300 metres of the low tide line are exempt
from registration. Theoretically and with the exclusion of the above-
mentioned boats, all merchant ships are eligible for registration at the
Harbour Master’s Office.
206 Getting the Deal Through – Shipping 2011
Merchant ships or merchant yachts under construction may be
registered at the Conventional Registry or at the International Ship-
ping Registry of Madeira.
6 What are the requirements for company formation?
The common legal structures used are both of limited liability, one
being a limited liability company by quotas (Lda) and the other a
limited liability company by shares (SA). The Lda company has to
have a minimum quota capital of e5,000 while the SA has to have
a minimum share capital of e50,000. A company can be incorpo-
rated by private written contract (signed with legalised signatures of
the signatories) save where the capital is being met by an immove-
able asset (an estate) where, in this case, public deed is in principle
required for the incorporation. The incorporation of the company
is subject to registration at the Commercial Registry and subject to
online publication at the Ministry of Justice’s official website.
7 Is dual registration and flagging out possible and what is the
procedure?
Dual registration is admissible within the Portuguese legal frame-
work, as per Decree-Law 287/83 and Decree-Law 96/89.
The Conventional Registry and the International Shipping Reg-
istry of Madeira admit flagging in of merchant ships under the fol-
lowing conditions:
• the merchant ship needs to be bareboat-chartered by a Portu-
guese bareboat charterer duly licensed to undertake the com-
mercial sea carriage business; and
• the bareboat charter party contract needs to stipulate a purchase
option in favour of the charterer and it (the flagging in) will be
subject to a duration permission that shall not exceed five years,
renewable.
A written permission application should be lodged by the charterer
and be accompanied by: original or certified copy of the bareboat
charter party contract with purchase option; written note describing
the advantages to the Portuguese economy and to the applicant that
arise from flagging in a foreign vessel; statement from the owner
authorising the flagging in; statement from the underlying registry
allowing the flagging in; certificate of ownership, liens and encum-
brances of the ship; statement from the mortgagee authorising the
flagging in; and copy of the tonnage certificate and copy of her safety
and classification society certificates. A registration number, call sign
and tonnage certificate should be requested from the Portuguese
authorities after issuance of the permission.
A written registration application should then be lodged and
accompanied by:
• proof of the Portuguese nationality of the bareboat charterer and
and of its licence to operate as a sea carrier;
• proof that the bareboat charter party is recorded at the Com-
mercial Corporate Registry of the charterer;
• proof of permission for the dual registration; and
• proof of the temporary registration number, call sign and ton-
nage certificate and certificate of ship’s survey.
The documents lodged with the permission application need not be
attached with the registration application. A certificate of registration
is issued upon completion of the registration process.
Article 18 of Decree-Law 96/89 states that the Technical Com-
mission may allow flagging out of bareboat chartered ships. The
procedure and requirements will mainly depend on the law of the
state flagged in.
Andrade Dias & Associados Portugal
8 Who maintains the register of mortgages and what information does it
contain?
If the ownership of the ship is registered in Portugal, the mortgage
will be registered at the Technical Commission and at the Commer-
cial Registry of the Free Trade Zone of Madeira, if she is registered
at the International Shipping Registry of Madeira, or at the Com-
mercial Registry, if registered at the Conventional Registry.
Identification of the mortgagor, mortgagee, principal, interest
and expenses shall be recorded.
If the ship is flagged in to Portugal, the mortgage will not be
registered at the Technical Commission or at the Harbour Master’s
Office.
Limitation of liability
9 What limitation regime applies? What claims can be limited? Which
parties can limit their liability?
Portugal is a contracting state to the International Convention for the
Unification of Certain Rules relating to the Limitation of the Liability
of Owners of Seagoing Vessels, 1924. The claims listed in article 1 of
the 1924 Convention may be limited. The owner can limit liability
arising from the said claims.
Portugal is also a contracting state to the International Conven-
tion relating to the Limitation of the Liability of Owners of Seagoing
Ships, 1957 and of the 1979 Protocol Amending the Limitation of
Shipowners’ Liability, 1957.
Pursuant to article 1 of the 1957 Convention, the following
claims may be limited:
• loss of life of, or personal injury to, any person being carried in
the ship, and loss of, or damage to, any property on board the
ship;
• loss of life of, or personal injury to, any other person, whether
on land or at sea, loss of or damage to any other property or
infringement of any rights caused by the act, neglect or intent
of any person on board the ship for whose act, neglect or intent
the owner is responsible or of any other person not on board the
ship for whose act, neglect or intent the owner is responsible for,
provide, however, that in this last case, the act, neglect or intent
is one which occurs in the navigation or the management of the
ship or in the loading, carriage or discharge of her cargo or in
the embarkation, carriage or disembarkation of her passengers;
and
• excluded by reservation.
The owner, armador, armador manager, master, members of the crew
and other servants of the owner, armador or armador manager acting
in the course of their employment can limit liability arising from the
above claims, provided that the total limits of liability of the owner
and all such other persons in respect to personal claims and property
claims arising on the same occasion shall not exceed the amounts
determined in accordance with article 3 of the 1957 Convention. The
armador is the person or entity that executes, in its own interest, all
the legal and material acts necessary for the ship to be in a position
to undertake her voyage – namely, equips, mans, clears and provides
the ship to undertake her voyage, under article 1, paragraphs (c)
and (d) of Decree Law 202/98. Pursuant to article 2 of Decree Law
202/98 and subject to proof to the contrary, the following persons or
entities are presumed to be the armador of the ship: owner; benefici-
ary of a dual registration; and bareboat charterer. The Protection
& Indemnity Club or the Hull & Machinery Underwriters can also
limit liability under the 1957 Convention, as has been decided in past
judgments issued by the Portuguese courts.
The 1957 Convention became internal law by force of Decree-
Law 49028. A Limitation Fund Regulation was created by Decree
49029.
www.gettingthedealthrough.com
Article 12 of Decree-Law 202/98 states that the owner, in addi-
tion to the limitation of liability provisions contained in any inter-
national conventions applicable in Portugal, and where the claims
at stake are other than the ones stated in the said international con-
ventions, may limit his liability to the ship and to the value of the
freight at risk by abandoning the latter to the creditors and in order
to establish a limitation of liability fund.
10 What is the procedure for establishing limitation?
There is no specific regulation applicable to the 1924 Convention.
The fund will be calculated based on the value of the ship, the freight
and the accessories of the ship.
The Limitation Fund Regulation was established to allow appli-
cation of the 1957 Convention. The fund can be established in any
way admitted by civil law to grant security. It will be established
by means of lodging of a written application that must refer to: the
event that has caused the damages; the amount of the limitation fund,
calculated in accordance with article 3 of the 1957 Convention; the
way in which the fund will be established and the amount to reserve
pursuant to article 3, paragraph 4 of the 1957 Convention. The
application must be attached with a list of the known creditors and
information on their claims and domiciles and with the supporting
elements for calculation of the amount of the fund, namely a tonnage
certificate and a tonnage admeasurement statement in respect of the
engine room space.
The amounts to which the applicant can limit his liability under
article 3 of the 1957 Convention shall be an aggregate amount
of 66.67 units of account for each ton of the ship’s tonnage if the
occurrence has only given rise to property claims. Where the occur-
rence has only given rise to personal claims, an aggregate amount of
206.67 units of account for each ton of the ship’s tonnage. Where
the occurrence has given rise to both personal claims and property
claims, an aggregate amount of 206.67 units of account for each ton
of the ship’s tonnage, of which a first portion amounting to 140 units
of account for each ton of the ship’s tonnage, shall be exclusively
appropriated to the payment of personal claims and of which a sec-
ond portion amounting to 66.67 units of account for each ton of the
ship’s tonnage shall be appropriated to property claims. Provided,
however, that in cases where the first portion is insufficient to pay
the personal claims in full, the unpaid balance of such claims shall
rank ratably with the property claims for payment against the second
portion of the fund.
The unit of account is the special drawing right as defined by
the International Monetary Fund. The amounts shall be converted
into the national currency on the date that the shipowner has con-
stituted the limitation fund, made the payment or given a guarantee
that, under the law of that state, is equivalent to such payment. The
relevant currency for Portugal is the euro. Tonnage will be calculated
as follows:
• in the case of steamships or other mechanically propelled ships,
the net tonnage shall be taken with the addition of the amount
deducted from the gross tonnage on account of engine room
space for the purpose of ascertaining the net tonnage; and
• in the case of all other ships, the net tonnage shall be taken.
Security has to be given either in the form of cash, mortgage or letter
of guarantee.
Pursuant to article 13 of Decree-Law 202/98, the same proce-
dural rules applicable to the establishment of the limitation fund
under the 1957 Convention shall apply to the limitation fund ruled
by Decree-Law 202/98, fully adapted to the provisions of the latter.
The value of the freight at risk must be stated in the application and
security for the said value of the freight should be provided by the
applicant. A bailee is appointed and the judicial sale of the ship is
ordered.
207
Portugal Andrade Dias & Associados
11 In what circumstances can the limit be broken?
As per article 2 of the 1924 Convention, the owner shall not be
allowed to limit his liability if the obligation arises out of acts or
faults of the owner itself or in regards to obligations referred to in
article 1(8), where the owner has expressly authorised or ratified
such obligation; the obligation arises out of the engagement of the
crew and other persons in the service of the vessel. If the owner or a
part-owner of the vessel is at the same time master thereof, then he
cannot claim limitation of liability for his faults other than his faults
of navigation and the faults of persons in the service of the vessel.
As per article 1 of the 1957 Convention, the applicant shall not
be allowed to limit his liability if the occurrence giving rise to the
claim resulted from the actual personal fault of the applicant.
A recent appeals judgement with No. 444/2008, issued by the
2nd Section of the Constitutional Court in proceedings No. 80/2008
on 23 September 2008 and published on 28 October 2008, has
considered the limitation of liability under the 1957 Convention
unconstitutional under certain specific circumstances. It has been
ruled that:
A compensation that covers merely 3.75 per cent of the claim
must be considered as a clear insignificant compensation, if
one bears in mind that the total amount of the recognised
damages to the claimants reaches e65,785.04. The dispro-
portion between this last value and the compensation given
is so apparent that the latter can only be considered miser-
able […]
In fact, it happens that it is the amount of the fund,
in the maximum total of e8,267.41, that is, in the outset,
insignificant, although we are facing a liable 100 tons net
tonnage ship (even if the claimants had received the total
amount of the fund, they would be merely receiving coverage
of 12.5 per cent of their claim). To allow that a ship, regard-
less of her tonnage, can blamefully collide with another ship,
and even sink her, resting only obliged to compensate the
caused property damages up to the amount of e8,267.41
clearly poses a risk to the core of the constitutional right
of compensation for damages, inherent to the constitutional
principle of democratic and the rule of law governed state
as the possibility of its application results in a unacceptable
disproportion between the value of the property damages
and the compensation given.
The situation is much more serious where the claimants
can not, under the 1957 limitation of liability convention,
obtain any other compensation for the suffered damages,
namely from the agents, servants or employees that acted
negligently because the latter’s can use the same limitation
of liability against the claimants (article 6(2) and (3) of the
1957 limitation of liability convention) [...]
It is decided then to rule unconstitutional the provision
regarding the constitution of the limitation of liability fund
with the amount stated in article 3, paragraph 1, sub para-
graph a) of the 1957 Convention [...] when the compensa-
tion arising from the distribution of the fund amount by the
creditors covers merely 3.75 per cent of the amount of the
recognised to certain plaintiff’s claims, with a total amount
of e65,785.04.
It is then decided to grant the appeal in this point order-
ing the reform of the appealed judgment in accordance with
the unconstitutionality judgment.
As can be inferred from the described judgment shipowners, may
well be prevented to limit their liability under the 1957 Convention
within the Portuguese jurisdiction, or it is at least very likely that
they will see their limitation right very limited. The outcome of this
judgment was that the owners were prevented to limit their liability.
Because the damages and their amount were considered proved in the
208 Getting the Deal Through – Shipping 2011
proceedings, the full amount of them was recognised. Its implications
in future limitation of liability cases is yet to be seen. It is also yet to
be seen what percentage relation will have to exist above 3.75 per
cent between the amount distributed and the amount of the claim.
However, shipowners may consider from this judgment onwards that
this will be an issue raised by any claimant in order to try to break
the limitation of liability.
Port state control
12 Which body is the port state control agency? Under what authority
does it operate?
IPTM is the port state control agency. It is governed by Decree-Law
146/2007. IPTM is a public body empowered of administrative and
financial autonomy pursuing tasks of the ministry of public works,
transport and communication. IPTM operates under the supervi-
sion and custody of the minister of public works, transport and
communication.
Its aim is to regulate, check and exercise functions of coordina-
tion and planning of the port and maritime sector and supervise
and regulate activities developed in this sector. Its tasks are, inter
alia, to promote the application and check the compliance with the
laws, regulations, rules and technical requirements applicable within
its tasks, namely, of national and international rules related to the
port and maritime sector, without prejudice of jurisdiction of other
entities.
13 What sanctions may the port state control inspector impose?
As per Decree-Law 195/98, the sanctions will not normally be
imposed by the inspector of the IPTM. The sanctions will normally
be imposed by the harbour master following a mandatory technical
opinion of the IPTM.
The following sanctions may be imposed: detention; stoppage of
operations (eg, cargo discharge); refusal of entry and stay in Portu-
guese ports; and fines of up to e25,000.
14 What is the appeal process against detention orders or fines?
A detention sanction can be appealed by means of an application
addressed to the Maritime Court. The appeal does not suspend the
effects of the detention sanction. The same can be followed to oppose
fines.
Classification societies
15 Which are the approved classification societies?
The approved classification societies are: American Bureau of Ship-
ping; Bureau Veritas; Det Norske Veritas; Germanischer Lloyd;
Lloyd’s Register; RINA; and RINAVE.
16 In what circumstances can a classification society be held liable, if at
all?
Pursuant to article 11 of Decree-Law 321/2003, the Portuguese state
shall have the right to seek compensation from the approved clas-
sification society when liability is imputed to the former arising out
of any incident, by a final and non-appealable judgment issued by a
court or an arbitral tribunal, together with an indemnity application
by the damaged parties and, where said liability arises, inter alia,
from loss or damage, death or personal injury and if it has been
proved in the said court that said damages were caused by intentional
act or omission or by gross negligence of the approved society, their
directors, employees, agents or other persons that act on her behalf.
The minister with supervision over maritime safety may limit the
maximum amount to be paid by the approved society. The process of
Andrade Dias & Associados Portugal
approval of a classification society is subject to the entering into of a
written agreement between the Portuguese state and the relevant clas-
sification society where a provision envisaging the mentioned liability
shall be inserted.
A classification society can theoretically be held liable under the
rules of tort if and where all requirements of this source of obli-
gations are verified, including: faulty (intentional or negligent) and
illicit act or omission; damage; causation between the act or omission
and the damage; and a special relation between the classification
society and her inspector that needs to be qualified as of comissão,
pursuant to article 500 of the Civil Code. We presume that the intri-
cate issue would be to ascertain what event has caused the damage.
Some professors of law are of the opinion that the rules of tort are
of public policy and hence cannot be subject to limitation of liability
clauses where the damage was caused by an intentional or with gross
negligent conduct.
Collision, salvage, wreck removal and pollution
17 Can the state or local authority order wreck removal?
Yes. Pursuant to article 5 of Decree-Law 64/2005, the following
entities may order wreck removal: harbour master; port administra-
tion; relevant administrative state entity with jurisdiction over an
environmental protected area; and administrative state entity with
jurisdiction over the River Douro.
18 Which international conventions or protocols are in force in relation to
collision, salvage and pollution?
With regard to collision, the international conventions in force are:
• the International Convention for the Unification of Certain Rules
Concerning Civil Jurisdiction in Matters of Collision, Brussels,
1952;
• the International Convention for the Unification of Certain Rules
of Law with respect to Collision between Vessels, Brussels, 1910;
and
• the International Convention for the Unification of Certain Rules
Relating to Penal Jurisdiction in Matters of Collision or Other
Incidents of Navigation, 1952.
With regard to salvage, the international convention in force is the
Convention Relating to the Unification of Certain Rules of Law
Relating to Assistance and Salvage at Sea, 1910. Portugal is not a
contracting state of the 1989 International Convention on Salvage
but has introduced most of the convention’s provisions into inter-
nal law by means of Decree-law No. 203/98 published on 10 July
1998.
With regard to pollution, international conventions and proto-
cols in force include:
• the Protocol of 1992 to Amend the International Convention on
Civil Liability for Oil Pollution Damage, 1969 (CLC Protocol
1992);
• the Protocol of 1992 to Amend the International Convention on
the Establishment of an International Fund for Compensation
for Oil Pollution Damage, 1971 (Fund Protocol 1992);
• the Protocol of 2003 to Amend the International Convention on
the Establishment of an International Fund for Compensation
for Oil Pollution Damage, 1992 (Fund Protocol 2003); and
• the Protocol of 1978 Relating to the International Convention
for the Prevention of Pollution From Ships, 1973 (MARPOL
73/78), its optional annexes III, IV, V and the 1997 Protocol on
annex VI.
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19 Is there a mandatory local form of salvage agreement or is Lloyd’s
standard form of salvage agreement acceptable? Who may carry out
salvage operations?
There is no mandatory local form of salvage agreement. The salvage
agreement merely needs to be entered into in writing, which includes
its insertion in letters, telegrams, telexes, faxes and other equivalent
procedures created by modern technologies, pursuant to article 2(2)
of Decree-Law 203/98. As per article 1 of Decree-Law 203/98, sal-
vage is defined as all act or activity that aims to render help to ships,
crafts or other assets, including freight at risk, when in peril at sea. A
salvor is defined as one who renders help to assets in peril at sea.
Ship arrest
20 Which international convention regarding the arrest of ships is in force
in your jurisdiction?
The International Convention for the Unification of Certain Rules
Relating to the Arrest of Seagoing Ships, 1952 is in force.
21 In respect of what claims can a vessel be arrested? In what
circumstances may associated ships be arrested?
A vessel can be arrested under the 1952 Convention based on one
of the maritime claims identified in article 1 (1)(a) to (q) of the 1952
Convention. Pursuant to article 8(2) of the 1952 Convention, a ship
sailing under the flag of a non-contracting state can be arrested for
one of the maritime claims listed in the former. The governing law of
the claim has no implications on the possibility of having an arrest
order granted, if the arrestor can produce in court sufficient evidence
of the existence of a maritime claim. Until a case late last year, as a
general principle of law, it was not possible to arrest an associated
ship. The Lisbon Admiralty Court has, however, accepted the arrest
of two vessels under the doctrines of associated ship arrest and of
‘piercing of the corporate veil’. The arrest orders issued in the first
instance were withdrawn pursuant to an out-of-court settlement
agreement and hence were not tested at appeal. They did, however,
pave the way to allow further arrests in use of said doctrines.
Outside the scope of application of the 1952 Convention, that
is to say, to obtain security for an unlisted claim – such as, insurance
premiums or P&I calls – an applicant arrestor can make use of the
Civil Procedure Code. Aside from a jurisdiction issue that needs to
be carefully assessed in the outset, the applicant arrestor must satisfy
an additional test in what regards to evidence. The applicant arrestor
shall have to produce evidence of the existence of a well-grounded
fear of losing security for its claim whether because the debtor is
insolvent or because he is dissipating his assets in order to dam-
age creditors. This test is not required if the application is presented
based on the 1957 Convention, but tends to be somewhat difficult
to comply with under the Civil Procedure Code.
An arrest order issued by a Portuguese judge is merely aimed at
allowing the creditor to obtain security for its claim. An arrest order
is fully dependent on a main proceeding on the merits, started to
obtain a judgment or an award, or fully dependent of an enforcement
proceeding if the said judgment or award exists already.
22 What is the test for wrongful arrest?
Pursuant to article 390(1) of the Civil Procedure Code and article
621 of the Civil Code, if an arrest order is considered unfounded or
expires by reasons imputed to the arrestor, he will be liable for dam-
ages caused with fault to the arrestee, provided the arrestor has not
acted with the normal prudence required. The arrest order expires,
inter alia, when the main proceeding on which it is fully dependent is
not commenced within a certain given time or if it is stalled by negli-
gence of the applicant for more than 30 days. The ultimate failure of
the claim (ie, final and non-appealable judgment refusing the claim)
is not, per se, sufficient to base a wrongful arrest claim.
209
Portugal Andrade Dias & Associados
23 Can a bunker supplier arrest a vessel in connection with a claim for
the price of bunkers supplied to that vessel pursuant to a contract
with the charterer, rather than with the owner, of that vessel?
Pursuant to article 1(1)(k) of the 1957 Arrest Convention a claim
arising from supplies of products – such as bunkers – or materi-
als done to a ship for her operation or maintenance wherever the
said supplies are performed constitute a maritime claim under the
1957 Arrest Convention. Subject to the provision of article 3(1) of
the 1957 Arrest Convention an applicant arrestor or creditor can
arrest the ship in respect of which the claim refers to or arises from.
Under article 3(4) of the 1957 Arrest Convention, in the case of
the existence of a charter party where the nautical management has
been passed from the owner to the charterer and when merely the
charterer is liable in persona, the creditor may arrest the ship insofar
as the claim refers to or arises from or any other ship owned by the
charterer.
A bunker supplier can therefore arrest a vessel in connection
with a claim for the price of bunkers supplied to that vessel pursu-
ant to a contract with the charterer, rather than with the owner, of
that vessel.
24 Will the arresting party have to provide security and in what form and
amount?
The judge can request the arrestor to provide security and to depend
the granting of the arrest order on the provision of the said security.
Security can be produced inter alia in cash or bank guarantee. The
judge will ultimately assess the sufficiency and quality of the security
offered. This is not common practice in our courts and hence it is
difficult to convey what amount will be required as security by the
judge.
25 Who is responsible for the maintenance of the vessel while under
arrest?
The judge will appoint a bailee, who will be obliged to keep, guard,
administer and maintain the vessel. Such responsibilities have, up
until now, been minimal.
26 Must the arresting party pursue the claim on its merits in the courts
of your country or is it possible to arrest simply to obtain security and
then pursue proceedings on the merits elsewhere?
No. It is possible to arrest simply to obtain security and then pursue
proceedings on the merits elsewhere. However in some situations this
may not be the case taken into consideration article 7 of the Interna-
tional Convention for the Unification of Certain Rules Relating to
the Arrest of Seagoing Ships, 1952, which is in force in Portugal.
Judicial sale of vessels
27 Who can apply for judicial sale of an arrested vessel?
The arresting party, the arrested party or the bailee can all apply for
judicial sale of an arrested vessel.
28 What is the procedure for initiating and conducting judicial sale of a
vessel? How long on average does it take for the judicial sale to be
concluded following an application for sale? What are the court costs
associated with the judicial sale? How are these costs calculated?
The judicial sale of any vessel can not, as a general principle, be
performed in the arrest procedure but only in the enforcement pro-
cedure where a creditor is enforcing a judgment. Considering, how-
ever, that the process of obtaining a judgment may take considerable
time, the present judge of the Lisbon admiralty court has long been
authorising the anticipated sale of arrested vessels within the arrest
210 Getting the Deal Through – Shipping 2011
procedure. The test for issuance of the sale order is accomplished
when the arrested ship’ value is depreciating due to poor or lack of
maintenance or due to any other reason.
The sale procedure will run as follows:
• the applicant must request in writing to the judge to grant per-
mission for the anticipated sale of the vessel stating reasons in
support that (and providing evidence of) her value is depreciat-
ing. It should also propose a minimum sale value and attach
evidence of her market value;
• the judge will hear the parties to the proceedings and will author-
ise or refuse the sale. The authorisation order will be issued if the
parties agree on the sale or, failing said agreement, if the judge
is convinced about the depreciation of the vessel pursuant to his
consideration of the evidence produced or attached in court that
show that her value is decreasing. The judge shall not authorise
in any case the anticipated sale if the action on the merits has not
yet been started;
• the authorisation order will:
• define the type of judicial sale (ships are usually sold by pri-
vate treaty sale that needs to be approved by the judge);
• nominate the person in charge of the sale process;
• define the minimum sale value; and
• define the duration of the sale process.
the minimum sale value will be determined taking into considera-
tion the evidence attached by the applicant of the sale or taking
into consideration a possible evaluation to her value ordered by
the judge to be performed by a third-party expert;
• the sale responsible normally drafts and publicizes a sale flyer
containing ship’s particulars that is promoted locally and
internationally;
• the presented bids are sent by the sale responsible to court and
passed to all parties to the proceedings. The parties may oppose
to their acceptance but ultimately the decision will rest with the
judge; and
• the sale responsible will draft an out of court sale and purchase
agreement once the judge has accepted the relevant bid. The
judge issues a final order approving the sale once the price has
been deposited. The final approval order allows the delivery of
the ship to the purchaser;
The process may be concluded in a period of six months counted
from the date of the application.
The sale responsible will be entitled to a unique fee that shall
cover costs and remuneration and shall be determined by the judge
in a percentage of up to 5 per cent of the sale proceeds.
29 What is the order of priority of claims against the proceeds of sale?
A Portuguese judge may apply three alternative lists of priority of
claims:
• the priority list contained in the law of the jurisdiction under
which flag the ship sails or, in case of dual registration, where
her ownership is registered;
• the priority list contained in the International Convention for
the Unification of Certain Rules Relating to Maritime Liens and
Mortgages, 1926 when the ship sails under a contracting state
flag that can be described as follows:
• legal costs due to the state, and expenses incurred in the com-
mon interest of the creditors in order to preserve the vessel
or to procure its sale and the distribution of the proceeds of
sale; tonnage dues, light or harbour dues, and other public
taxes and charges of the same character; pilotage dues; the
cost of watching and preservation from the time of the entry
of the vessel into the last port; other taxes and social security
dues;
• claims arising out of the contract of engagement of the mas-
ter, crew, and other persons hired on board;
Andrade Dias & Associados Portugal
• remuneration for assistance and salvage, and the contribu-
tion of the vessel in general average;
• indemnities for collision or other accident of navigation, as
also for damage caused to works forming part of harbours,
docks, and navigable ways, indemnities for personal injury
to passengers or crew, indemnities for loss of or damage to
cargo or baggage;
• claims resulting from contracts entered into or acts done by
the master, acting within the scope of his authority, away
from the vessel’s home port, where such contracts or acts are
necessary for the preservation of the vessel or the continu-
ation of her voyage, whether the master is or is not at the
same time owner of the vessel, and whether the claim is his
own or that of the ship-chandlers, repairers, lenders, or other
contractual creditors; and
• mortgages, hypothecations and other similar charges on the
vessel duly effected in accordance with the law of the con-
tracting state to which the vessel belongs; or
• the priority list contained in article 578 of the Commercial Code
that is described as follows:
(i) court costs made in the common interest of the creditors;
(ii) taxes and social security dues;
(iii) salvage rewards;
(iv) claims secured by mortgages or pledges over ships;
(v) pilots and towing expenses for entry into port;
(vi) tonnage, anchorage, public health, light and other harbour
dues;
(vii) expenses made with the keeping of the vessel and storage
of her appurtenances;
(viii) master and crew wages;
(ix) repair costs of the vessel, her appurtenances and
equipment;
(x) reimbursement of the price of the cargo that the master
was forced to sold;
(xi) insurance premiums;
(xii) the outstanding price of the last purchase of the vessel;
(xiii) repair costs of the vessel, her appurtenances and equip-
ment, in the three years previous to the voyage at issue and
counted from the date of termination of the repairs;
(xiv) costs related to shipbuilding contracts;
(xv) the insurances premiums over the ship, if entirely covered,
or over the covered part or her appurtenances not men-
tioned in paragraph (xi); and
(xvi) indemnities due to the shippers for shortage or damage of
goods.
Claims mentioned in (i) to (xi), excluding the claims mentioned in
(iii), are those incurred in the last voyage and because of it.
30 What are the legal effects or consequences of judicial sale of a
vessel?
The judicial sale of a vessel extinguishes all prior liens and encum-
brances over a ship and thereby provides the purchaser clean title.
31 Will judicial sale of a vessel in a foreign jurisdiction be recognised?
Yes. The question to know will be to ascertain if said recognition
will be automatic or subject to a recognition of the order that has
accepted or approved the sale.
32 Is your country a signatory to the International Convention on Maritime
Liens and Mortgages 1993?
No. Portugal is a contracting state to the International Convention
for the Unification of Certain Rules Relating to Maritime Liens and
Mortgages, 1926.
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Carriage of goods by sea and bills of lading
33 Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some
variation in force and have they been ratified or implemented without
ratification? Has your state ratified, accepted, approved or acceded
to the UN Convention on Contracts for the International Carriage of
Goods Wholly or Partly by Sea? When does carriage at sea begin and
end for the purpose of application of such rules?
The International Convention for the Unification of Certain Rules
Relating to Bills of Lading, Brussels, 1924, is in force. The Hague
Rules became internal law by means of Decree-Law 37748 of 1 Feb-
ruary 1950. The Hague Rules apply mandatorily where the bill of
lading was issued in the territory of a contracting state.
Decree-Law 352/86 will apply, in subsidiary terms (in respect of
issues not dealt by the conventions) to the international conventions
in force in Portugal, to the contracts for the carriage of goods by
sea. Decree-Law 352/86 rules, inter alia, on pre-loading and post-
discharge responsibilities and liabilities, on package and unit limita-
tion calculation and amounts and on limitation periods. Decree-Law
352/86 inserted into internal law some of the Visby Protocol amend-
ments in regard to package and unit calculation. It has inserted the
Hamburg Rules’ limitation period of two years to be applied merely
outside the scope of application of the Hague Rules because regard-
ing liabilities arising out in connection with the Hague Rules the
one-year limitation period is to be applied. The Hague Rules must be
applied in conjunction with Decree-Law 37748 and especially with
Decree-Law 352/86.
Portugal has not ratified, accepted, approved or acceded to
the UN Convention on Contracts for the International Carriage of
Goods Wholly or Partly by Sea (Rotterdam Rules).
Pursuant to article 1(e) of the Hague Rules, carriage of goods
by sea encompasses the time elapsed, as from the time the goods
are loaded on board the ship up to the moment they are discharged
from the ship, that is to say, as from and up to the moment they have
passed the ship’s rail ‘tackle to tackle’. Under article 6 of Decree-Law
352/86 the carrier’s liability for the goods in respect of the period
elapsed between receipt and loading of the goods is ruled by the
provisions of the bailment contract contained in the Civil Code. The
bailment contract regime is applied also as from the moment the
goods have been discharged onwards. It is fair to conclude, then,
that carriage by sea commences and ends as from and up to the
moment the goods have passed the ship’s rail at her loading and
discharge ports.
34 Are there conventions or domestic laws in force in respect of road, rail
or air transport that apply to stages of the transport other than by sea
under a combined transport or multimodal bill of lading?
In respect of road carriage, Portugal is a contracting state to the
Convention on the Contract for the International Carriage of Goods
by Road signed at Geneva on 19 May 1956 (CMR Convention). Por-
tugal has also in force an internal regime that is applicable to inter-
nal road carriages and that is contained in Decree-Law 239/2003,
published on 4 October 2003. The most relevant difference between
these two regimes rests in the limitation of liability limits applicable
to non-intentionally caused losses or damages to goods. Pursuant to
article 23 of the CMR Convention, the road carrier shall not be liable
for more than 8.33 units of account per kilogram of gross weight in
short, being the unit of account, the special drawing right, calculated
under paragraph 7 of article 23 of the CMR Convention and duly
converted into euros. Differently, pursuant to article 20 of Decree-
Law 239/2003, the carrier shall not be liable for more than e10 per
kilograms of gross weight of the goods in short or damaged.
In respect of rail carriage, Portugal is a contracting party to the
Convention concerning International Carriage by Rail (COTIF) of 9
May 1980 in the version of the Protocol of Modification of 3 June
211
Portugal Andrade Dias & Associados
1999. Decree-Law 58/2008, published on 26 March 2008, contains
the internal regime applicable to internal rail carriage.
With regards to air carriage, Portugal is a contracting state to
the International Convention for the Unification of Certain Rules
Relating to International Air Carriage, Warsaw 12 October 1929
and of The Hague, Guatemala and Montreal Protocols. Portugal
is also a contracting state of the International Convention for the
Unification of Certain Rules Relating to International Air Carriage,
Montreal 28 May 1999. European Union Regulation No. 889/2002
of the Parliament and of the Council should be applied within the
European Union.
35 Who has title to sue on a bill of lading?
The initial party (shipper or receiver) to the contract for the carriage
of goods by sea or an assigned third party on the rights of the former;
the holder of a bill of lading where a bearer bill of lading was issued;
the named consignee where a not to order bill of lading was issued;
or the named consignee or the endorsee where a bill of lading was
issued at the order.
36 To what extent can the terms in a charter party be incorporated into
the bill of lading? Is a jurisdiction or arbitration clause in a charter
party, the terms of which are incorporated in the bill, binding on a third-
party holder or endorsee of the bill?
Pursuant to freedom of contract principles, between owner and char-
terer the terms of the charter party can be incorporated into a bill
of lading.
The said incorporation will be in principle ineffective with regard
to the third-party holder or endorsee as he is not a party to the charter
party being merely a party to the contract for the carriage of goods by
sea titled by the bill of lading. This will not be the case with regard
to the clauses of the charter party reproduced in the bill of lading, or
in the case that the former is attached to the latter. In these two last
cases, the clauses may be effective depending on the interpretation of
the clauses of the contracts. The same reasoning is valid for a jurisdic-
tion or an arbitration clause in a charter party, the terms of which
are incorporated in the bill. In addition, subparagraph (b) of article
29 of Decree-Law 352/86 states that ‘within the relations between
carrier and third-party holder of the bill of lading, with prejudice
of what on the contrary may be stated in the charter party, where
the bill of lading has been issued pursuant to the charter party, the
rules of Decree-Law 352/86 will prevail’. Article 30 of Decree-Law
352/86 states that the Portuguese courts will have jurisdiction for
actions arising from carriage of goods by sea if, inter alia the port of
loading or discharge is located in Portuguese territory, or the head
office, branch or agency of the shipper, receiver or consignee or the
carrier are located in Portugal.
Law 31/86 states that the arbitration clause has to be produced
in writing and inserted in a document signed by the parties or con-
tained in exchange of letters, telexes, telegrams or other means of tel-
ecommunication of which there persists evidence in writing, whether
these instruments directly contain the arbitration convention itself, or
whether there is a clause in them referring to any document in which
said convention is contained. We presume that this will be applied
where the contracting parties are all the same for both contracts or
where the arbitration clause of the charter party is reproduced in the
bill of lading or if the former is attached to the latter, subject always
to the interpretation of both contracts.
37 Is the ‘demise’ clause or identity of carrier clause recognised and
binding?
The identity of the carrier clause is normally a standard one. Stand-
ard forms of contracts are governed by Decree-Law 446/85. It is
defensible to sustain that the said clause will be valid and binding
212 Getting the Deal Through – Shipping 2011
where evidence is produced in court that cargo interests knew or
ought reasonably to have known of the existence and extent of said
clause. Note however that only the carrier of the goods can issue bills
of lading, as per subparagraph 5 of article 8 of Decree-Law 352/86.
Pursuant to paragraph 1 of article 10 of Decree-Law 352/86, bills of
lading issued by one who does not have the condition of a sea carrier
are null and void. Whoever, not being the sea carrier of the goods,
issues a bill of lading, is liable for damages caused to the shipper and
to others interested in the goods, pursuant to paragraph 2 of article
10 of Decree-Law 352/86. This does not prevent an agent of the car-
rier to sign bills of lading on behalf of the carrier. Under article 28 of
Decree-Law 352/86, if the bill of lading is considered null and void
or if the sea carrier is not identifiable by the wording of the bill of
lading, the carrying ship will be liable in rem before cargo interests
under the same terms as the carrier.
38 Are shipowners liable for cargo damage where they are not the
contractual carrier and what defences can they raise against such
liability? In particular, can they rely on the terms of the bill of lading
even though they are not contractual carriers?
Article 7 of Decree-Law 352/86 states that the intervention of a port
operator or of any other agent of the contractual carrier in any opera-
tion related to the cargo does not remove or exempt liability of the
contractual carrier before cargo interests. The contractual carrier
becomes entitled to act against the said port operator or agent in
recourse or redress. Article 800 of the Civil Code and article 377
of the Commercial Code states that the debtor (contractual carrier)
is liable before the creditor (other party to the sea carriage contract
– shipper, receiver or holder of the bill) for the acts and omissions of
his representatives or the persons or entities that he uses to perform
the carriage as if the said acts were performed by the debtor itself.
Ultimately, however, if the bill of lading is considered null and void
or if the sea carrier is not identifiable by the wording of the bill of
lading, the carrying ship will be liable in rem before cargo interests
under the same terms as the carrier.
39 What is the effect of deviation from a vessel’s route on contractual
defences?
Clauses inserted in a bill of lading allowing the carrier to deviate from
the vessel’s route are valid and enforceable against cargo interests.
Article 4(4) of the Hague Rules allows this deviation.
40 What liens can be exercised?
A lien can only operate by force of law and not by contract under
Portuguese law.
The carrier enjoys a retention lien by operation of statutory law
over the carried goods to secure any claims arising from the carriage
by sea, as per article 21 of Decree-Law 352/86. When the carrier
intends to exercise its retention lien, a notice must be served on the
receiver or on the consignee within the time limit of the subsequent
15 days after arrival of the ship in port. The carrier may elect to leave
the goods on board or to have them discharged and deposited. The
carrier shall be prevented to claim any compensation for the ship’s
stoppage if he elects to leave them on board and shall be obliged
to assure their diligent keeping and maintenance. The keeping and
maintenance costs shall run on cargo’s interest. The carrier shall have
a duty to start proceedings within the time limit of 30 days after
serving the notice informing cargo interests that he is exercising his
retention lien. When the cargo is of a perishable nature, the carrier
is entitled to apply to the court for permission to perform the antici-
pated sale of the cargo. The carrier must also serve a notice to cargo
interests if they are known, informing that it will apply for permis-
sion to have the cargo sold. The order shall be issued ex parte but the
counterparty may prevent the anticipated sale by offering adequate
Andrade Dias & Associados Portugal
security. The carrier shall have a retention lien over the sale proceeds
but the court can order the deposit of the said proceeds.
A priority lien (that is to say, a right to be paid by distribution
of sale proceeds with priority over common claims) over the ship,
freight, cargo and ship’s accessories is given by article 2 of the Inter-
national Convention for the Unification of Certain Rules relating
to maritime liens and mortgages, Brussels 10 April 1926 (of which
Portugal is a contracting state) and by articles 578, 580 and 582 of
the Commercial Code to a wide variety of claims. These priority liens
operate by force of law.
41 What liability do carriers incur for delivery of cargo without production
of the bill of lading and can they limit such liability?
Assuming that the carrier has delivered cargo to someone that has
no lawful rights over the cargo, the carrier will be liable for breach
of the contract of the carriage of goods by failing to perform, in full,
the said contract.
As per article 20 of Decree-Law 352/86, if more than one person,
with sufficient title, claims for delivery of the cargo, the goods will
remain at the custody of the entity that has received them, up until
the court decides who has the right to receive them. In the case of
perishable goods, the carrier may sell the goods following permission
from the court and notice to the counterparty.
The carrier cannot limit his liability for wrongful delivery of the
cargo as the provisions contained in the Hague Rules and in Decree-
Law 352/86 in respect of limitation of liability are merely applicable
to loss or damage to cargo.
42 What are the responsibilities and liabilities of the shipper?
The shipper will be liable before the carrier for unpaid freight
and for any damages arising from omissions or mistakes in cargo
statements.
Jurisdiction and dispute resolution
43 Which courts exercise jurisdiction over maritime disputes?
The Lisbon Admiralty Court exercises jurisdiction over disputes that
have some sort of material connection with Portugal’s mainland. The
relevant material connections arise inter alia from: the port where
the ship is anchored; the port where the goods where loaded or dis-
charged; and where the tortuous event happened. Where such con-
nection is linked to the Azores or Madeira Islands territory, the Civil
Court shall have jurisdiction.
44 In brief, what rules govern service of court proceedings on a defendant
located out of the jurisdiction?
Three sets of rules may apply:
• European Union Regulation 1393/2007;
• the Hague Convention Related to Service and Notices Abroad of
Judicial and Non-Judicial Acts in Civil and Commercial Matters,
1965; or
• the Civil Procedure Code.
EU Regulation 1393/2007 envisages four forms of service of papers
that can be described as follows:
• via appointed authorities;
• via diplomatic or consular channels (that can be used either to
transmit papers between appointed authorities or to serve papers
directly);
• via registered courier with acknowledgment of receipt or via an
equivalent procedure; or
• via direct service.
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Each member state presented statements about the terms in which it
would apply the said EU Regulation. The statements can be found
on the European Commission’s web site (http://ec.europa.eu). Each
member state has declared what type of service of papers it accepts.
A plaintiff starting proceedings in Portugal against an EU-domiciled
defendant should comply with the relevant member state rules where
the defendant is domiciled.
The Hague Convention Related to Service and Notices Abroad
of Judicial and Non-Judicial Acts in Civil and Commercial Matters,
1965 envisages an identical structure as of EU Regulation 1393/2007.
The relevant contracting state party’ requirements need to be ascer-
tained on a case-by-case basis.
Under the Civil Procedure Code service of court proceedings is
done by a letter (attached with the relevant papers to serve, which
are the points of claim and the attached documents) drafted by the
court and sent by the latter via registered courier with acknowledge-
ment of receipt to the defendants’ address. Note that this procedure
is used in arrest proceedings even if the defendant is domiciled in an
EU member state or in a state that is a contracting state party of the
Hague Convention.
45 Is there a domestic arbitral institution with a panel of maritime
arbitrators specialising in maritime arbitration?
No.
46 What rules govern recognition and enforcement of foreign judgments
and awards?
Rules governing recognition and enforcement of foreign judgments
include:
• Council Regulation (EC) No. 44/2001;
• the Agreement between EU and Denmark on Jurisdiction and the
Recognition and Enforcement of Judgments in Civil and Com-
mercial Matters;
• the Convention on Jurisdiction and the Enforcement of Judge-
ments in Civil and Commercial Matters, Brussels, 1968;
• the Convention on Jurisdiction and the Enforcement of Judge-
ments in Civil and Commercial Matters, Lugano, 1988;
• several Conventions with most of the former Portuguese colonies
on jurisdiction (and arbitration); and
• the Civil Procedure Code.
Rules governing recognition and enforcement of arbitral awards are
found in:
• the New York Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, 1958;
• the Geneva Convention on Execution of Foreign Arbitral Awards,
1927; and
• the Civil Procedure Code.
Under general terms a judgment or an award will be recognised and
enforced more easily if issued in a state or country covered by one
of the above-mentioned international rules than if they have been
produced on a state where said provisions are inapplicable. The Civil
Procedure Code shall apply exclusively when no international rules
are in force. A recognition order cannot be issued without prior serv-
ice of the defendant if the application is lodged merely under the Civil
Procedure Code. The arguments to oppose to the recognition request
are wider if only the Civil Procedure Code is in use than if an applica-
tion has been lodged pursuant to an international set of rules.
47 What remedies are available if the claimants, in breach of a jurisdiction
clause, issue proceedings elsewhere?
There are no remedies available in the Portuguese jurisdiction. There
is no such tool as an anti-suit injunction.
213
Portugal Andrade Dias & Associados
Update and trends
On 20 May 2010, the Council of Ministries approved a draft
resolution that was sent to Parliament for approval. The resolution
suggests the denunciation of the International Convention for
the Unification of Certain Rules Relating to Maritime Liens and
Mortgages, 1926. The denunciation will favour the ranking of
priorities in favour of mortgagees and presumably increase the
flagging in of ships in Portugal, the investment in the Portuguese
merchant fleet and the manning of ships by Portuguese nationals.
48 What remedies are there for the defendant to stop domestic
proceedings that breach a clause providing for a foreign court or
arbitral tribunal to have jurisdiction?
Where the clause is binding under Portuguese law, the defendant
may apply in the points of defence for the formal dismissal of the
proceedings based on breach of the said clause and hence on lack of
jurisdiction of the Portuguese courts or arbitral tribunals. This will
not, however, release a defendant from the onus to oppose the claim
based on its merits. Under civil procedure rules a defendant must con-
centrate all its defence efforts in the points of defence. The points of
defence are presented at an early stage of the proceedings and hence
a defendant will be forced to argue all defences – both formal and on
the merits defences – at an initial stage of the proceedings. This will
be so even if the proceedings are then subsequently dismissed based
on breach of a valid and enforceable jurisdiction clause. A defendant
is forced to use all its weapons in the points of defence because he
will not have a second chance to oppose the merits if the jurisdiction
or arbitration clause is considered inapplicable.
Limitation periods for liability
49 What time limits apply to claims? Is it possible to extend the time limit
by agreement?
A limitation period can be qualified as prescription or caducity. The
main differences lie in the fact that a prescription time limit cannot
be extended by agreement and will only be interrupted with service
of court proceedings on the defendant. A caducity time limit can be
extended by agreement and it will be interrupted merely by the filing
of papers in court.
The most relevant time limits are: tort: three years (prescription);
contract: 20 years (prescription) and carriage of goods by sea: one
year (Hague Rules) or two years (Decree-Law 352/86) (caducity).
50 May courts or arbitral tribunals extend the time limits?
No.
Miscellaneous
51 Is it possible to arrest bunkers in your jurisdiction or to obtain an
attachment order or injunction in respect of bunkers?
Pursuant to article 1(1)(2) of Decree-Law No. 201/98, a ship is
defined as a floating craft aimed at water navigation. The following
are constituent parts of the ship: her main and auxiliary engines;
appliances; fittings; lifesaving equipment; accessories; and further
equipment existing on board necessary for her operation other than
goods or merchandise carried on board as her cargo. It has been
therefore generally understood that the arrest order of a ship includes
all the above-mentioned constituent parts. It has been also generally
understood that bunkers are included in the described constituent
parts and hence are covered by an arrest order over a ship. Theoreti-
cally speaking this may not be the case where the bunkers on board
do not belong to her owner. Therefore, the theoretical possibility of
214 Getting the Deal Through – Shipping 2011
having an exclusive arrest of the bunkers can be advanced. To date
we have not seen this tested, and this understanding may face the
impediment arising from the fact that the arrest order issued over a
ship includes her bunkers, and hence the only possibility available is
to have her lawfully arrested in full and not merely to have her bun-
kers arrested. Note, however, that this may be a non-issue as most of
the situations where it is requested to arrest merely her bunkers are,
most of the time, situations where it is possible to arrest the ship for
the claim at stake (eg, claims arising from a time charter party where
bunkers belong to the charterer). Therefore it may be that in most of
the cases the arrest of the entire ship will be a way to obtain security
for a claim related to her bunkers.
Any fuel or oil that is on board as cargo of the ship can be sepa-
rately arrested.
52 Can external factors, such as the recent global restriction on the
availability of credit, affect the legal rights and liabilities of the parties
to a shipping contract?
Pursuant to the principle enshrined in our contract law provisions, all
contracts are to be strictly complied with, clause-by-clause or point-
by-point, under the principle pacta sunt servanta contained in article
406 of the Civil Code. Pursuant to this proviso a contract (or a clause
of a contract) can only be modified or terminated by agreement of
the parties or by force of some other residual provision contained in
statutory law.
The effect of any external factors such as the recent global restric-
tion on the availability of credit on the legal rights and liabilities of
the parties will depend firstly on what the parties have agreed in this
respect.
Theoretically speaking two general provisions or doctrines may
be advanced under contract law: termination or modification of a
contract caused by change in the circumstances that served as the
basis for the parties to enter into a contract; and frustration or objec-
tive impossibility (non-imputable to the debtor) of a debtor to per-
form its duties or obligations under the contract.
Under article 437 of the Civil Code:
If the circumstances over which the parties have based their deci-
sion to contract have suffered an abnormal (subsequent) change,
the damaged party may elect to terminate the contract or to have it
modified under equity as long as the compliance with its contractual
duties breaches the principles of good faith and are not covered by
the inherent risks of the contract.’
The counterparty may oppose the valid termination of the contract
by accepting the contract’s modification.
Pursuant to article 790 of the Civil Code:
A contractual obligation shall terminate or be cancelled where the
performance of it becomes impossible by a cause not imputable to the
debtor.
These general principles of Portuguese contract law have been
inserted in the following particular provisions applicable to specific
contracts.
Building or ship repair contracts
Pursuant to article 1227 of the Civil Code (provision contained in the
rules applicable to the construction or repair contracts – articles 1207
to 1230 of the Civil Code – but applicable to a ship building or repair
contract by force of Decree-Law 201/98), if the performance of the
repair or of the construction work becomes impossible by cause not
imputable to any of the parties, article 790 of Civil Code shall apply
– that is to say, the obligation shall be terminated. The owner shall
be required, however, to indemnify the builder or the repairer of the
works performed and to support the expenses incurred.
Andrade Dias & Associados Portugal

Voyage charter parties
Subject to article 14 of Decree-law No. 191/87, if the voyage or voy-
ages cannot be initiated on the date or seasons agreed between the
parties by a cause not imputable to the owner or to the charterer,
any of the parties may terminate the contract without incurring any
liability whatsoever for any possible damages that may arise from
said termination.
Time and bareboat charter parties
Pursuant to article 30 of Decree-law No. 191/87 freight shall not be
due during the periods in which the commercial use of the ship is
impossible by cause or any reasons not imputable to the charterer.
Carriage of goods by sea
Subject to article 13 of Decree-law No. 352/86, if the voyage cannot
be performed on the agreed date or season by a cause not imput-
able to the carrier, any of the parties may terminate the contract of
carriage without incurring any liability whatsoever for any possible
damages that may arise from said termination. Pursuant to article 15
of Decree-law No. 352/86, if the shipper fails to present the goods for
loading to the carrier at the agreed place and time, the contract is con-
sidered to be terminated; the shipper, however, is obliged to perform
payment of freight. If the shipper terminates the contract after having
delivered the goods to the carrier he will be obliged to pay freight and
the expenses that the carrier has incurred with the goods.
There is no specific provision for the contract for the sale and
purchase of ship as it exists for the above-mentioned other contracts.
The general principles contained in articles 437 and 790 of the Civil
Code may be applied.
53 Are there any other noteworthy points relating to shipping in your
jurisdiction not covered by any of the above?
Portugal is not a contracting party to the Athens Convention Relating
to Carriage of Passengers and Their Luggage by Sea, 1974 or the SDR
Protocol 1976. Carriage of passengers is merely ruled by Decree-Law
349/86. This may need to be taken into account, considering the
enormous recent increase in cruise ship calls at Portuguese ports. This
may soon be changed pursuant to the publication of EU Regulation
392/2009 of the Parliament and of the Council on the liability of
carriers of passengers by sea in the event of accident. Portugal is a
contracting state to the International Convention for the Unification
of Certain Rules Relating to Maritime Liens and Mortgages, 1926.
Portugal is not a contracting party to the Hazardous Noxious Sub-
stances Convention 1996 or of the Bunkers Convention 2001.

Andrade Dias & Associados

Mateus Andrade Dias mateus@diaslawyers.com

Rua António Maria Cardoso, no. 25, 5th floor Tel: +351 21 346 81 34
1250-026 Lisbon Fax: +351 21 347 37 46
Portugal www.diaslawyers.com

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