Shipping

The legal framework applicable to the shipping sector in Portugal is set out in several statutes, some of which are somewhat outdated. They include the following:

• Law 35/86, which originally aimed to establish five maritime courts in Portugal;
• Decree-Law 61/2012, as amended, which transposed Directive 2009/16/EC into Portuguese law and established the framework applicable to the conduct of the port state in ensuring compliance with the applicable international requirements;
• Decree-Law 43/2002, which created the National Maritime Authority (NMA), which is the competent authority for the maritime sector;
• Decree-Law 265/72, which provides the framework applicable to port authorities;
• Decree-Law 43/2018, which created the National System of Vessels and Seafarers and regulates conventional registration;
• Decree-Law 15/94, which created the National Maritime Research and Rescue System;
• Decree-Law 92/2018, which established a simplified regime for conventional ship registration; and
• Decree-Law 96/89, as amended, which provides the legal framework applicable to the international ship registry of Madeira (‘MAR Regulation’).

Portugal is a party to, has entered into, has ratified and/or is subject to:

• the United Nations Convention on the Law of the Sea;
• the Paris Memorandum of Understanding on Port State Control;
• the Brussels International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages 1926;
• the Brussels International Convention on the Limitation of the Liability of Owners of Sea-Going Ships 1957;
• the Nairobi International Convention on the Removal of Wrecks 2007;
• the Convention on the International Regulations for Preventing Collisions at Sea 1972;
• the Brussels International Convention on Certain Rules concerning Civil Jurisdiction in Matters of Collision 1952;
• the Brussels International Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision or other Incidents of Navigation 1952;
• the Hamburg International Convention on Maritime Search and Rescue 1979; and
• Decree 18/2017, which implemented the 1976 Convention on Limitation of Liability for Maritime Claims in the Portuguese jurisdiction.

Decree-Law 43/2002 established the NMA, which is the competent authority for all matters relating to the maritime sector. Decree-Law 265/72 further sets out the framework applicable to port authorities. This statute provides the key competences of port authorities, which include ensuring compliance with the rules on safety and pollution. In practice, this is undertaken by the harbourmasters of the ports, who also have the power to charge penalties and impose other measures in case of breach of the applicable rules (eg, the arrest of a vessel and the imposition of fines). Decree-Law 44/2002 and Decree-Law 45/2002, as amended, provide the framework for the corresponding proceedings.

Given the multiplicity of statutes and the (at least) apparent lack of a common thread among them, a general approach is extremely hard to identify and characterise.

Under Portuguese law, there are two different types of vessel registration:

• Conventional registration is regulated by:
• • Decree-Law 43/2018, which created the National System of Vessels and Seafarers; and
  • Decree-Law 92/2018, which established a simplified regime for the conventional vessel registration.
• The international registry of ships in Madeira is regulated by the MAR Regulation, which created the services of the International Shipping Register of Madeira (MAR).

With regard to the conventional registry, Article 4(1) of Decree-Law 43/2018 provides that registration should be effected through an application submitted to the Electronic Counter of the Sea – a virtual desk which is responsible for receiving requests and instructing the procedures relating to the registration of vessels. According to Articles 7(a), (b) and (c) of that statute, the following vessels are subject to registration:

• commercial vessels;
• research and auxiliary vessels;
• recreational vessels; and
• fishing vessels.

Additionally, Article 5(e) of the MAR Regulation defines a ‘vessel’ as including any commercial vessels operating in the marine environment, including fixed or floating platforms.

Regarding the possibility of dual registration, Article 16 of Decree-Law 92/2018 provides that bareboat chartered vessels may be temporarily registered in the conventional registry. The applicant for a temporary registration – whose request must be supported by the consent of the vessel’s owner, the authorisation of the original registry and the respective bareboat charter agreement – is not granted ownership of the vessel.

Article 15 of the MAR Regulation also allows for the temporary registration of vessels and establishes the following requirements:

• due authorisation of the owner of the vessel;
• due authorisation of the entity with which the vessel is permanently registered; and
• due authorisation of the mortgagee(s), if any.

Dual registrations are allowed only through the temporary registration mechanism.

Decree-Law 43/2018 generally grants interested parties the possibility to apply for the registration of vessels.

According to Article 15 of the MAR Regulation, ships owned by the following are subject to registration in the International Shipping Register of Madeira (MAR):

• licensed offshore entities; and
• entities outside the institutional scope of the Madeira Free Trade Zone.

Regarding restrictions, Article 15 of the MAR Regulation provides as follows:

• Ships registered in the MAR cannot transport passengers or cargo between national ports, except in the situation foreseen in Article 7(2) of Decree-Law 34/87 (in case there is insufficient supply in the market);
• Ships registered in the MAR cannot benefit from any support or protectionist measures, which are exclusively reserved for the remaining fleet under the national flag; and
• Ships flying the Portuguese flag that have received investment incentives may not transfer their registration to the MAR before fulfilling the commitments assumed with the Portuguese state.

Pursuant to Article 3 of Decree-Law 43/2018, the Directorate-General of Natural Resources, Security and Maritime Services is the body which administers the conventional shipping register in the Portuguese jurisdiction. The National Maritime Authority (NMA) and the Institute of Registration and Notary Affairs also have the power to conduct acts of registration. According to Article 3 of the MAR Regulation, the MAR is the competent entity for the registration of vessels in the International Shipping Register of Madeira.

Although Article 5(1) of Decree-Law 43/2018 provides that information about vessel registry in the National Maritime and Ship System (SNEM) is publicly accessible, details of ship ownership are not generally available to the public, as the same article establishes that only the following entities are allowed to access this information:

• The entities that intervene in the procedures covered by the system – that is, the competent central and local bodies of the NMA and the Institute of Registration and Notary Affairs – may access and insert information in the SNEM through a protocol to be signed with the Directorate-General of Natural Resources, Security and Maritime Services; and
• In the exercise of their respective powers, the supervisory bodies, the enforcement agents, the Tax and Customs Authority and the social security services can also access such information, provided that, in the case of personal data, the information is not obtained from the respective holders.

The MAR Regulation does not specifically regulate this issue; and although the latest amendment thereto is aimed at promoting greater digitalisation of both procedures and records, the MAR’s records are not public.

According to Article 17 of the MAR Regulation, in order to register a vessel, the following is necessary:

• Offshore entities must produce evidence of licensing in the Autonomous Region of Madeira, the title for the acquisition of the vessel and the settlement of the fees applicable under Article 8 of the MAR Regulation.
• Other entities, such as companies and natural persons, must indicate:
• • the firm or company name and the domicile or headquarters of the applicant, attaching the respective memorandum and articles of association, in the case of a legal person;
  • full identification, in the case of a natural person; and
  • the title for the acquisition of the vessel.

The registration allows vessels to fly the flag of the country of registration and benefit from the conditions set out under the applicable legal framework – most notably regarding tax and employment. Deregistration will prevent the shipowner, the vessel itself and its workers from benefiting from this legal framework.

With regard to conventional registration, the registration of mortgages is maintained by the SNEM and obtained from the virtual desk referred to in question 2.1. According to Article 21(3) of Decree-Law 92/2018, in order to register the creation or modification of a mortgage over a vessel, a document with a recognised signature of the owner must be submitted. This document must include a reference to the position and powers pursuant to which each signatory is acting, where applicable. A notary must not only certify the signature of the signatory, but also confirm such powers. The parties may choose the law applicable to the mortgage, which must be indicated at the time of registration; and a copy of that law, signed by the parties, must be submitted (Article 21(5)). Mortgages must also be registered with the Commercial Registry.

With regard to deregistration, according to Article 21(4) of Decree-Law 92/2018, the voluntary reduction of the mortgage or cancellation by waiver of the creditor must be set out in an express statement, with acknowledgement through the signature of the mortgage creditor or its representative, stating the nature of the representative and his or her powers to act as such.

There is no specific form for the registration of ship mortgages in the MAR. The parties have contractual freedom and may agree to their own terms; there is no need to comply with any specific rules. The creation of mortgages over vessels must be made through a notarised document signed by the owner and the mortgagee. This document must include a reference to the position and powers pursuant to which the signatory is acting, where applicable. As with conventional registration, the notary will not only certify the signature, but also confirm such powers. Pursuant to Article 13(2) of the MAR Regulation, the creation or modification of a mortgage over a vessel must be made through a document signed by the parties, with the signatures being witnessed in person.

Unlike the conventional registry in mainland Portugal, while the general rule is that documents submitted to the MAR must be in Portuguese, documents in English, French or Spanish may be accepted without a translation. However, if the foreign language is not accepted, the relevant document must be translated into Portuguese. This translation may be partial if the translation includes a statement in which the interested party declares that the part which has not been translated is not relevant for the purposes of the registration and does not contravene or contradict the translated part.

The MAR ship registry has no prescribed form of mortgage, so this can incorporate any aspects that the lenders require. In practice, we normally attach the underlying facility agreement and provide that all of its terms are incorporated in the mortgage, which is acceptable under Portuguese law.

To register vessels in the MAR, there is no requirement for the owner to be incorporated in Portugal, although several tax benefits result from doing so. Where the owner is not incorporated in Madeira, it must be represented by an agent to which powers are granted. These must include:

• the power to represent the shipowner before any state or public authorities; and
• the power to undertake the actions required for registration of the mortgage.

These powers must be granted through a power of attorney, which must in principle be notarised and in some cases apostilled.

Ownership of the vessel and mortgages must also be registered with the Commercial Registry.

Pursuant to Decree-Law 61/2012, as amended, which transposes Directive 2009/16/EC of the European Parliament and of the Council of 23 April 2009 into Portuguese law, the Directorate-General for Natural Resources, Security and Maritime Services (DGRM) is the body responsible for port state control. The DGRM has the power to submit vessels to regular inspections and mandatory inspections in particular cases. Furthermore, the National Maritime Authority (NMA), created by Decree-Law 43/2002, is the competent authority in all matters related to the maritime sector in Portugal, with responsibility for (in accordance with Article 6):

• safety and control of navigation;
• preservation and protection of natural resources;
• preservation and protection of the underwater cultural heritage;
• preservation and protection of the marine environment;
• prevention and remediation of pollution;
• maritime signs, aids and notices to navigation;
• surveillance of activities involving the economic exploitation of living and non-living resources;
• safety of life at sea and maritime rescue;
• civil protection at sea;
• civil protection with regard to the sea and the coastline;
• protection of public health;
• prevention and repression of crime, in particular as regards combating drug trafficking, terrorism and piracy;
• prevention and repression of illegal immigration; and
• security of the coastline and maritime public domain, and of maritime and fluvial borders, where applicable.

As referred to in question 1.3, Decree-Law 45/2002 provides the framework for administrative offences to be applied in areas under the jurisdiction of the NMA. These powers are usually exercised by the harbourmasters of the ports. Among other things, they may impose penalties, arrest the vessel and suspend the vessel’s operations.

Article 12 of Decree-Law 45/2002 provides that the general regime for administrative offences – approved by Decree-Law 433/82, as amended and republished by Decree-Law 244/95 – will apply to anything that is not expressly covered in the aforementioned statute.

Article 55 of Decree-Law 433/82 provides that decisions, orders and other measures taken by the administrative authorities in the course of the process may be judicially challenged by the defendant or the party against which they are directed. However, this does not apply to measures that are intended solely to prepare the final decision to close the case or to impose a fine.

The appeal must be made in writing and submitted to the administrative authority that imposed the fine within 20 days of the defendant becoming aware of it (Article 59 of Decree-Law 433/82). According to Article 60 of Decree-Law 433/82, the timeframe for challenging the decision of the administrative authority will be suspended on Saturdays, Sundays and public holidays. Furthermore, if the timeframe expires on a day on which it is not normally possible to present an appeal, the deadline will be transferred to the next working day.

(a) Collisions

The Commercial Code provides as follows:

• According to Article 664, if a collision proves to be fortuitous or a case of force majeure, there is no right to compensation. Collision is presumed to be fortuitous, except where the general navigation and special regulations of the port are not observed (Article 669).
• If the collision proves to be the fault of both vessels, the right to compensation will be proportionate to each vessel’s degree of fault (Article 666).
• If the collision is caused by the fault of a third vessel that could not prevent it, that third vessel will be responsible (Article 667).
• Pursuant to Article 668, if there is doubt as to which of the vessels caused the collision, each will bear the losses it suffered; but all are liable for the damages caused to the cargoes and for compensation due to persons.
• The liability of the vessels established in the Commercial Code does not exempt the authors of the fault towards the injured parties and owners of the vessels (Article 671).
• According to Article 672, in any case in which liability falls upon the captain, if the ship, at the time of collision and in compliance with the regulations, was under the direction of the pilot of the port or shore pilot, the captain has the right to be indemnified by the respective pilot or corporation, if there is one.
• Claims for losses must be presented within three days to the authority of the place where the collision happened or of the first place where the collided vessels dock, under penalty of non-admission (Article 673).

Portugal ratified the Convention on the International Regulations for Preventing Collisions at Sea 1972 on 17 October 1978 and the Brussels International Convention on Certain Rules concerning Civil Jurisdiction in Matters of Collision and International Convention for the Unification of Certain Rules relating to Penal Jurisdiction in Matters of Collision or Other Incidents of Navigation on 10 May 1952.

(b) Pollution

With regard to domestic law, the following statutes are relevant:

• Decree-Law 170-B/2014, which transposed Directive 2012/33/EU into Portuguese law, provides the rules on the sulphur content of marine fuels.
• Decree-Law 142/2010, which transposed Directive 2009/30/EC into Portuguese law, refers to the specifications of fuels used in inland waterway vessels.
• Decree-Law 69/2008 introduced specific measures regarding the sulphur content of marine fuels, transposing into Portuguese law Directive 2005/33/EC.
• Decree-Law 1/2008 approved the 1997 Protocol to the International Convention for the Prevention of Pollution from Ships 1973, as modified by the 1978 Protocol relating to the Regulations for the Prevention of Air Pollution from Ships, signed in London on 26 September 1997.
• Decree-Law 281/2000 sets out the limits on the sulphur content of certain types of petroleum-derived liquid fuels to reduce the harmful effects of such emissions on man and the environment, transposing into national law Directive 1999/32/EC relating to a reduction in the sulphur content of certain liquid fuels.

As an EU member state, Portugal is also subject to the EU maritime legislation, such as the following:

• Commission Implementing Decision (EU) 2015/253, which lays down the rules for sampling and reporting under Directive 1999/32/EC on the sulphur content of marine fuels;
• Commission Recommendation 2009/1020/EU on the safe implementation of the use of low-sulphur fuel by ships at berth in community ports;
• EU Regulation 1257/2013 on vessel recycling, which aims to minimise and, to the extent practicable, eliminate accidents, injuries and other adverse effects on human health and environment caused by vessel recycling. This regulation was executed in Portugal by Decree-Law 66/2020; and
• EU Regulation 2015/757 on the monitoring, reporting and verification of carbon dioxide (CO2) emissions, which was amended by the Commission’s Delegated Regulation 2016/2071, regarding the methods for monitoring CO2 emissions and the rules for monitoring other relevant information.

With regard to CO2 emissions, the following are also relevant:

• the Commission’s Implementing Regulation 2016/1927 on templates for monitoring plans, emission reports and compliance documents;
• the Commission’s Delegated Regulation 2016/2072 on verification activities and accreditation of verifiers; and
• the Commission’s Implementing Regulation 2016/1928 on the determination of cargo carried by categories of vessels other than passenger ships, roll-on, roll-off vessels and container ships.

Portugal is also part of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, which was approved Decree-Law 37/93. This convention aims to protect human health and the environment by obliging the parties to the convention, among other things, to:

• minimise the quantities of hazardous waste that are transported;
• treat and dispose of such waste as close as possible to their place of generation; and
• prevent or minimise the generation of wastes at source.

(c) Wreck removal

With regard to international law, Portugal is a signatory to the Nairobi International Convention on the Removal of Wrecks 2007. This convention was adopted by Decree 28/2017 and has been in force since 2018. Pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims, vessels with a tonnage of more than 300 tons entering a Portuguese port must have insurance covering their liabilities. If there is a risk of pollution as the result of a stranded or sunken vessel, the authorities can choose the most suitable entity to remove the polluting substances on board the vessel.

Decree 64/2005 provides the framework for the removal of wrecks from stranded and sunken vessels.

(d) Salvage

Decree-Law 15/94 created the National Maritime Research and Rescue System. Additionally, Portugal is a signatory to the Hamburg International Convention on Maritime Search and Rescue 1979.

Portuguese law does not specify any parties that may bring a casualty claim in the Portuguese jurisdiction; but in principle, any injured party may bring claims against the party that caused or should be held liable for any potential damage.

Portugal adopted the 1976 Convention on Limitation of Liability for Maritime Claims through Decree 18/2017.

Pursuant to Article 2 of the convention, the following claims may be limited:

• claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;
• claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
• claims in respect of other loss resulting from the infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations;
• claims in respect of the raising, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship;
• claims in respect of the removal, destruction or rendering harmless of the cargo of the ship; and
• claims of a person other than the person liable in respect of measures taken in order to avert or minimise loss for which the person liable may limit its liability in accordance with the convention, and further loss caused by such measures.

The procedure and requirements applicable to the constitution of a limitation fund are established under Decree 49029/1969. Article 1 of this statute provides that shipowners and other parties referred to in Article 6 of the Brussels International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships and Protocol of Signature that intend to establish a limitation fund may do so by requesting the competent court to create the limitation fund.

Pursuant to Article 2 of 49029/1969, to make such a request the interested party must indicate:

• the facts from which damages arose;
• the amount of the limitation fund, calculated in accordance with Article 3 of the convention;
• the manner in which the fund is to be created; and
• where applicable, the amount to reserve pursuant to Articles 3 and 4 of the convention.

Additionally, the following documents must be submitted:

• a list of known creditors entitled to participate in the fund, including a reference to their residence/headquarters and the amount of credit; and
• the elements that justify the calculation of the amount of the limitation fund.

Pursuant to Article 3 of the 1976 Convention on Limitation of Liability for Maritime Claims, incorporated into the Portuguese jurisdiction by Decree 18/2017, the limitation of liability is not available in case of:

1. Claims for salvage or contribution in general average;
2. Claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage, dated 29 November 1969 or of any amendment or Protocol thereto which is in force;
3. Claims subject to any international convention or national legislation governing or prohibiting limitation of liability for nuclear damage;
4. Claims against the shipowner of a nuclear ship for nuclear damage;
5. Claims by servants of the shipowner or salvor whose duties are connected with the ship or the salvage operations, including claims of their heirs, dependants or other persons entitled to make such claims, if under the law governing the contract of service between the shipowner or salvor and such servants the shipowner or salvor is not entitled to limit his liability in respect of such claims, or if he is by such law only permitted to limit his liability to an amount greater than that provided for in article 6.

Furthermore, in accordance with Article 4 of the same convention, “a person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”.

Additionally, according to Article 3(1) of Decree 49029/1969, the request for a limitation of liability fund will be denied if the value of the fund is not calculated in accordance with the rules prescribed in Article 3 of the convention.

No specific defences are provided under Portuguese law in case of marine casualty claims.

Law 18/2012 provides the legal framework for the fundamental principles of technical investigation of marine casualties and transposes Directive 2009/18/EC into Portuguese law. According to Article 4 of this law, the technical investigation of marine casualties is conducted by the Office for the Prevention and Investigation of Maritime Accidents (GPIAM). The GPIAM is responsible for, as effectively and promptly as possible:

• identifying the causes of the relevant casualty;
• preparing and publishing the corresponding reports; and
• promoting studies and formulating recommendations on maritime safety aimed at reducing maritime accidents.

During its investigation, the GPIAM must cooperate with the national authorities and with the investigative bodies of the other member states.

Additionally, Decree-Law 236/2015 created the Office for Marine Accident Investigation and the Aviation Meteorological Authority (GAMA).

The GAMA is responsible for, among other responsibilities provided in Article 6(2) of the decree-law:

• conducting, in an autonomous and independent manner, technical investigations into marine casualties and incidents in order to determine their causes;
• ensuring that reports of investigations are prepared in accordance with Article 11 of Law 18/2012; and
• notifying the European Commission, through the European Maritime Accident Information Platform, of:
• • maritime accidents and incidents involving a ship flying the national flag, irrespective of where the accident or incident has occurred;
  • maritime accidents and incidents occurring in the territorial sea of the Portuguese state or in its inland waters, irrespective of the flag of the ship or ships involved in them; and
  • maritime accidents and incidents involving other legitimate interests of the Portuguese state.

For this purpose, the model provided in Annex I to Law 18/2012 must be used.

In accordance with Article 7 of Law 18/2012, the GPIAM must be notified of all marine casualties and incidents. This notification obligation is incumbent upon the persons referred to in question 4.7, which are either:

• persons who were involved in the respective casualty; or
• other persons or/and entities that are obliged to notify the GPIAM if they are aware of any incident.

If the casualty is serious or very serious, notification must be made within six hours of the occurrence of the casualty and the remaining casualties within 48 hours (Article 7(5)). The notification report must contain the information referred to in Annex I of Law 18/2012.

The consequences of non-compliance may be civil, criminal, disciplinary liability or administrative offences, punishable with a fine of:

• between €2,200 and €3,700 in the case of an individual; and
• between €10,000 and €44,000 in the case of a company (Article 24 of Law 18/2012).

According to Article 14 of Law 18/2012, without prejudice to salvage operations, upon their investigation, the authorities will immediately:

• isolate and guard the accident site;
• remove people who are strangers to the investigation;
• identify the witnesses and collect the first statements made voluntarily, taking into account the objectives of the technical investigation;
• verify, examine, collect traces and identify evidence in the wreckage and in the bodies of the victims before their removal; and
• conduct all necessary acts to ensure the preservation of evidence requiring special technical expertise.

According to Decree-Law 15/94, the National Maritime Research and Rescue System is responsible for salvage operations. Pursuant to Article 6(2) of this decree-law, the rescue system comprises:

• the Maritime Rescue Coordination Centre;
• the Maritime Rescue Sub-centre;
• the coastal surveillance units; and
• the search and rescue units.

Portugal is also subject to the Hamburg International Convention on Maritime Search and Rescue 1979.

The Hague Rules, created by the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, are applicable in Portugal.

Decree-Law 352/86 provides the legal framework for liability relating to cargo claims.

Portuguese law does not specify any parties that may bring a casualty claim in the Portuguese jurisdiction; but in principle, any injured party may bring cargo claims against the party which caused or may be held liable for the damage. Pursuant to Article 27(2) of Decree-Law 352/86, claims arising from damage to cargo must be filed within two years of the claimant learning of the damage.

Pursuant to the Hague Rules, carriers may limit their liability for cargo damage in order to protect themselves from risks associated with high-value goods of undisclosed value.

According to Article 12 of Decree-Law 202/98, the shipowner may limit its liability to the ship and the amount of the cargo at risk, leaving it to the creditors, by creating a limitation of liability fund. This statute further equates the liability of the carrier to that of the shipowner. Should a third party present a claim against a shipowner which happens not to be the carrier, such shipowner may directly ask the carrier to reimburse it for any potential costs and expenses it may incur, pursuant to Article 6 of Decree-Law 202/98. The shipowner’s liability may be hedged by the creation of a limitation fund.

Without prejudice to the applicable provisions of conventions or other international instruments to which Portugal is subject, the constitution of a liability limitation fund must be set out in a request that mentions the following (Article 14 of Decree-Law 202/98):

• the fact from which the losses resulted; and
• the amount of the freight at risk.

This request should be accompanied by a list of known creditors entitled to participate in the distribution of the fund, indicating their respective domiciles and the amount of their claims, and filed before the end of the timeframe for contesting an action based on a claim to which the limitation of liability applies.

Furthermore, in accordance with Article 15 of Decree-Law 202/98, as soon as the deposit of the proceeds from the sale of the ship is shown to have been paid, the judge will declare that the limitation fund has been constituted.

According to Article IV(e) of the Hague Rules, neither the carrier nor the ship will be entitled to the limitation of liability if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result.

Pursuant to Article IV(2) of the Hague Rules, when faced with a claim, the carrier may rely on the 17 exceptions set out therein. The exceptions are all related to four common law exceptions:

• act of God;
• Queen’s enemies;
• inherent vice; and
• a general average sacrifice.

A carrier cannot rely on a listed exception in any of the following circumstances:

• The peril could have been avoided by exercise of reasonable care;
• The operative cause of the loss was the unseaworthiness of the vessel; or
• There has been a fundamental breach of the contract of carriage.

Regarding the carriers, according to Article 13 of Decree 352/86, if the voyage cannot be undertaken on the date or at the time scheduled for reasons beyond the carrier’s control, either party may terminate the contract without incurring any liability in respect of the loss or damage suffered by the freighter.

Portugal has ratified the 2002 Protocol to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974. These claims must be submitted within two years of the fact giving rise thereto.

Articles 7 and 8 of the Athens Convention provide limitations on liabilities available to the owners in respect of passengers’ claims.

The claims that may be limited include claims for death of or personal injury to a passenger; and no specific procedure is provided.

Time limits are imposed on the possibility to limit liability under the 2002 Protocol to the Athens Convention. Once these time limits have expired, limitation of liability becomes unavailable.

Under Portuguese law, these matters are regulated by:

• Decree-Law 201/98, of 10 July 1998, which provides the legal definition of a ‘vessel’; and
• the Civil Procedure Code, approved by Law 41/2013, which establishes the procedure and the requirements applicable to the arrest of a vessel.

Portugal is also subject to the Brussels International Convention Relating to the Arrest of Seagoing Ships 1952.

Under Portuguese law, there is no distinction between claims for which the arrest of a vessel may or may not be available.

An arrest is an injunction procedure aimed at ensuring that the debtor does not dissipate the means to pay its debts. The party requesting the arrest must sufficiently demonstrate that:

• it has a claim; and
• there is an adequate likelihood of that claim not being satisfied.

Maritime liens are recognised under Portuguese law. In 1931, Portugal acceded to the Brussels International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages 1926. However, this was revoked in 2010 with effect from 2012. Domestic rules on the priority of maritime claims are provided under Articles 574 to 583 of the Commercial Code. The recognised liens are as follows:

• judicial costs and expenses borne in the common interest of the creditors;
• salvage and assistance salaries;
• mortgages and pledges over the vessel;
• expenses in respect of pilotage and towage in entering the port;
• port taxes, including (but not limited to) tonnage, lighthouse, anchorage and public health;
• expenses for the custody of the vessel and the storage of its equipment;
• master and crew salaries;
• vessel repair costs (including equipment);
• reimbursement of the cargo which the master needed to sell;
• insurance premiums;
• any part of the outstanding purchase price in debt since the last acquisition of the vessel;
• expenses relating to vessel repairs (including its equipment) in the three years prior to the voyage and counting from the date the repair was concluded;
• debts arising from the vessel’s construction contracts;
• insurance premiums covering the vessel, if it was all insured, or over part of the vessel’s accessories; and
• compensation due to the shippers for lack of delivery or of damage to the cargo.

The wording of Article 578 of the Commercial Code may be understood as suggesting that the liens identified in the first to tenth bullets above, with the exception of the third, are only those incurred during and for the purposes of carrying out the last voyage of the relevant vessel.

Should a shipowner be personally liable for a claim underlying the arrest of a vessel, any vessel owned by such debtor may be subject to arrest. In any other case, maritime liens over a vessel may be enforced only through the arrest of that vessel.

Portuguese law does not specifically address this possibility. Given the procedure described in question 7.6, this must be assessed on a case-by-case basis. A bareboat or time-chartered vessel may be arrested if the competent court finds that the risk of the relevant debt not being paid justifies the arrest of such vessel.

The arrest of a vessel is an injunction procedure aimed at safeguarding the satisfaction of a creditor’s claim against a certain debtor by preventing the debtor from dissipating the means to comply with its obligations. It is, by nature, a temporary solution.

The Portuguese courts are the only entities with competence to determine the arrest of a vessel under the Portuguese jurisdiction. The creditor submitting the request for the arrest to be determined must sufficiently demonstrate:

• the existence of a claim; and
• the likelihood of that credit not being satisfied by the debtor.

If the judge acknowledges such risk, the arrest will be ordered on a provisional basis, without the debtor being heard. However, a hearing is held with both parties prior to a final decision on the arrest order. A power of attorney and evidence will be required (simple copies, not originals). Important documents should be translated, but can be presented subsequently. The arresting party need not provide security.

The timings are dependent on the complexity of the situation; but given the urgent nature of injunctions, this is usually a swift procedure.

A vessel subject to arrest will be released in the following cases:

• The relevant debt is settled;
• Adequate security is provided by the debtor (usually a bank guarantee); or
• Where the Portuguese courts are competent to decide on the main claim, the claim is not filed by the creditor which obtained the arrest within 30 days of the arrest being ordered by the court.

There is no specific test for wrongful arrest. The test is the same for every arrest and is as described in question 7.6.

This notwithstanding, should a defendant be able to demonstrate the wrongful arrest of a vessel, it may request that the claimant be held liable by the court for damages, as provided under Articles 542 and following of the Civil Procedure Code.

Portuguese law provides no alternatives to arrest.

However, the latest amendment to the MAR Regulation, approved by Law 56/2020, introduced the possibility of the parties expressly agreeing, when creating a mortgage over a vessel, that the mortgagee may, in the event of default, take possession of the vessel without a court order being required. The exercise of this power allows the mortgagee to seize, navigate and sell the vessel, as provided by the parties in the agreement, pursuant to Article 14-I of the MAR Regulation.

Vessels are judicially sold only once a final judgment has been issued. This procedure is regulated under the Civil Procedure Code.

A vessel may be sold only once the claims to which it is subject have been permanently decided. The judicial sale of arrested ships will take place through:

• proposals in sealed letters;
• sale in a regulated market;
• direct sale to a person or entity entitled to acquire the ship;
• private negotiation; or
• auction.

The decision on the specific method to adopt will be made by the execution agent, after consulting with the debtor, secured creditors (if any) and the claimant.

The associated costs (eg, those due to the port for its role as custodian of the vessel) are deducted from the proceeds of sale.

The proceeds of the judicial sale of a vessel are distributed in accordance with the list set out in question 7.3.

The transfer of ownership of the vessel, as if it had been voluntarily sold.

Please see question 4.1.

Please see question 4.1.

Please see question 4.1.

Please see question 4.1, which also refers to other environmental concerns.

Portugal has adopted the International Labour Organization’s Maritime Labour Convention 2006, which was subsequently amended in 2014. The amendments were not adopted by Portugal but were otherwise included in Portuguese law through the transposition of EU Directive 2018/131.

Regarding international law, we further highlight the following:

• the Geneva Merchant Shipping (Minimum Standards) Convention 1976, adopted by Portugal through Decree 65/83; and
• the Geneva Seafarers’ Identity Documents Convention 1958, adopted by Portugal through Decree 47712/1967.

Decree-Law 101-F/2020, which transposed EU Directives 2017/159 and 2018/131, provides the legal framework regarding the health and safety of maritime workers in the Portuguese jurisdiction.

Law 146/2015 regulates the activity of seafarers on board vessels flying the Portuguese flag, as well as the responsibilities of the Portuguese state as flag or port state, with a view to complying with the mandatory provisions of the Maritime Labour Convention.

The general rules of the Portuguese Labour Code, approved by Law 7/2009, also apply to maritime workers.

There are numerous disparate rules on maritime workers in the Portuguese jurisdiction. This notwithstanding, we would highlight the following:

• Shipowners must keep up-to-date records of working time, including overtime, and rest periods, and retain them for five years.
• Shipowners must provide the competent authorities, upon request, with information about the registers and about night and watch-keeping seafarers.
• Maritime workers may exercise the right to repatriation by notifying the shipowner or its representative within 10 days following constitution of the right to repatriation.
• The shipowner may not receive from the seafarer any sum by way of advance payment to cover the expenses of repatriation; although the shipowner may demand reimbursement of those expenses from the seafarer where the situation giving rise thereto is attributable to the latter, and may organise – at its own expense – for them to be offset against the maritime worker’s wages or other entitlements.
• The shipowner must ensure and pay for the treatment of maritime workers who, while on voyage, suffer a natural illness or an accident other than a work-related illness and require treatment ashore outside the national territory, including essential dental care.
• The shipowner must compensate maritime workers for property damage resulting from the breakdown or loss of the ship or shipwreck.
• If a maritime workers die, his or her heirs are entitled to the respective remuneration until the last day of the month following that in which the death occurs.
• The shipowner must keep any property left on board by a sick, injured or deceased maritime worker and ensure that it is returned to the seafarer himself or herself, or to his or her family members.

The original intention, pursuant to Law 35/86, was to create five maritime courts in Portugal. However, only the court located in Lisbon is currently operational. Law 62/2013, which governs the organisation of the judicial system, sets out the scope of the maritime court’s competence, which encompasses all claims relating to maritime law, including shipping matters, given that there is no specific shipping court in Portugal.

The most common disputes relating to maritime and shipping matters usually involve cargo and passenger claims. The resolution of the cases will always depend on the specificities of each case. Furthermore, under Portuguese law, courts are not obliged to follow prior decisions on similar cases, making it hard to identify a typical resolution pattern.

We are not aware of any noteworthy recent cases.

Although it was only approved about a year ago, the latest amendment to the MAR Regulation is already having an impact. Lenders have noticed the favourable conditions offered by the International Shipping Register of Madeira (MAR) for the registration of vessels and especially mortgages thereover, given the recently introduced self-help remedies.

In most cases, vessels registered with the MAR and flying the Portuguese flag do not operate in Portuguese waters; it is therefore unlikely that an arrest will occur in Portugal, which is generally also not deemed a friendly jurisdiction for arrest by lenders.

The new wording of the MAR Regulation states that the parties may, in the mortgage agreement, grant the mortgagee the right to take possession of the ship in the event of a default of an underlying obligation. It further establishes that the right to take possession empowers the mortgagee to seize, navigate and sell the ship under the terms foreseen in the mortgage, as if it were the owner.

These rights must be expressly granted in the mortgage – that is, the parties must contractually establish the terms under which the right to possession may be exercised. A mortgagee may only exercise this right if there is no higher-ranking mortgagee, unless such mortgagees give their consent in writing.

In order to apply retrospectively – for example, in relation to the new powers granted to a mortgagee to take possession of the vessel in a default situation and sell it privately without recourse to the owner/borrower – most existing registered mortgages will need to be amended in order to incorporate these new powers (unless they are already contractually included, which will need to be reviewed on a case-by-case basis). New mortgages registered from 1 September 2020 must also expressly refer to these powers and the terms and conditions in respect of which the mortgagee can resort to this mechanism. These self-help remedies are made available only to mortgagees of mortgages registered in MAR and not in the Portuguese conventional registry.

Although the ship mortgage registration requirements and procedures are governed by Portuguese law, the MAR Regulation expressly provides that the parties may choose for the mortgage to be subject to a foreign law. This is without prejudice to the international conventions to which Portugal is a party.

Should the parties choose to subject the mortgage to the laws of a country other than Portugal, the request for registration must include a translated copy of the applicable legislation signed by both parties, except when the registrar waives (in part or in whole) such requirement or requires that the translation be made by a specific translator.

Although the legislation foresees the possibility of registering a mortgage governed by a foreign law, in practice, we are not entirely satisfied that this approach has been fully tested on the arrest of a vessel in a foreign jurisdiction. Our concern is that potential conflicts of law may arise in court on a vessel arrest: usually, international maritime principles provide that the law of the mortgage is the law of the flag, so that in case of omissions one can look to the law of the flag for guidance. It is not yet clear how foreign courts will, in practice, reconcile the distinction of a Portuguese flag and a foreign law mortgage.

Vessels registered in Madeira may be owned and managed by foreign incorporated companies and have full access to EU cabotage.

The MAR Regulation also allows for the provisional registration of vessels and mortgages (and other similar encumbrances) over hulls/vessels under construction. From the lenders’ perspective, this framework also foresees that the priority of such registrations is not affected by their conversion from provisional to permanent.

Over the years, there has been an ongoing effort to create a more competitive international ship registry in Portugal. One of the key changes was the reorganisation of the priority of maritime claims, which ranks mortgages over a vessel as third, behind judicial costs and expenses borne in the common interest of the creditors and salvage and assistance salaries.