The recently approved labour reform allows arbitration in individual employment agreements, provided that the employee's monthly salary is twice as high as the cap on social security pensions and the arbitration clause is proposed or expressly agreed by the employee, according to the Arbitration Law. This means that employees with a higher level of education and income can now sign employment contracts for the settlement of any disputes through arbitration.
The full bench of the Superior Court of Justice recently refused the recognition and enforcement of two arbitral awards issued by an arbitral tribunal seated in New York under the International Chamber of Commerce Rules. This decision is historic and important for arbitration, as it is one of the rare cases in which the Superior Court of Justice failed to recognise a foreign arbitral award.
The Sao Paulo State Court was recently faced with a dispute between the contracting parties to a franchise agreement. While the judge rapporteur recognised that the Brazilian legal system provides for competence-competence as a general rule, given the circumstances of this case, he declared the arbitration clause in the relevant franchise agreement to be null.
The Superior Court of Justice recently issued an important decision that not only demonstrates the level of sophistication reached by the superior courts in relation to arbitration, but also the prestige that arbitration has achieved in the country as a dispute resolution method which has a jurisdictional characteristic. The decision is critical for the development of arbitration in Brazil, since it reinforces the state courts' position in favour of arbitration.
December 14 2016 is already being considered 'D-day' with regard to arbitration and corporate law, as before the Brazilian judiciary's court recess, two important precedents were set on the subject. Questions still exist regarding whether these precedents are conflicting and only time and the likely debates following these decisions will be able to resolve them. However, one thing is certain: the judiciary's final decisions in 2016 are likely to cause intense discussions in 2017.
The Superior Court of Justice recently ruled that an arbitration clause providing that disputes between the contracting parties must be settled by "arbitration or mediation" was valid. In addition, the court held that the arbitration clause would be valid even if inserted into an agreement that, despite the presence of the arbitration clause, also allowed certain situations to be resolved by the courts.
The Superior Court of Justice recently declared an arbitration clause inserted into a franchise agreement null, as it did not meet the requirements set out under Article 4(2) of the Arbitration Act. The court ultimately ruled that although franchise agreements are common commercial contracts, they are still considered adhesion contracts. As such, any arbitration clause provided therein must comply with the formal requirements set out in the Arbitration Act.
The Mediation Act and the new Code of Civil Procedure were recently enacted in an effort to usher in a new era for litigation and arbitration in Brazil. Among the innovations being introduced in the civil courts, the new code asserts a strong policy favouring alternative dispute resolution in order to reduce the cost of litigation and empower litigants and market players to resolve disputes amicably.
The Sao Paulo Court of Appeals recently ruled that an arbitration clause inserted into a contract by adhesion was binding. This decision has important implications, as many arbitration proceedings involve standardised commercial contracts in which clauses have been unilaterally established by one party without eliminating the bargaining power of the accepting party.