Congress recently approved Federal Law 13.129/2015, which has amended the Arbitration Law in order to address questions and concerns, consolidate court precedents and align the Arbitration Law with the new Civil Procedure Code. Changes introduced by the new law include new rights for parties when choosing an arbitrator, the introduction of partial awards and the establishment of a statute of limitations.
Congress recently approved a new Civil Procedure Code, which will come into force in March 2016. The new code has integrated the specific rules on arbitration and the civil rules in order to promote alternative dispute resolution – in particular, arbitration and mediation. This will reduce the number of suits filed before the courts and offer a definitive and quick means of dispute resolution.
After Brazil's enactment of the New York Convention, domestic regulations ended the old double exequatur system and obligation to have exequaturs in Brazil and the foreign jurisdiction where the arbitral award was made. To be enforced in Brazil, foreign awards must now be recognised by the Superior Tribunal of Justice. In light of these changes, the Superior Tribunal of Justice recently amended its internal regulations.
The American Chamber of Commerce for Brazil Arbitration and Mediation Centre recently launched its new rules. The changes include the addition of mediation into its activities and a new mediation clause model. The new rules are an example of how Brazilian arbitration centres are working to ensure their credibility and provide better conflict resolution for parties.
Arbitration has advanced considerably in Brazil in recent years. The number of cases, both domestic and international, has increased dramatically over the past decade. Further, Brazilian courts are almost uniformly in support of arbitration as a form of dispute resolution. This update provides an overview of arbitration, including procedures, arbitrator and party rights and the enforcement of foreign awards.
A recent decision by the Superior Court of Justice (STJ) – Brazil's highest court in federal law issues and responsible for confirming foreign awards – may tip the balance in favour of Brazil as the seat of arbitration. The STJ was called on to resolve a jurisdictional dispute between an International Chamber of Commerce arbitral tribunal seated outside Brazil and a first-instance local court.
Brazilian law requires arbitrators to state the reasons for their respective decisions. Failure to do so may result in annulment of the arbitral award. Plaintiffs in annulment actions usually invoke 'lack of reasoning' as one of the grounds in their attempts to set aside arbitral awards. Recent opinions rendered by the Sao Paulo appellate court shed some light on how much reasoning arbitrators are required to give in their awards.
The creation of specialised appeal courts has proved successful in several Brazilian states. In Sao Paulo, the nation's richest state, the business law chambers established within the state appellate court have produced relevant precedents that illustrate the interplay between the judiciary and arbitration. In one such precedent, the court's specialised chamber analysed the scope of pre-arbitral injunctions.
The Senate recently established a special committee to discuss amendments to the Arbitration Act. While the committee's president has pledged not to hinder the progress of arbitration in Brazil, he has expressed the need to adjust the legal text to reflect Brazil's dynamic economic environment and the modifications brought by changes to both the law and the judiciary in recent years.
The more the Brazilian courts get acquainted with arbitration, the more effective this method becomes. Another set of important court decisions from 2012 illustrates how knowledgeable the judiciary has become regarding the validity of agreements to arbitrate, the scope of arbitration, the enforcement of foreign awards and the judiciary's role before, during and after arbitral proceedings.
The concession agreements of three recently privatised airports contain clauses submitting any disputes to International Chamber of Commerce arbitration, sending a clear pro-arbitration message to all interested foreign investors. However, the draft agreements for two relevant upcoming projects indicate that the government may have shifted its position on arbitration in major infrastructure works.
The Sao Paulo appellate court recently held that insurance companies are precluded from commencing arbitral proceedings abroad until Brazilian courts have decided the merits of a challenge brought by the insureds against the validity of the underlying arbitration clause in the agreement. Proceedings which had been commenced in London were suspended as a result.
The quality of arbitration jurisprudence is likely to improve with the creation of a specialised chamber of the Sao Paulo Appellate Court which has exclusive jurisdiction over commercial law disputes, including lawsuits arising from arbitration. Despite the recent establishment of this chamber, a review of its first arbitration-related decisions reveals a pro-arbitration stance among its members.
Violation of public order has been a recurring argument in challenging the confirmation of arbitral awards rendered outside Brazil, particularly those arising from proceedings applying foreign law. However, as confirmed by its decision in a recent case, the Superior Court of Justice continues to uphold a restrictive view of such an important, yet fluid concept of law.
The Brazilian Superior Court of Justice (STJ) - the court of last resort in federal law issues - recently rendered a decision dealing with the enforceability of arbitral awards in Brazil. In a case stemming from a 2001 accident involving an oil drill platform commissioned by the Brazilian state-owned company Petrobras, the STJ judges overturned the decision of the Rio de Janeiro Court of Appeals.
Not so long ago, the general perception in Brazil was that the number of seminars, symposia and congresses about arbitration far outnumbered the actual cases submitted. Although the subject remains a hot topic at these events (as is appropriate), the recent explosion in the number of proceedings serves to put to rest, once and for all, the initial scepticism of some practitioners towards arbitration.
Recently gathered empirical data strongly favours the inclusion of of arbitration provisions in corporate documents. More than 60 appellate court decisions that specifically dealt with the invalidation of corporate deliberations were analysed. The main problem revealed was the lengthy time that it takes to decide such cases. The inclusion of arbitral clauses would ensure a swift resolution of shareholders' disputes through arbitration.
The Brazilian courts are showing an increased willingness to embrace arbitration as the appropriate means of dispute resolution for problems arising out of complex derivatives transactions. A recent decision rendered by a Sao Paulo court of first instance provides further evidence of the important role that judges play in the enforcement of pre-dispute agreements to arbitrate derivatives-related issues.
A recent decision rendered by Brazil's highest labour court makes it easier for top executives (ie, managers and directors) to challenge the enforceability of arbitral awards regarding employment-related disputes. The case involved a branch manager of a multinational company who had participated in an arbitration to decide the amount of labour fees due following termination of his employment agreement.
The enforcement of arbitration clauses in relation to non-signatories is an issue that draws the attention of practitioners and academics alike. While a range of material on the subject is available in books, law reviews and commentary, two precedents from the Brazilian courts can serve to gauge the law of the land on this interesting and potentially dispositive issue.