Portugal Government Proposes Restriction on Mandatory Arbitration in Public Contracts
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TL;DR
- Portugal proposes to prevent public entities from imposing arbitration in public contracts.
- New rules would guarantee that rejection of arbitration does not exclude companies from public procurement.
- The initiative seeks to enhance contractual freedom while continuing to encourage arbitration for easing court congestion.
Overview
The Portuguese government has proposed amendments to the rules governing public contracts, specifically aiming to prevent public entities from making arbitration a prerequisite for participation in public tenders. The proposed changes are intended to give contracting parties greater freedom, ensuring that companies cannot be excluded from public procurement processes for refusing to accept arbitration.
What Happened
According to the report, the government continues to encourage arbitration as a means to alleviate the burden on administrative courts.
Despite this encouragement, the proposed legal amendments would block any public entity from requiring arbitration as a mandatory condition for participation in public contracts.
The revised Public Contracts Code would aim to enhance contractual freedom among parties involved in public procurement.
If passed, no private entity or company would be disqualified from contracting with the public sector based solely on a refusal to accept arbitration.
Context
Arbitration has often been utilized in Portugal as a mechanism for resolving disputes arising from public contracts, in part to reduce the load on administrative courts.
The legislative initiative responds to concerns that mandatory arbitration clauses could restrict access to public procurement for potential contractors who may prefer or require dispute resolution through the courts.
Why It Matters
- The proposed rule change could impact how public procurement disputes are resolved in Portugal, increasing flexibility for bidders.
- It may encourage broader participation in public tenders by ensuring that companies are not compelled to accept arbitration as a precondition for eligibility.