TRIBUNAL CONSTITUCIONAL Portugal

RULING No. 591/16

9of November of 2016

Headnotes:

The court a quo interpreted and applied a norm in the Law governing Access to the Law and the Courts (LADT) in such a way as to immediately and categorically exclude the possibility of granting legal aid to for-profit legal persons. The Constitutional Court found that this interpretation and the ensuing refusal of legal protection to such entities without taking their concrete economic situation into consideration were unconstitutional, because they violated the constitutional right of access to the law and to effective jurisdictional protection, under which justice cannot be denied because of a lack of economic resources. This is a right that is an indispensable guarantee of the protection of fundamental rights in general and is inherent in the idea of a state based on the rule of law.

The Court took the view that the Constitution does not require a treatment that simply ignores all the differences between the various types of legal subject, or the different degrees of importance that granting legal protection has for each one. However, it is necessary that the ways in which those differences are projected onto the criteria for granting that protection do not absolutely or disproportionately preclude it. The criteria must be appropriate and cannot make it impossible in practical terms to concretely assess and consider situations in which any given subject alleges a lack of sufficient means. The LADT norm before the Court limited itself to prohibiting the grant of legal protection to a whole category of subjects, regardless of their concrete situation, and this was unconstitutional.

Summary:

The appellant in this concrete review case was a for-profit legal person (a commercial company), which had applied for legal aid in order to be able to judicially oppose an injunction taken out by the District Centre of the Social Security Institute. This application was rejected, and the company then contested that rejection before the court a quo, which denied its suit on the basis of a normative interpretation whereby legal aid cannot be granted to for-profit legal persons solely because the legal system requires such persons to always have enough economic resources in order to not be in a situation in which a lack of funds justifies the need for protection in the form of legal aid.

The Constitutional Court (TC) said that the constitutional right of access to the courts cannot be emptied of its content by a lack of economic resources, and so no person, be they natural or legal, Portuguese or foreign, can be deprived of the ability to submit their cause to the judgement of the courts. The Constitution guarantees legal persons the enjoyment of the rights that are compatible with their nature. Given that the ability to go, and the possibility of being taken, to court do not require a human support, one can only conclude that the fundamental right of access to the law and the courts is compatible with the nature of legal persons.

The fundamental right of citizens to form associations and companies would also be deprived of its efficacy if the Constitution were not to protect the fundamental rights of those legal entities.

Justice-related services do not necessarily have to be free of charge, but their cost cannot be so burdensome that it makes access to the courts substantially difficult. The costs involved in that access must bear in mind the potential inability of entities in economic difficulties to go to court, and must respect the principles of proportionality and appropriateness.

In a society characterised by the prohibition of self-defence and the guarantee of access to the courts, both legal and natural persons sometimes need to take other entities to court in order to effectively implement their rights (e.g. credit rights), and to defend themselves in lawsuits brought against them by third parties (e.g. actions for contractual or extra-contractual civil liability, including the applicable injunction proceedings).

The interpretation of the LADT norm by the lower courts in the present case presupposed that it was not admissible for for-profit legal persons not to have enough money to be able to go to court, inasmuch as their own legal nature means that the law requires them to be provided with an organisational and financial structure with the capacity to fund the foreseeable costs of their activities, including those resulting from litigation. This precluded any case-by-case assessment of merit and excluded the legal protection needed for a subject in this legal category to gain access to a court. The only factor that counted in order for the norm to be applied was the subject’s legal nature, while its lack of economic capacity, gauged with reference to criteria that are both appropriate and comparable to those applied to other legal and natural persons, was deemed irrelevant.

The Court acknowledged that the situation involved in granting legal aid to natural persons is not the same as that entailed in providing aid to for-profit legal persons. The law requires the latter to incorporate the costs of any judicial litigation in which they engage into their overall business.

It also said that one cannot forget that if one were to choose to afford unlimited legal protection to for-profit legal persons, this would include the effect of protecting litigation by commercial companies that were not in a position to carry on trading. From this point of view, awarding legal aid to for-profit legal persons would be dysfunctional and could potentially create inequalities between companies competing in the same market.

In addition, legal persons are allowed to deduct the costs of litigation from their taxable income, so that although the entity has to bear them to begin with, they end up being written off when their taxable profits are calculated.

However, in its case law the Court had already noted that neither the norms contained in the European Convention on Human Rights, nor the case law on the European Court of Human Rights in relation to those norms, have led to any normative solution regarding the legal protection of legal persons that requires the exclusion of the possibility of granting legal aid to for-profit legal persons without first concretely evaluating their situation.

In a 2010 ruling, the Court of Justice of the European Union also emphasised that the principle of effective jurisdictional protection set out in the Charter of Fundamental Rights of the European Union (CFREU) must be interpreted to mean that one cannot exclude the possibility that legal persons can invoke the principle, and that the aid granted in consequence can in particular encompass dispensation from prior payment of court costs and/or for the assistance of legal counsel (without prejudice to the fact that the response to a concrete request for legal aid must always take several factors, ranging from the object of the dispute to the applicant’s financial capacity, into account).

This understanding of the principle of effective jurisdictional protection enshrined in the CFREU precludes the idea of a necessary incompatibility between the provision of legal aid to for-profit legal persons and the proper functioning of competitive markets.

The Constitutional Court said that that understanding should be upheld in domestic Portuguese law and within the overall framework of a systemic vision of the subject. Suffice it to imagine the hypothesis of a commercial company from Portugal or another EU Member State that finds itself in economic difficulties due to a violation of EU legal norms by the Portuguese State and wants to hold the latter civilly liable: the company’s absolute inability to discuss its own lack of funds with the competent Portuguese authorities in order to obtain the legal aid needed to ensure effective jurisdictional protection would be contrary to the CFREU norm and would place the company in an unequal situation in relation to its counterparts in parallel situations in other Member States.

As such, the Court found the normative interpretation before it unconstitutional.

Cross-references:

Rulings nos. 279/09 (27-05-2009); and 216/10 (01-06-2010).