25 Portugal

Subject(s):

Banks and cross-border issues — Guarantees and security — Monetary obligations — Contractual set-off — Insolvency set-off — Judicial set-off

This chapter provides an overview of the law of set-off in Portugal, both outside and within the context of insolvency. In Portugal, the policy justification for set-off is based on the fact that it may be used to avoid reciprocal payments whenever legally possible. The Portuguese Civil Code regulates set-off as part of its rules on contractual rights and obligations, but does not regard set-off as creating any security right (either in rem or in personam), lien, pledge, charge, mortgage, or other similar right over any assets of the parties involved. The chapter first considers set-off between solvent parties, focusing on unilateral set-off and contractual set-off, before discussing set-off against insolvent parties. It examines the relevant provisions of the Portuguese Netting Law and concludes with an analysis of cross-border issues relating to set-off between solvent parties and set-off against insolvent parties.