In May 2021, Law n. 32/2021, of May 27^th, was adopted, prescribing the creation of an administrative system for the control and prevention of use of unfair (and thus prohibited) Standard Contractual Clauses (SCC).[1] Decree-law n. 123/2023 (available here) has recently been enacted to precisely further detail and implement, in the form of an independent (SCC) Commission, working with the members of Government responsible for Justice and Consumer Protection, and administratively backed by the General-Directorship for Consumer Affairs (DGC).

In the words of the legislator, the Mission of this Commission is to “inform consumers and deter this practice”, “preventing the use of unfair SCC” and “shining light onto providers of goods or services of have been judicially recognized as using prohibited SCCs.”

Main Novelties in Decree-Law n. 123/2023

The Commission shall be composed of seven unpaid members, to be appointed by various entities who pursue public interest goals in the area of Consumers Protection and Justice.[2] The attributions of the Commission include “examination of contract containing SCC”, as well as the publication of standardized SCC that parties may voluntarily adopt, “issuing of recommendations of modifications or withdrawal of SCC from existing contractual models”, as well as supervising compliance with those recommendations, and “issuing opinions” on matters related to SCC. These powers are, however, subsidiary to those of sector-specific regulatory entities.

To perform the tasks contained in its attributions, the Commission may request SCC proponents to submit their model clauses in use for analysis, issue, within 30 days of the request and after hearing the relevant SCC proponents, recommendations aimed at withdrawing or modifying SCCs, notify the District Attorney’s Office and any interested parties of any failure of the proponent to comply with a judicial obligation to abstain from using abusive SCC, issue opinions on possible prohibited nature of specific SSC, at the request of judicial courts and, lastly, appreciate legislative initiatives submitted to its bodies. The opinions and recommendations issued by the Commission should be published in an online Portal, to be created to host them, alongside SCC-relevant anonymized judicial decisions.

The Commission shall, lastly yet relevantly, act as depositary of SCC models used by specific (types or categories of) companies, to be announced by the Minister responsible for Consumer Protection area. This provision constitutes, no doubt, the most significant innovation in this diploma. It is proof of a strategic change in the approach to SCC, from post-factum redress-based mechanisms to preventive permission-based mechanisms. Not specific to SCC, the change in approach from focus on redress of harm to focus on prevention of harm has been underway for a few years now, at the level of the European Institutions. 

Are these novelties sufficient to achieve the goals set by the legislator?

Next Steps, Setbacks and Shortcomings

The Commission should be ready to run by, at latest, 90 days after the entry of force of the diploma, on December 27^th, 2023. Afterwards, it shall enjoy an additional 90 day-period to enact self-regulatory statutes and make available the SCC online Portal. This means the entities mentioned above have less than six months to erect a fully functioning SCC Commission. 

The speed at which these members will be appointed, and those statutes enacted, might be surprising. After two and a half years mediating the enacting of the Law prescribing the creation of the Commission and the enacting of a statute actually creating said Commission, however, some skepticism cannot be avoided. Especially considering no members have been officially appointed, no internal statutes have been enacted, and in either case the powers of the Commission shall remain subsidiary to those of sector-specific entities, the details of the operation of the Commission remain in the shadow, and it is doubtful a fully operational body will be promoting fairer SCC by the end of the present semester.

Other legislative elements may constitute setbacks to the envisioned development of the SCC Commission. Namely, the fact that members of the Commission are unpaid may constitute a disincentive to the promotion of use of fairer SCC. In the ideal world, the interest in pursuing public interest activities should exist regardless of payment, no doubt. That misconduct spurts where individuals feel underappreciated, however, is a well-known risk.

Additionally, there are key elements missing from the recently enacted Decree-Law. Some of the most relevant are (i) lack of sanctioning powers of the Commission, in particular against SCC proponents for non-compliance with request to submit SCC model clauses in use or with recommendations for modification or withdrawal of such clauses, and (ii) absence of sanctions for the Commission itself for non-compliance with the imposed deadlines. Put together with the inexistence of a deadline for the announcement of which companies are bound by the obligation to deposit their SCC model clauses, both the deposit obligations imposed on companies and the attributions allocated to the Commission will become less than useless in the promotion of their legislative ends.

Lastly, the procedural aspect of the Commission is left entirely unregulated. We can assume that these aspects (e.g., where should clauses be submitted? How long does the Commission have to conduct their examination of clauses? Who can request the analyses of new SCC? And how? And how long do proponents of SCC have to abide to recommendations of modification or withdrawal; what is the consequence if they do not?) shall be addressed by the self-regulatory instruments to be enacted by the Commission itself. Are these, however, not legislative-worthy elements of the procedure? They are, on the contrary, the first in line to ensure the execution of the Commission’s attributions. Is the legal community comfortable leaving these decisive elements to a non-political and non-judicial entity? 

Perhaps it should not be. Regardless, there shall be a Commission by late June 2024. Only time will tell if the Mission will be accomplished.

[1] SCC may be understood as “contractual clauses that are written without prior individual negotiation, that indeterminate proponents or recipient simply subscribe or accept.” SCC are unfair when contrary to principles of good faith and are, for that reason, prohibited, according to general Portuguese SCC regulations. 

[2] Namely, the DGC, the General Directorship for Justice Policy, ASAE (National Agency charged with health and economic safety), the  Superior Council of the Judiciary, the Superior Council of District Attorneys and, finally, by the Ministries responsible for the Justice and Consumer Protection areas.