Building law and regulation in Portugal during Covid-19

No.

With regard to the legislation on COVID-19 and, in particular, with regard to real estate law, only a few rules have been introduced regarding lease agreements for the time being. The signal given by the Government with regard to the economic activity in general terms is that only the work that can be developed at home can prevent the displacement to the workplace, which says that the activity of the construction can follow the normal course depending of the decision of each construct company and the respective construction owner.
On the other hand, with regard to the practice of acts before public entities, it should be noted that all prescription and limitation periods for all types of proceedings and procedures are also suspended.
It was also determined that the closure of establishments (measure implemented in order mitigate the effects of the pandemic), may not be invoked as grounds for termination of non-housing rental agreements as well as other forms of real estate exploitation.

Thus, on balance, and without prejudice to the acts that may be carried out by means of distance, there will be, in the scope of Real Estate Law, a general dilation of the transactional procedures as well as of all the others that imply the intervention of public authorities.

Yes.

The government helps employers by providing support to companies that are in a business crisis.  In this situation of business crisis, the employer can choose between:

• Suspension of the employee's employment contract;or
• Reduction of employees' working hours, in accordance with the general Lay Off regime, established in the Labour Code.

In these cases, the employees concerned are entitled to a financial support of 2/3 of the gross salary paid by the Government.

The employer is also granted temporary exemption from the payment of social security contributions.

However, this support only lasts one month but it can be extended to a maximum of 3 months.

Nevertheless, during the period of application of the above-mentioned measures, as well as in the following 60 days, the employer may not terminate the employment contracts of an employee covered by those measures, under the terms of collective dismissal or dismissal for extinction of the position.

There is no legal definition of "force majeure" under Portuguese law. Although, this concept has been discussed on case law and has the idea of inevitability at its core: it will be any natural event or human action which, although predictable or even prevented, cannot be avoided, either in itself or in its consequences.

According to the Portuguese Supreme Court of Justice, "force majeure" is based on an idea of inevitability, linked to action by man or third party and, in many cases, to phenomena of nature, which are uncontrollable and not even predictable by the will of the party concerned.

Therefore, in the definition of "force majeure" the following assumptions should be verified: unpredictability, irresistibility, externality to the will of the parties.
This concept can be used to assess the impossibility to fulfil due to a cause not imputable to the debtor and the consequent extinction of the obligation, in accordance with Article 790 of the Portuguese Civil Code.

In case there is no "force majeure" clause in a contract, the legal consequences must be assessed in accordance with the Civil Code’s rules of impossibility to fulfil, without prejudice to the possibility of using the regime of abnormal change of circumstances presented below.

The effects of the Epidemic shall be assessed on a case-by-case basis, since there are situations in which the obligation can still be performed.

Therefore, if the impossibility to fulfil will last only for a limited period of time, the debtor will not be liable for late performance, pursuant to Article 792(1) of the Civil Code.

In this respect, it is important to note that, pursuant to Article 792(2) of the Civil Code, the impossibility is only considered temporary as long as, given the purpose of the obligation, the interest of the creditor remains.

On the other hand, where the performance becomes permanently impossible, the obligations under the contract expire, pursuant Article 790(1) of the Civil Code. In these cases, the counterparty shall also be released from his obligations and shall be entitled, if he has already fulfilled them, to demand their repayment, pursuant to article 795(1) of the Civil Code.

The Epidemic may give rise to termination rights to either party.

Pursuant the regime of abnormal and supervening change of circumstances unforeseeable at the time of conclusion of the contract (e.g. in case of the performance of a contract becomes excessively onerous) the parties may have the right to terminate the contract or to amend it according to fairness rules, provided that the requirements of the obligations arising from the contract seriously affect the principles of good faith and are not covered by the risks inherent in the contract.

For this purpose, the Epidemic may be considered as a change of circumstances unforeseeable at the time of conclusion of the contract, pursuant to Article 437(1) of the Civil Code.

In this respect, there must be a direct correlation, which must be factually demonstrated, between the change of circumstances unforeseeable at the time of conclusion of the contract (in case, the Corona Pandemic) and the damage caused to the party.

On the other hand, as mentioned, the situation must not be covered by the risks inherent in the contract, which is a complex point in Portuguese case law.

Additionally, according to Article 437(2) of the Civil Code, the opposite party may refuse to terminate the contract, stating that it accepts its amendment.

Finally, the party shall not have the right to terminate or amend the contract if it was in default at the time when the circumstances changed, pursuant to Article 438 of the Civil Code.

All this shall be assessed on a case-by-case basis.

The measures currently being taken, namely those referred to in Question 1 are of a temporary nature. Nevertheless, the price and time consequences are not predictable at the present moment, since the Government may introduce new measures in the next few days, depending on the evolution of the pandemic crisis.

No for the time being.