Compulsory arbitration procedure launched

In September 2006, for the first time since the restoration of democracy in 1974, the system of compulsory arbitration was used in Portugal. Between September 2006 and the beginning of 2007, nine compulsory arbitration processes have taken place. Compulsory arbitration may be invoked wherever it has proved impossible to resolve a dispute through voluntary conciliation, mediation or arbitration. The system came into force in 2004, under the 2003 Labour Code and Law No. 35/2004, with the final conditions being determined in autumn 2006.


The 1990 Economic and Social Agreement (Acordo Económico e Social de 1990, AES) was the first accord to address the issue of compulsory arbitration, recommending changes to the legal framework, and proposing that collective agreements should include procedures to resolve disputes. Recognising the difficulties facing the implementation of compulsory arbitration, the 1996 Short-term Social Concertation Agreement (Acordo de Concertação Social de Curto Prazo 1996, ACSCP) proposed to examine the obstacles, and to introduce compulsory arbitration on an experimental basis. Furthermore, the 1996–1999 Strategic Concertation Agreement (Acordo de Concertação Estratégica, ACE) (PT9808190F) presented the same objectives and suggested the creation of a tripartite Labour Relations Centre (Centro de Relações de Trabalho, CRT). Among its duties, such a centre would be required to carry out procedures to resolve disputes.

However, it was only in the 2003 Labour Code (PT0305101N) that compulsory arbitration eventually came into force. Following the Labour Code dispositions, Law No. 35/2004 settled the specific procedures for the implementation of voluntary and compulsory arbitration.

On 7 January 2005, following the collapse of a number of collective agreements in 2004, employer organisations and trade unions signed a bilateral agreement, which they subsequently submitted to the CPCS. The overall aim of the agreement was to promote the ‘Dynamics of collective bargaining’ (Acordo entre as Confederações com Assento na CPCS Visando a Dinamização da Contratação Colectiva) (PT0604019I). Once again, the creation of a CRT was recommended, and the social partners agreed to include specific rules on the resolution of disputes through voluntary conciliation, mediation and arbitration in the collective agreements. Compulsory arbitration was not mentioned this time.

The final steps to put compulsory arbitration into practice were only taken in the autumn of 2006. In September 2006 the arbitration board was nominated, and the following month the government issued a directive setting up the wage conditions to apply to the arbitration functions (Directive 1100/2006).

Views of the unions

Since the beginning of the 1990s, several social pacts signed at the tripartite Standing Committee for Social Concertation (Comissão Permanente de Concertação Social, CPCS) made reference to compulsory arbitration, but their recommendations on this issue had no practical effect. All social partners signed these social pacts, with the exception of the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP), which has been against compulsory arbitration in general.

CGTP believes that compulsory arbitration must only be used when all other means of dispute resolution have failed. From its point of view, compulsory arbitration is a far-reaching measure, which impacts on the principle of the autonomy of collective bargaining of the social partners, and should only be used in relation to issues surrounding wage compensation. The General Workers’ Union (União Geral de Trabalhadores, UGT) considers that compulsory arbitration should be used as a last measure and that it must be effective in order to prevent the expiration of collective agreements (PT0604019I).

Procedures for compulsory arbitration

According to the present legal framework, compulsory arbitration may be invoked where it has proved impossible to resolve a dispute through voluntary conciliation, mediation or arbitration. Compulsory arbitration can be invoked in relation to disputes concerning the following:

  • negotiation of collective agreements;
  • definition of minimum services in the case of strike action, when this is not defined by collective agreement, or when the parties do not agree on the definition of such essential services before an announced strike.

In these cases, the aim is to resolve the latent conflict between the right to strike and the safeguarding of the legitimate interests of the community at large.

The procedures for compulsory arbitration are clearly established as follows:

  • compulsory arbitration can only take place 60 days after the failure of all the other available measures;
  • it can be invoked by any one of the parties, following consultation with the CPCS;
  • it can also be invoked through a recommendation voted on by the majority of employee and employer representatives in the CPCS;
  • the Minister of Labour can also invoke it after consulting with the CPCS, when essential services to the population are at stake.

Arbitration board and proceedings

The arbitration board is a fundamental component of compulsory arbitration. It is composed of 28 arbitrators, 12 of whom are presidents, eight of whom are members designated by the employers and a further eight of whom are members designated by the trade unions. A commission, including the president of the Social and Economic Council (Conselho Económico e Social, CES), two representatives of the trade unions and two representatives of the employers, select independent persons with expertise in the field to be part of the arbitration board. The mandate of the arbitrators lasts for three years.

The process of compulsory arbitration starts with the setting up of an arbitration court, which is composed of three elements: the president arbitrator and two arbitrators representing the parties. In the case of collective bargaining, each party can designate one arbitrator, and these arbitrators then choose the president, all of whom must be members of the arbitration board. However, in the case of the definition of minimum services related to strike action, the composition of the arbitration court is chosen more or less randomly, although due consideration is given to the list of arbitrators.

Between September 2006 and the beginning of 2007, nine processes of compulsory arbitration took place. The conflict in the nine cases concerned the definition of minimum services in the case of strike action. Six cases were related to the transport sector, while the other three cases affected the telecommunications sector. Prior to this, major strikes had taken place in the public transport and energy and water supply sectors, affecting minimum essential services in public transport, and the production and distribution of energy (gas and electricity) and water.

Maria da Paz Campos Lima and Reinhard Naumann, Dinâmia

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