Jump to Content Jump to Main Navigation
Signed in as:
Oxford Law Citator
Sign up for alerts

14 São Paulo

Fernando Eduardo Serec, Antonio Marzagão Barbuto Neto

From: Choice of Venue in International Arbitration

Edited By: Michael Ostrove, Claudia Salomon, Bette Shifman

Content type:
Book content
Product:
International Commercial Arbitration [ICMA]
Published in print:
09 January 2014
ISBN:
9780199655717

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Subject(s):
Arbitral rules — Recognition and enforcement — Arbitral tribunals — Awards — Place of arbitration

(p. 346) 14  São Paulo

14.1  Background

14.1.1  Overview of arbitration in Brazil

14.01  Over the last decade, the extent of foreign direct investment in Brazil has increased significantly, along with an increasing demand for arbitration and a change in mentality among legal practitioners and the judiciary.

14.02  While Brazil’s Arbitration Act has been in effect since 1996, the New York Convention on the Recognition and Enforcement of Foreign Awards was not ratified until 2002. Prior to the ratification of the New York Convention, arbitral awards issued abroad were submitted to a ‘double exequatur’ by both foreign and Brazilian courts in order to enjoy recognition and enforceability within Brazil. The late ratification of the New York Convention in essence obliged parties involved in an arbitration proceeding to comply with the rules set out in the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards. In effect, this meant that a party seeking to enforce an arbitral award in another country would have to prove that the award was ‘final’ in the country in which it was made, in addition to conforming to the burdensome requirement of obtaining an exequatur in the country where enforcement was (p. 347) sought. Currently, an arbitral award issued abroad is subject only to a single ‘homologation’ (ie recognition) by the Superior Court of Justice (STJ)1 in order to be enforceable.

14.03  This may help to explain why for many years arbitration in Brazil was viewed as a dubious and inefficient method of international dispute resolution. This was not helped by the perceived willingness of the Brazilian courts to ignore contractual arbitration agreements.

14.04  By the same token, however, it is now safe to say that arbitration would never have become a viable mechanism for the resolution of commercial disputes in Brazil if not for the decisive role played by the Brazilian courts and practitioners.

14.05  Starting with the Supreme Court’s 2001 landmark ruling on the constitutionality of the Arbitration Law in MBV Commercial and Export Management Establishment (‘MBV’) v Resil,2 and continuing with subsequent pro-arbitration decisions rendered by the STJ on the recognition of foreign awards, the Brazilian judiciary has paved the way for the widespread use of arbitration clauses, particularly in commercial transactions.

14.06  In another important case, the STJ reversed a decision rendered by the Rio de Janeiro Appellate Court preventing an award creditor from taking attachment measures (execution) directly before a court of first instance, even though the award had been rendered in Rio de Janeiro. The lower court, by a majority vote, dismissed enforcement proceedings (execução), citing the need for confirmation proceedings, because the arbitral award had been rendered by the ICC, an international institution headquartered in Paris.3 Although this decision was viewed by many as a lapse in correctly interpreting what constitutes a domestic arbitral award as opposed to an international award, the reversal at the STJ level ultimately evinces the proper guidance and direction of the Brazilian judiciary in terms of arbitration. According to the STJ, an arbitral award is deemed domestic as long it is rendered within Brazilian territory, even when the arbitrators decide on a conflict that has arisen from international trade. In other words, confirmation is not required for domestic awards—instead, they can be directly enforced by the court that would have had original jurisdiction to hear the case.

14.07  More recently, the STJ not only confirmed its pro-arbitration stance, but also strengthened the use of arbitration by public companies. One of the grounds used by the STJ to uphold an arbitral award rendered against a public company was that arbitration was closely connected to the constitutional principle of efficiency.4

(p. 348) 14.08  In short, Brazilian judges no longer view arbitration as a threat to their constitutional mission, but rather as an effective way to deliver justice pursuant to the parties’ autonomy to select their own decision-makers. Courts are increasingly aware of their importance to arbitration proceedings—before and after the appointment of arbitrators—in ensuring the proper enforcement of agreements to arbitrate.

14.09  Much of this progress can be attributed to the Brazilian arbitration community. The Brazilian Arbitration Committee (CBAr) has played a fundamental role in the development of arbitration in Brazil and continues to fulfil its mission to serve as a conduit between arbitration, the courts, and the business community. Quality scholarly works are being published by respected authors and rising stars, and law schools are finally offering courses specifically designed to train students in alternative means of dispute resolution.

14.1.2  Role of São Paulo

14.10  As the largest city and business hub in South America, São Paulo is where a great number of contracts are signed and therefore one of the leading regions for the settlement of disputes related to those contracts by international arbitration.5

14.11  Indeed, the city offers good logistical facilities for arbitration, as most of the major Brazilian arbitral institutions are located within the city’s business district. In addition, as a natural response to the demand for specialized judicial cooperation (before, during, and after the arbitral proceedings), São Paulo courts have educated and developed themselves to properly assist arbitral tribunals in both domestic and international arbitration.

Arbitration centres in São Paulo

14.12  Among the most commonly chosen institutions in Brazil are the Arbitration and Mediation Center of the Chamber of Commerce Brazil-Canada (CCBC), the São Paulo Chamber for Mediation and Arbitration (FIESP/CIESP), Conciliation and Arbitration Chamber of the Fundação Getúlio Vargas (FGV), the Corporate Chamber of Commerce in Brazil (CAMARB), the Arbitration and Mediation Center of the American Chamber of Commerce in São Paulo (AMCHAM), the Mediation and Arbitration Center of the Portuguese Chamber of Commerce in Brazil, and the Market Arbitration Center established by BOVESPA/BMF, Câmara de Arbitragem do Mercado (CAM)—all of which are located in the city of São Paulo.

14.13  The number of cases administered by these arbitral institutions has soared in recent years, and Brazil currently holds a prominent spot in the annual statistics published by the ICC. In 2011, 10 per cent of all cases submitted to the ICC involved Brazilian parties. The large inventory of cases currently administered by the major local arbitral institutions has led them to invest in qualified personnel to ensure proper and efficient proceedings, as well as to expand their panels of arbitrators.

(p. 349) 14.14  Certain institutions, such as the Brazil Arbitration and Mediation Center of the Chamber of the CCBC, and the FIESP/CIESP, have also recently changed and adapted their arbitration rules to reflect current international practice, contributing to turning São Paulo into one of the main arbitration and mediation venues in the world.

14.15  Additionally, arbitral centres, such as the Arbitration and Mediation Center of the CCBC, are currently going through a process of ‘internationalization’ by entering into partnerships and agreements with foreign arbitral institutions, such as the Centro de Arbitraje y Mediación of Santiago (Chile).

14.16  Foreign arbitral providers, such as the ICC, the ICDR, and the LCIA are also commonly chosen to administer arbitral proceedings in seats like São Paulo, although none currently have offices in the country.

Courts in São Paulo

14.17  Needless to say, the developments previously mentioned would be ineffective without the proper assistance of local courts. As mentioned earlier, the STJ’s attitude to arbitration has evolved significantly during the last few years. In São Paulo, this positive attitude has produced a string of pro-arbitration decisions by first instance judges, appellate bodies, and superior courts.

14.18  The São Paulo Appellate Court has demonstrated readiness and expertise with respect to a wide range of arbitration related matters, including the following.

Non-signatories and the extension of arbitration agreements

14.19  In Trelleborg v Anel,6 the São Paulo State Appellate Court extended the effect of an arbitration agreement to a non-signatory. Trelleborg involves an action to compel arbitration under article 7 of the Brazilian Arbitration Act,7 in which the Swedish parent company (Trelleborg Industri AB) claimed it was not a proper party to an arbitration involving an acquisition agreement executed by its Brazilian subsidiary. The Court upheld the court-supervised Terms of Reference (the by-product of any action to compel arbitration), which included Trelleborg Industri AB as a respondent in the arbitration, finding that the parent company’s ‘active participation’, ‘clear involvement’, and ‘interest in the outcome’ of the acquisition negotiations required its participation in the arbitral proceedings.

Enforceability of arbitration agreements

14.20  In CAOA Comércio Importação e Exportação Ltda v Renault SA,8 the São Paulo Appellate Court upheld a first instance judgment dismissing a lawsuit filed by CAOA against Renault before a civil court in São Paulo seeking damages in connection with the termination of CAOA’s distributorship of Renault vehicles in Brazil, because there was an arbitration agreement between the parties regarding the termination of their commercial relationship.

Production of evidence in aid of arbitration

14.21  In Motorola Industrial SP v Turner South America Ltda,9 the São Paulo Appellate Court granted a preliminary injunction for the (p. 350) production of evidence. The lower court had relied on the existence of an arbitration agreement to refuse the injunction, but the appellate court held that although the parties were bound by an arbitration agreement, courts have a duty to act in support of arbitration, pursuant to article 22(4) of the Brazilian Arbitration Act.

14.22  There have on rare occasions been decisions of the São Paulo Appellate Court that have been considered controversial by the arbitration community in Brazil, including Energia Sustentável do Brasil SA v SulAmerica Companhia Nacional de Seguros10 and Companhia do Metropolitano de São Paulo (‘Metro’) v Consorcio Via Amarela.11

14.23  In the first case, the São Paulo Appellate Court ordered a stay of an arbitration initiated in London under an insurance policy covering the construction of one of the world’s largest hydroelectric facilities. The Court held that the insurance companies were precluded from commencing arbitral proceedings in London until the Brazilian courts decided the merits of the insureds’ challenge to the validity of the arbitration clause.

14.24  In Metro v Consorcio Via Amarela—an interesting case involving the compelled production of evidence in the course of an arbitration—the same court ordered an ICC tribunal sitting in São Paulo to re-examine evidence for the purpose of determining the amount of compensation claimed by the plaintiff.

14.25  In spite of the drawbacks contained in the findings of the Court, these precedents seem to be in line with a pro-arbitration jurisprudence that is gradually being formed in Brazil, due in no small part to the fact that São Paulo tends to attract a greater caseload of complex disputes as compared to most venues in Brazil, and that these often involve international parties.

Specialized chamber of the appellate court for arbitration-related matters

14.26  The quality of arbitration jurisprudence is likely to improve even more with the recent creation of a specialized chamber of the São Paulo Appellate Court with exclusive jurisdiction over commercial law disputes (involving corporation law, unlawful competition, intellectual property, and licensing/franchise agreements), including arbitration-related litigation. The rationale for the creation of a specialized chamber was to streamline and enhance the decision-making process for commercial law in general and arbitration in particular.

14.27  Thus, as of August 2011, the Câmara Reservada de Direito Empresarial is the court of last resort (at the state level, ie the final instance in São Paulo) for actions in aid of arbitral proceedings, such as actions to compel arbitration, pre-arbitration injunctions, discovery orders, etc as well as actions to set aside or annul domestic arbitral awards.

14.28  Although this specialized chamber has been in place for a relatively short time, a review of its arbitration-related decisions to date already reveals a pro-arbitration stance.

14.1.3  Comparison with other regional or national venues

14.29  São Paulo is the quintessential business city, so it is no wonder most arbitration proceedings are held within its limits. No one denies that other capitals, particularly Rio de Janeiro, can (p. 351) be equally suited to host arbitrations, but São Paulo will remain, at least within the foreseeable future, as the preferred seat for national proceedings.

14.30  This is true, not only because of the assistance of local courts (as discussed), but also for reasons of geography and convenience: São Paulo is still home to most prominent Brazilian companies (including almost the entire financial industry), as well as the subsidiaries of multinationals; it is the destination of most international flights to Brazil; and is prolific in services and infrastructure normally associated with arbitration (hotels, conference centres, arbitral institutions, law firms, and other service providers).

14.2  Commencing the Arbitration

14.2.1  Notice and appointment of arbitrators

14.31  Most arbitral institutions12 in Brazil have established standard rules for initiating arbitral proceedings, which usually require the interested party to notify the secretariat of the arbitral institution of its intention to arbitrate, stating the nature of the dispute,13 the amount in dispute, and relevant information pertaining to the other party, and attaching a copy of the contract under which the parties agreed to arbitrate their dispute.14

14.32  The secretariat will then notify the other party of the request for arbitration and ask the parties to appoint the arbitrator(s) within a certain period of time. In an ad hoc arbitration, the Arbitration Act provides that if the parties have not agreed ahead of time on the procedure for initiating arbitral proceedings, the interested party shall notify the other party, either by mail or through any other means of communication, with confirmation of receipt, of its intention to commence arbitral proceedings.

14.33  Usually, unless the parties have agreed otherwise (for instance, by choosing to have a tribunal with a sole arbitrator), the arbitrators appointed by the parties will, in turn, choose a third arbitrator from the institution’s roster of arbitrators, who will preside over the arbitral tribunal. This also reflects the default appointment process outlined in article 13 of the Brazilian Arbitration Act.

14.34  Depending on the arbitral institution that the parties have chosen and its institutional rules, the appointment of arbitrators who are not listed in the institution’s roster of arbitrators will be subject to approval by the president of the arbitral institution. However, provided that the appointed arbitrator is a person with full legal capacity, impartial, and independent and, ultimately, trusted by the parties, this does not constitute a major concern among legal practitioners and parties conducting arbitral proceedings in Brazil, particularly since the (p. 352) practice of limiting appointments to the institution’s roster is gradually being abolished by arbitral institutions in Brazil.15 In addition, Brazilian law does not require arbitrators to be Brazilian nationals.

14.35  Pursuant to the Brazilian Arbitration Act,16 the arbitral tribunal is deemed constituted upon acceptance by the arbitrator of his nomination, in the case of a sole arbitrator, or by all, if there are several. However, prior to this acceptance, parties often find themselves trapped in a ‘jurisdictional limbo’ between being able to rely on a arbitral tribunal that has not yet been officially constituted, and resorting to a local court for support. This is particularly true where interim relief becomes necessary or when one of the parties is resisting the initiation of the arbitration.

14.36  Fortunately Brazilian law, institutional rules, and courts throughout Brazil (particularly those more experienced in dealing with issues involving arbitration) have developed and routinely apply effective mechanisms to deal with these situations.

14.2.2  Court assistance in compelling arbitration

14.37  Brazilian civil procedure rules require courts to dismiss any lawsuit brought by a party in violation of an agreement to arbitrate.17 In addition, the Brazilian Arbitration Act18 provides for a specific remedy in such cases, by means of a ‘motion to compel arbitration’ against the recalcitrant party.

14.38  In addition to serving as an effective tool to compel specific performance of arbitration agreements, the ‘motion to compel arbitration’ may also be used to give effect to defective or incomplete arbitration clauses. Thus, an interested party may resort to a local court in order to correct or supplement a defective arbitration clause.

14.39  São Paulo has a favourable track record involving motions to compel in which the court either dismissed the lawsuit brought in violation of an existing arbitration agreement between the parties, or entertained a motion to compel arbitration filed against a recalcitrant party. When faced with the so-called ‘full arbitration clause’, even if in its simplest form (language containing a commitment to arbitrate pursuant to the rules of a particular arbitral institution), courts in São Paulo will normally relinquish jurisdiction to arbitrators without further ado.19

(p. 353) 14.40  Recent disputes involving derivatives agreements containing arbitration clauses also illustrate the effective approach taken by São Paulo courts in enforcing specific performance of arbitration agreements. Derivatives disputes were the most visible by-product of the global financial turmoil that swept the world in September 2008. Many Brazilian exporters have disclosed significant financial losses arising from derivatives operations allegedly used to hedge against currency fluctuations. Many of these exporters filed lawsuits in São Paulo challenging the arbitration clauses inserted in the underlying agreements. Courts in São Paulo, however, reaffirmed the arbitrators’ exclusive jurisdiction to decide on the existence and validity of the derivatives agreement executed between the parties and the obligations thereunder (article 8 of the Brazilian Arbitration Act, which reflects the principle of competence-competence). As a result, in one case state judges enforced the arbitration clause and remitted the dispute to arbitration.20

14.41  It is worth noting that the action to compel arbitration under article 7 of the Brazilian Arbitration Act is only necessary in cases of ‘defective arbitration clauses’, ie where the parties themselves failed to agree on a self-executing procedure for triggering the arbitral process. In other words, a ‘full arbitration clause’ (providing for such mechanism, as it is the case in virtually all rules of administering organizations) allows for a party to initiate and pursue claims without seeking the assistance of a Brazilian court.

14.2.3  Pre-arbitration interim relief by courts

14.42  Brazilian arbitration law allows an arbitral tribunal to grant provisional remedies in certain situations and as it deems necessary to safeguard the effectiveness of a prospective award.21 As a basic matter, however, it is important to establish whether or not an arbitral tribunal has been effectively constituted, as this will determine whether parties can still resort to local courts in Brazil in order to obtain provisional measures.

14.43  If the arbitral tribunal has not yet been constituted, an interested party may request a local court22 to grant interim relief up to 30 days prior to and ‘in preparation’ of a main proceeding (in this case, an arbitral proceeding). The party seeking interim measures must prove that it has already taken the appropriate measures to commence arbitral proceedings, or do so within 30 days after filing the request. Should the interested party fail to initiate arbitration within that time any measures ordered will lose.

14.44  When filing a request for ‘preparatory’ interim relief, a party requests the judge that would otherwise have had original jurisdiction to hear the case in the absence of an arbitration agreement to grant an injunction (liminar) to order certain measures such as the production of evidence, the freezing of bank accounts, or restraining orders against the sale of property in dispute or even to prevent a shareholders’ meeting from taking place, until the arbitrators are able to exercise jurisdiction over the merits of the dispute.

(p. 354) 14.45  The merits of a decision on urgent matters rendered by a local court may be reviewed and revoked later by the arbitral tribunal, once it is constituted, as the arbitrators ultimately have jurisdiction to examine the merits by virtue of the arbitration agreement. Thus, according to a prevailing view among scholars in Brazil, ‘the majority Brazilian doctrine holds that after the institution of the arbitration, coercive or urgent measures may only be requested from the arbitral tribunal. Only if the party against which the decision is issued does not comply will the intervention of the state court be necessary’.23

14.46  The rationale behind this intertwining of functions is that, unlike a court, an arbitral tribunal lacks coercive powers, even though arbitrators in general enjoy equal footing with judicial courts in Brazil.24

14.47  Additionally, some arbitral institutions, such as the Arbitration Center of the BM&FBOVESPA (Brazilian Stock Exchange), have recently updated their rules25 to allow interested parties to obtain injunctive relief through the institution prior to the constitution of the arbitral tribunal, similar to the ‘emergency arbitrator’ mechanism under the new ICC Rules of Arbitration.26 Other arbitration entities, such as the Brazilian Center for Mediation and Arbitration, expressly provide for recourse to the courts in order to obtain interim relief prior to the constitution of the arbitral tribunal.27

14.48  In São Paulo, the courts are generally amenable to pre-arbitration injunctive relief (ie those precautionary measures that are designed to ‘hold the fort’ until the arbitral tribunal is constituted). Statistics published by the Brazilian Arbitration Committee (CBAr)28 show that São Paulo not only attracts the greatest number of cases involving pre-arbitration interim relief by courts (of 57 examined decisions, 37 were issued by the São Paulo Appellate Court), but that the decisions overall evince a pro-arbitration stance and that judges in that venue are well-educated in this area (of the 37 decisions issued by the São Paulo Appellate Court, 33 granted the interim relief sought while preserving the arbitral the jurisdiction of the arbitrators once they were properly appointed).

(p. 355) 14.3  During the Arbitration

14.3.1  Courts and challenges to arbitrators

14.49  Upon being nominated to an arbitral tribunal, arbitrators are required by law and institutional rules to submit a statement of independence or equivalent document disclosing any circumstances that might give rise to concerns about the existence of a potential conflict of interest affecting the arbitration. As addressed later, unresolved conflicts of interest can lead to the annulment of the award.

14.50  The grounds for challenging an arbitrator under the Brazilian Arbitration Act are essentially the same as ‘impediments’ and ‘suspicions’ for the disqualification of a judge under the Brazilian Code of Civil Procedure. Similarly to the disqualifying factors listed under the ‘red list’ of the IBA Guidelines on Conflicts of Interest,29 an impediment is a clear sign that the arbitrator is biased and may not act in the proceeding with an objective interpretation of the circumstances. ‘Suspicions’, on the other hand, offer a subjective and tentative analysis of the decision-maker’s state of mind and do not necessarily lead to the conclusion that an arbitrator is biased in favour of one of the parties or has an interest in the subject matter in dispute.

14.51  While there are only a few court decisions rendered in Brazil specifically relating to conflicts of interest of arbitrators, recent precedents indicate judges’ scepticism concerning challenges to the impartiality and independence of arbitrators, particularly when these issues are raised outside the framework established by the Arbitration Act30 and the respective arbitration rules.

14.52  The STJ recently held that challenges to the partiality/independence of arbitrators must be made within the timeline specified by the respective arbitration rules.31 Likewise, the São Paulo Appellate Court rejected an attempt to stay the effects of an arbitral award based on allegations of impartiality regarding one of the arbitrators.32

14.53  As far as institutional regulation is concerned, some of the major arbitration institutions in Brazil have prepared guidelines on arbitrators’ conflicts of interest. For example, the Center of Arbitration of the CCBC adopted in 2008 its Code of Ethics for arbitrators, which addresses issues of conflicts of interest, among other matters. The National Council for Mediation and Arbitration Institutions (CONIMA) also has its own Code of Ethics for arbitrators. Many institutions (such as CONIMA and the CCBC, among others) have set up special commissions to adjudicate challenges against arbitrators, thereby increasing the degree of predictability and satisfaction of the parties.

14.54  In Brazil, an arbitrator’s duty to disclose potential conflicts of interest is therefore perceived as an indispensable requirement. Unless waived by the parties (at their own discretion), a well-founded challenge is likely to result in the withdrawal of the designated arbitrator. When in doubt, an (p. 356) arbitrator is encouraged to disclose any facts capable of giving rise to a challenge. Similarly, parties should undertake reasonable investigation of any factors potentially compromising the arbitrator’s fitness to decide the matter.

14.3.2  Production of evidence—standards and the role of the courts

14.55  Once the arbitrators have accepted their nominations, as a rule, assistance by local courts will be limited to the implementation of orders or decisions issued by the arbitral tribunal in the event that parties do not comply voluntarily, since arbitrators lack coercive powers. A judge will usually refrain from examining the merits of the arbitrator’s deliberations and will only rarely, and on serious grounds (such as lack of an arbitration agreement or violation of public policy), refuse to give effectiveness to orders issued by the arbitral tribunal.

14.56  In effect, article 22 of the Brazilian Arbitration Act provides that ‘the arbitrator or the arbitral tribunal, at the request of the parties or on its own motion, may take depositions of the parties, hear witnesses, order expert examinations and any other evidence it may deem appropriate’, and further, that ‘the arbitrators may request to the judicial body that would have originally been competent to hear the case, to grant interim measures of protection’.33

14.57  While litigation in Brazil is inherently characterized by the inquisitorial system, in which courts play a fundamental role in the investigation of the facts, the same may not be said with respect to arbitral proceedings in Brazil. Attorneys unfamiliar with arbitral proceedings are often surprised by the adversarial nature of arbitration in Brazil and their expected active role in the proceedings with respect to the production of evidence and conduct of hearings. Nonetheless, as a result of the influence of Brazilian procedural rules, most commentators maintain that once the arbitral tribunal is duly constituted, the arbitrators may order the production of evidence on their own initiative, which is consistent with the wording of article 22 of the Act.

14.58  Most types of evidence are admitted in court in Brazil, including the testimony of witnesses domiciled abroad and expert evidence. Regardless of whether the production of evidence is directly ordered by the arbitral tribunal or by means of judicial intervention (when needed), however, it is important to note that, as a general rule in Brazil,34 parties will only be required to present evidence on which they intend to rely to prove their case and may introduce any lawfully obtained evidence during the evidentiary stage of the proceeding.

14.59  Thus, the standards of admissibility of evidence in Brazil are essentially two—the relevance of evidence to the facts, and the lawfulness of the means by which the evidence is obtained. With respect to the relevancy burden, evidence must be necessary and useful to the arbitrators in understanding and investigating the facts of the case. As for the lawfulness requirement, evidence will be admitted in the arbitral proceedings provided it is not considered contrary to Brazilian law.

14.60  These rules, which grant the decision-maker the authority and discretion to admit evidence, seem to be in line with the rules applied in other jurisdictions, as well with the IBA Rules on the Taking of Evidence (‘The Arbitral Tribunal shall determine the admissibility, relevance, (p. 357) materiality and weight of evidence’).35 Among the existing institutional rules in Brazil, many national arbitration providers have adhered to this ‘universal’ standard as well, including the CCBC36 and the FIESP/CIESP.37

14.61  There are a number of decisions by Brazilian courts confirming the autonomy of arbitrators and limiting judicial assistance to implementing the arbitral tribunal’s orders. Illustratively, in an interesting matter involving a conflict between partners of a law firm, the São Paulo Appellate Court upheld the lower court’s decision directing compliance with an arbitral tribunal’s order to produce documents.38

14.3.3  Referral to court—stay of arbitral proceedings

14.62  Article 25 of the Brazilian Arbitration Act requires arbitrators to defer to the courts whenever an issue involving non-disposable/negotiable rights arises in the course of arbitral proceedings. In other words, if the resolution of such a non-arbitrable issue is a condition precedent for the arbitral award, arbitrators must refer the matter to the respective court of competent jurisdiction, thereby suspending the entire arbitration.

14.63  That is the case, for example, when the respondent challenges the enforceability of a particular contract by invoking his/her lack of civil capacity to enter into agreements, a matter subject to the exclusive jurisdiction of the courts. In this scenario, proceedings will be suspended until a final and unappealable court decision is rendered on such a ‘prejudicial’ issue.

14.64  In practice, this type of stay of arbitral proceedings is rarely verified and courts, especially those located in São Paulo, are reluctant to interfere with the arbitrators’ ability to decide on their own jurisdiction (the competence-competence principle, as stated in article 8 of the Brazilian Arbitration Act).

14.3.4  Restrictions and requirements in arbitral proceedings

Arbitrability

14.65  As far as subjective arbitrability is concerned (the personal status of the parties involved in the arbitral proceedings and their standing to be parties), the Brazilian Arbitration Act expressly provides that parties must have full legal capacity in order to arbitrate a dispute.

14.66  As for objective arbitrability (which pertains to the susceptibility of the disputed subject matter to arbitration) under the Brazilian Arbitration Act, arbitration is permitted only in cases involving so-called ‘negotiable rights’ (direitos disponíveis). This means that certain (p. 358) matters may not be arbitrated even if the parties agree to arbitrate them: family matters, certain public law matters, and possibly, according to a recent decision of the Superior Labor Court, individual employment-related matters. However, most commercial matters may be arbitrated, including many (though not all) involving the government or a government-controlled entity as a party.

14.67  Additionally, arbitration clauses in consumer contracts or adhesion contracts are considered valid and effective only when the consumer or adhering party initiates the arbitration, or if the arbitration provision is in bold type or appears in a separate signed document.

Procedural requirements

14.68  Provided that the subject matter in dispute is arbitrable under Brazilian law and that parties have full legal capacity in law, there are generally very few restrictions on undertaking arbitral proceedings in Brazil. Overall, parties can freely determine in the arbitration agreement the procedure that will be applied. They can choose the arbitration rules of an institution or entity, establish the rules that will govern the arbitration, or attribute to the arbitral tribunal the power to define the procedure.

14.69  Certain procedural rules and principles must nevertheless be observed throughout the proceedings, particularly ones that derive from the concept of due process, such as full defence and proper response, equal treatment of the parties, arbitrators’ impartiality, and independence.

Foreign practitioners

14.70  An arbitrator may be an ‘individual with legal capacity’ and the law does not impose any citizenship requirement or special qualification (eg licensed to practice law in Brazil).39 Therefore, arbitrators in both domestic and international proceedings may be foreigners and non-lawyers. Some arbitral institutions, such as the CCBC, have recently expanded their roster of arbitrators to include foreigners in the list.

14.71  As for attorneys, the Brazilian Arbitration Act does not prevent foreign practitioners from participating as counsel in arbitral proceedings. In fact, legal representation of parties in arbitral proceedings is not a requirement under the Brazilian Arbitration Act, although it would be a rare case in which the parties chose not to be represented by counsel.

Hearings and meetings abroad

14.72  Hearings and procedural meetings of arbitrations with their seat in Brazil may also take place outside Brazil. Brazilian law does not prevent the arbitrator from choosing the most convenient place to carry out the hearings and procedural meetings. This will not affect the choice of the seat of arbitration.

14.73  Only with respect to arbitral awards does the Brazilian Arbitration Law consider a foreign award as one rendered outside the national territory, as opposed to domestic awards, which are issued within Brazilian boundaries.

Language requirements

14.74  As a rule, arbitral proceedings may be conducted in any language, particularly since this falls within the autonomy of the parties, along with the choice of the institution, rules, (p. 359) deadlines, etc. In Brazil, language is not a mandatory requirement in arbitral proceedings. Similarly, none of the Brazilian arbitral institutions require parties to conduct proceedings in Portuguese or in any other language. In fact, the use of languages other than Portuguese is quite common in arbitrations taking place in Brazil, particularly when one of the parties comes from a non-Portuguese speaking country.

14.75  It must be noted, however, that the 2004 Public-Private Partnership Law and the 2005 Amendment to the Concessions Law, which authorize the arbitration of disputes between public entities and private parties arising from transactions executed with the federal government, require that the arbitration be conducted in Brazil and in Portuguese—which in practical terms would narrow the options of qualified foreign arbitrators.40

Foreign arbitral institutions

14.76  Foreign arbitral providers are permitted to operate in Brazil. Brazilian law does not provide any specific rules on the establishment of arbitral institutions in Brazil.41 As previously mentioned, institutions such as the ICC, ICDR, and LCIA are commonly chosen to administer arbitral proceedings in seats like São Paulo, although none currently have offices in Brazil.

14.4  The Award

14.4.1  Definition and status of an arbitral award

14.77  Arbitral awards issued within Brazilian territory (regardless of the nationality of the arbitral institution) are enforceable in Brazil in the same manner as final and non-appealable decisions rendered by a judicial court, and may therefore be challenged under very limited circumstances only.42

14.4.2  Mandatory formal requirements

14.78  For an arbitral award to be considered valid and effective, it must satisfy certain formal and substantive requirements.

14.79  Under Article 26 of the Brazilian Arbitration Act, an arbitral award must contain (a) a summary of the dispute and procedural history; (b) the reasons for the decision; (c) a decision as to the claims and any counterclaims; (d) the date and place of issuance of the arbitral award (seat); and (e) the signature of all arbitrators. An arbitral award that does not fulfil these requirements may be set aside.

Summary of the dispute and procedural history

14.80  The summary of the dispute must contain all claims of the parties, as well as the procedural steps that led to the decision.

14.81  Although such a summary is usually not mandatory in other jurisdictions, it is crucial in the Brazilian system, as it demonstrates that all evidence and arguments presented and raised by the parties were taken into consideration by the tribunal in rendering a final decision.

(p. 360) The reasons for the decision

14.82  Brazilian arbitration law requires that all grounds and reasons that led the arbitrators to their conclusions be clearly and logically expressed in the award. The main reason for this requirement is that the grounds for a decision are considered to be a matter of public policy in the Brazilian legal system, particularly in order to demonstrate that the decision was not arbitrary or biased.

Decision as to claims and counterclaims

14.83  An arbitral award must also contain an operative section addressing the conclusions of the tribunal, also referred to by Brazilian procedural law as the ‘dispositiv’, in which the arbitrators are required to indicate clearly whether they have granted or rejected the claimant’s claims and any counterclaims.

14.84  All claims submitted by the parties must be ruled on by the Arbitral Tribunal. It may not rule on matters beyond the scope of the arbitration agreement.

Date and place of signature

14.85  The indication of the date of signature of the arbitral award is important for several reasons, particularly in order to establish when the decision becomes res judicata among the parties, as well as to verify whether or not the arbitral tribunal complied with any time limits for the issuance of the award.

14.86  The place of signature is by far one of the most important formalities, as it determines where an award was issued and therefore whether it is domestic or foreign. Brazil has adopted the territorial criterion, whereby the place of issuance of the arbitral award is considered the seat of arbitration. This is particularly relevant for the purpose of enforcement. An award rendered in foreign venue will be considered a foreign award and therefore subject to recognition by the STJ, whereas an award rendered within Brazil can be enforced directly. Additionally, as a matter of lex arbitri, when the seat of arbitration is in Brazil, Brazilian arbitration law will apply on a subsidiary basis to any institutional rules chosen by the parties.

14.87  In order to facilitate and expedite the enforcement of an arbitral award in Brazil, parties often choose Brazil as the place of signature, particularly as this will avoid the need to apply to the STJ for recognition.

Signature of all arbitrators

14.88  An arbitral award must contain the signatures of all members of the arbitral tribunal. If an arbitrator cannot or will not sign the award, the chairman of the arbitral tribunal must certify this in the award in order to prevent it from being invalid.43 The arbitrator who dissents from the majority may, if he so wishes, state his vote separately.44

14.4.3  Mandatory substantive requirements

14.89  The Brazilian Arbitration Act establishes only one substantive requirement: that the arbitrators determine the responsibilities of the parties for the payment of costs and fees, as well as for any bad faith in litigation.45

(p. 361) 14.90  The costs incurred by the parties must be presented through documents to the arbitral tribunal prior to the issuance of the arbitral award. Most arbitral institutions in Brazil do not have specific rules regarding attorney’s fees and the recovery of costs and expenses. This provision of the Brazilian Arbitration Act will therefore apply complementarily to the rules of any institution.

14.91  It is important to note that there is a substantial difference between costs and attorney’s fees under Brazilian arbitration law. While costs relate to the conduct of the arbitral proceedings (including the arbitrators’ fees), legal representation is not an essential requirement under the Arbitration Act, and therefore the lack of a decision on attorneys’ fees will not affect the validity of an award.

14.92  When establishing the costs and expenses due in arbitrations under Brazilian law, arbitrators often fix legal fees as a percentage of the final award, ranging from 10 to 20 per cent, based on factors such as the nature of the subject in dispute and the amount of work involved. The rationale for establishing such a percentage range is greatly influenced by the Brazilian civil procedure rules on the payment of fees, which requires courts to apply a 10–20 per cent ratio over the amount attributed to the claim (ie the economic value of the dispute).46

14.5  After the Award

14.5.1  Request for clarification

14.93  Within five days of the issuance of the arbitral award, either party may request the arbitral tribunal to correct any errors in the award, to clarify any obscurity or inconsistency, or to decide on any omitted issue that should have been decided. The other party must be given notice of the request, and the tribunal must render its decision, in the form of an addendum to the award, within ten days.

14.5.2  Annulment/setting aside

14.94  Pursuant to the Brazilian Arbitration Act, an arbitral award rendered in Brazil47 may be annulled on very limited grounds only, and the request must be made within 90 days (p. 362) following the receipt of the award by the parties. Usually, the interested party will file for annulment of the award at the local court that would have had jurisdiction in the absence of an arbitration agreement between the parties. In any event, it is important to emphasize that Brazilian courts tend to be reluctant to grant a motion to vacate an arbitral award.

14.95  Under article 32 of the Brazilian Arbitration Law, an award rendered in Brazil may be set aside only where (a) the arbitration agreement is null and void; (b) the award was rendered by someone who could not serve as an arbitrator; (c) the award does not satisfy the requirements of article 26 of the Brazilian Arbitration Act (mandatory formal requirements for an arbitral award); (d) the award deals with matters outside the scope of the arbitration agreement; (e) the award does not resolve the entire dispute submitted to arbitration; (f) the award was procured by corruption, fraud, or graft; (g) the arbitral award was rendered after the time limit for rendering it had expired; or (h) the principles of due process of law, equality of the parties, impartiality of the arbitrator, or the arbitrator’s discretion to decide have been violated. With respect to the grounds set forth in points (b), (d), and (e), the dispute may be remitted to the same arbitral tribunal for the issuance of an amended award. As for the remaining grounds, the arbitration agreement will be deemed invalid and the parties are free to resort to the courts for resolution of the dispute.

14.96  The growth of arbitration in Brazil has also brought an increase in the number of motions to vacate (or annulment actions). While the courts in São Paulo exercise constraint in annulling arbitral awards, judgment debtors are relatively successful in obtaining injunctions to suspend the execution/enforcement of the award until a final decision is rendered on the merits of their motions to vacate.

14.97  A recent decision by the São Paulo Appellate Court illustrates this trend in annulment actions: arguing violation of due process and challenging the impartiality of an expert report, a construction company successfully enjoined the enforcement of a multi-million dollar arbitral award arising from an EPC48 agreement to build a hydroelectric power plant.49

Arbitration agreement is null and void

14.98  An arbitral award may be null and void when (a) the subject matter is non-arbitrable under Brazilian law; (b) the mandatory requirements for arbitration agreements, as set forth in article 10 of the Brazilian Arbitration Act,50 were not satisfied; (c) the parties lack legal capacity; and (d) there are defects in the parties’ consent to arbitration.51

Award rendered by someone who could not serve as arbitrator

14.99  As mentioned previously, arbitrators are required by law and institutional rules to submit a statement of independence or an equivalent document disclosing any circumstances that (p. 363) might give rise to concerns about the existence of a potential conflict of interest. Thus, an arbitral award issued by an arbitrator who failed to disclose any conflicts of interest may be annulled. Additionally, an award issued by a person who lacks specific qualifications agreed by the parties may also be set aside, but the Arbitration Act requires the party who intends to make this challenge to do so ‘at the first opportunity, after the initiation of the arbitration’.52

Award does not satisfy formal requirements of article 26

14.100  Article 26 of the Brazilian Arbitration Act sets forth the mandatory formal requirements for an arbitral award: (a) summary of the dispute and procedural history; (b) the reasons for the decision; (c) decision as to all claims and counterclaims; (d) date and place of issuance (seat); and (e) signatures of all arbitrators. Arbitral awards that fail to meet formal requirements may be set aside.

Award deals with matters outside the scope of the arbitration agreement

14.101  This ground refers to decisions rendered outside the scope of the arbitral tribunals’ jurisdiction (‘ultra petita’ awards) or in excess of the parties’ claims (‘extra petita’). In the former situation, the court will vacate the award and remit the case to the arbitrators for re-adjudication. In the latter case, the court can simply ‘trim off’ the excess, without the need to reconstitute the arbitral panel.

Award does not resolve the entire dispute submitted to arbitration

14.102  Similarly, an arbitral award that falls short of what the parties claimed in the arbitration may be subject to annulment. In this case, the arbitral tribunal will be ordered to supplement the award.

Award procured by passive corruption, fraud, or graft

14.103  This ground refers to situations of criminal misconduct by the arbitrators in the exercise of their mandates as arbitrators. The criminal acts are set out in the Brazilian Criminal Code.

Award rendered after time limit expired

14.104  In spite of this provision, the time limit for the issuance of an award will not usually constitute an issue capable of justifying the annulment of an award. Parties may, by agreement, fix a time limit within which the arbitrators must deliver the award. As a default rule, if no time limit is provided for by the parties, or in the applicable institutional rules, article 23 of the Brazilian Arbitration Act establishes a six-month period as of the commencement of the arbitration (ie the acceptance by the arbitrators of their appointment).

14.105  Many authors maintain that a party seeking to annul an award on this ground must notify the arbitral tribunal of its intention upon the expiration of the time limit. In practical terms, however, many arbitral institutions allow arbitrators to extend time limits by means of a procedural order.53

(p. 364) Violation of principles of due process, equality, impartiality, or arbitrator discretion

14.106  This ground refers to a clear and damaging violation of fundamental procedural principles, such as the denial of the right to respond to the opposing party’s allegations, unequal treatment of the parties, or flagrant partiality on the part of the arbitrators.

14.107  Occasionally, however, this ground is invoked frivolously by parties seeking to set aside an award, although Brazilian case law has proved to be particularly demanding with respect to standards of the burden of proof for the violation of said procedural principles.

14.108  The São Paulo Appellate Court has recently held that ‘courts should not interfere with the merits of the arbitral awards, but merely verify whether formal requirements have been properly observed by the arbitrators when deciding the case’.54 In this precedent, the appellate judges unanimously held that the judgment debtor was actually ‘dissatisfied with the [unfavorable] result of the arbitration’, rather than properly challenging the award under Article 32 of the Brazilian Arbitration Act. As a result, the annulment action was denied.

Annulment procedure

14.109  Following the issuance of an arbitral award, any of the parties may file for annulment within 90 days of the date on which the parties received notice of the arbitral tribunal’s decision.

14.110  At the outset of the annulment proceeding, a judge may give the parties the opportunity to settle the dispute, as is customary in any civil lawsuit. If a settlement is not reached (which is quite common), a request for annulment will follow the same procedure as for ordinary lawsuits, meaning that the lower court’s decision may be appealed and make its way up to the Brazilian high courts (the STJ for federal law matters; the STF for constitutional law matters). This can, unfortunately, add a substantial amount of time to the resolution of a dispute that was initially expected to end with the issuance of the arbitral award. Nevertheless, it is important to note that a request to set aside an arbitral award alone will not prevent the enforcement of the arbitral tribunal’s decision. This may be achieved only by seeking injunctive relief from the court to prevent the arbitral award from producing its effects, by demonstrating (a) the likelihood of success of the annulment request, and (b) that failure to suspend the effects of the arbitral award will lead to irreparable harm.55

Annulment statistics

14.111  According to a report prepared by the Brazilian Arbitration Committee,56 in its survey regarding the annulment of arbitral awards in Brazil between 2001 and 2008, of a total of 33 cases examined, 14 awards were set aside by state courts (only one by the São Paulo Appellate Court) and 19 annulment requests were denied. More importantly, however, only one decision (of the Espírito Santo Appellate Court) was considered by the Committee to be technically incorrect, making a total of 93 per cent of the annulment rulings correct.

(p. 365) 14.5.3  Opposing the enforcement of an arbitral award

14.112  Pursuant to Article 31 of the Brazilian Arbitration Act, an arbitral award will ‘produce as to the parties and their successors, the same effects as a judgment rendered by the court and, should it be condemnatory, it will constitute a valid document to commence an execution process’. This means that an arbitral award rendered within Brazil is considered as a judgment debt and may therefore be enforced in the same manner as a judgment rendered by a state court.

14.113  Article 475-N of the Brazilian Code of Civil Procedure lists the different types of judgment debts as follows: (a) judgments rendered by means of civil procedure recognizing the existence of an obligation to perform, not to perform, to deliver a thing, or to pay an amount; (b) criminal convictions no longer subject to appeals; (c) homologation judgments or conciliation or transactional agreements, irrespective of judicial examination of the subject matter; (d) arbitral awards; (e) extrajudicial agreements of any nature recognized by a court; (f) foreign judgments recognized by the Superior Court of Justice; and (g) deeds of distribution solely with respect to the administrator of an estate, heirs, and singular or universal successors.

14.114  As a last resort, during enforcement proceedings against a debtor that fails to comply voluntarily with the terms of the arbitral award, the debtor may raise certain defences which are significantly more strict than the grounds for annulment and limited to specific matters. Thus, article 475-L of the Brazilian Code of Civil Procedure provides a narrow list of conditions under which a judgment debt (impugnação) may be challenged:

  • •  a lack or nullity of service, in a case of default judgment;

  • •  unenforceability of the decision;

  • •  wrongful seizure or wrongful evaluation;

  • •  lack of standing;

  • •  the enforcement request exceeds the amount set out in the award; and

  • •  any impeditive, modifying, or extinctive cause of the obligation (eg payment, statute of limitations), provided such cause is subsequent to the relevant decision.

14.115  In any event, it is important to note that under Brazilian procedural law, a challenge by a party resisting enforcement will in no way stay or impede the successful party from taking measures to collect the amount awarded.

14.116  Additionally, if the defendant fails to perform the obligation set out in the arbitral award within the specified period, the court may impose a penalty of 10 per cent over the total amount owed, and property may be attached to an extent sufficient to secure the performance of the obligation. The attached amount is then made available to the court. This ‘obligation’ corresponds to a liquidated judicial debt (ie what was officially awarded to the successful party by the court) and is fully enforceable as of the moment the judgment is rendered.

14.6  Conclusion

14.117  São Paulo is regarded as Brazil’s locomotive, and while other regions of the country have experienced significant development in the past decade, São Paulo maintains its status as Brazil’s leading centre for business and financial transactions.

(p. 366) 14.118  This business-oriented culture continues to be the perfect breeding ground for arbitration; from the creation of Brazil’s first arbitration center (the CCBC in 1979), to the consolidation of an ‘arbitration culture’ by the relentless work of the local arbitration community, São Paulo remains Brazil’s preferred venue for arbitral proceedings.

14.119  Finally, there is the pivotal role played by the local courts, whose decisions represent the most compelling evidence that São Paulo is comparable to other major international arbitration venues.

Footnotes:

1  The Brazilian Supreme Court (STF) and Superior Court of Justice (STJ) are the two highest courts in Brazil. In essence, the difference between the these courts is that the latter is competent to decide cases not related to constitutional matters, while the former solely decides issues pertaining to the Brazilian Federal Constitution. Prior to Constitutional Amendment no 45, of 8 December 2004 (the ‘Reform of the Judiciary’), the recognition and enforceability of a foreign arbitral award was granted by the Brazilian Supreme Court. The Amendment in effect transferred such attribution exclusively to the Superior Court of Justice. As a practical result of this transition, the Superior Court of Justice is in a better condition to respond to the number of filed requests for recognition (or ‘homologation’), as it is composed of 33 justices, whereas the Supreme Court only 11 justices.

2  This case relates to a dispute between two private companies, in which the enforcement of a foreign award issued in Spain was sought in Brazil. The conflict arose out of a disagreement with respect to the terms of a commercial representation contract between the representative (Spanish party) and its principal (Brazilian party). Among the provisions in the commercial contract, the parties had agreed to arbitrate disputes arising out of the contract. The Supreme Court upheld the constitutionality of arbitration agreements.

3  Interlocutory Appeal no 0062827-33.2009.8.19.0000 Petromec Inc v Nuovo Pignone SPA, Tribunal de Justiça do Estado do Rio de Janeiro (27 February 2010), available at <http://www.tjrj.jus.br>.

4  Special Appeal no 904.813/PR, Companhia Paranaense de Gás—Compagás v Consórcio Carioca—Passarelli, Superior Court of Justice (20 October 2011).

5  Established in August 2007, the CBAr has developed extensive research consisting of an in-depth analysis of every judicial decision on issues pertaining to arbitral proceedings issued in Brazil since the enactment of the Arbitration Act; see D Monteiro and G Ettore Nanni, ‘Second Stage of the Research on “Arbitration and the Judiciary” Theme Report: Validity, Efficiency and Existence of Arbitration Agreement’(2010) Academic-Scientific Institutional Partnership São Paulo Law School of Fundação Getulio Vargas (DIREITO GV) Brazilian Arbitration Committee (CBAr) Research Paper 54, available at <http://bibliotecadigital.fgv.br/dspace/bitstream/handle/10438/6576/working%20paper%2054.pdf?sequence=5>, also published in (2011) Revista Brasileira de Arbitragem (Special Edition) 1. According to the Committee’s report, São Paulo attracts approximately 30% of all arbitration-related lawsuits in Brazil.

6  Trelleborg v Anel Appeal no 267.450.4/6-00, 7th Private Chamber of São Paulo Court of Appeals (24 May 2006).

7  Brazilian Arbitration Act 1996 (BAA 1996).

8  Comércio Importação e Exportação Ltda v Renault SA Appeal no 1.117.830-0/7, 36 Civil Chamber of São Paulo, Court of Appeals (26 February 2008).

9  Motorola Industrial SP v Turner South America Ltda Civil Appeal no 494.408-4/6, São Paulo,Court of Appeals (28 June 2007).

10  Energia Sustentável do Brasil SA v SulAmerica Companhia Nacional de Seguros Interlocutory Appeal no. 0304979-49.2011.8.26.0000, Tribunal de Justiça do Estado do São Paulo (19 April 2012).

11  Companhia do Metropolitano de São Paulo (‘Metro’) v Consorcio Via Amarela Writ of Mandamus no 053.10.017261-2, São Paulo Court of Appeals (7 June 2010).

12  For instance, under the CCBC Rules of Arbitration, s 5.1:

The party, in a separate document containing a compromise clause which establishes the Center’s competence to decide on contractual disputes by means of arbitration, shall notify the Center of its intention to arbitrate, declaring forthwith upon, the nature of the dispute, the amount involved and the name and relevant data of the other party, attaching a counterpart of the relevant contract.

13  The BAA 1996 allows ‘persons capable of contracting’ to ‘settle through arbitration disputes related to patrimonial rights over which they may dispose’. The act’s broad scope of arbitrability, however, excludes from the scope of arbitration issues that cannot be contracted away, such as criminal, antitrust, and patent matters.

14  In order to be valid, the arbitration agreement must be in writing and must be contained in the contract itself or in a separate document.

15  Under the new arbitration rules of the CCBC, in effect as of 2012, the presiding arbitrator is no longer required to be listed in the institution’s roster of arbitrators.

16  BAA 1996, art 19.

17  Brazilian Civil Procedure Code, art 267: ‘A lawsuit shall be dismissed without examination of the merits: ...VII—when parties have agreed to arbitrate the dispute’.

18  BAA 1996, art 7:

Where there is an arbitration clause but one of the parties shows resistance as to the commencement of arbitration, the interested party may request the court to summon the other party to appear in court so that the submission agreement (compromisso) may be signed; the judge shall designate a special hearing for this purpose...§ 7—The judge’s decision granting the motion shall be considered as the submission agreement (compromisso) itself.

19  See for instance Civil Appeal no 267.450.4/6-00 Anel Empreendimentos v Trelleborg, São Paulo Court of Appeals (24 May 2006); Civil Appeal no 208.671-4/2-00 Das Luiz Mangieri v Dirceu Alves Da Silva, São Paulo Court of Appeals (23 September 2004); Interlocutory Appeal no 505.721-4/7-00 José De Souza Cintra v Cervejaria Petrópolis, São Paulo Court of Appeal (24 May 2007); Civil Appeal no 263.009-4/5-00 Air Products Gases Industriais v AGF Brazsil Seguros, São Paulo Court of Appeals (12 December 2005).

20  See Interlocutory Appeal no 7.343.768-4, 13th Chamber of Private Law of São Paulo Court of Appeals (13 June 2009).

21  BAA 1996, art 22:

The arbitrator or the arbitral tribunal may take the parties’ deposition, hear witnesses and determine the production of expert and other evidence deemed necessary, either ex officio or at the parties’ request...§ 4—With the exception of the provisions of Paragraph 2, if coercive or injunctive orders become necessary, the arbitrators may request them from the State Court originallycompetent to decide the case.

22  Usually located in the venue in which the urgent measure is to be implemented.

23  JTP Muniz and ATP Basilio, Arbitration Law of Brazil: Practice and Procedure (Juris Publishing, 2006)127.

24  In accordance with BAA 1996, art 18: ‘An arbitrator acts as judge of fact and law and the award rendered shall not be subject to judicial review, appeal or ratification.’

25  The new BM&FBOVESPA Rules of the Market Arbitration Chamber, s 5.1:

Urgent Interim or Conservatory Measures before the Arbitration Tribunal has been constituted. If before the Arbitration Tribunal has been constituted a party deems urgent interim or conservatory measures necessary to prevent imminent harm or irreparable injury, the party shall submit a motion to this effect to the President of the Arbitration Chamber, who shall appoint a permanent member of the Arbitration Chamber to act as emergency arbitrator. The role of the emergency arbitrator is to take a decision regarding the motion for urgent interim or conservatory measures, which if granted shall remain in force until the Arbitration Tribunal decides upon the merits (‘Emergency Arbitrator’). The Emergency Arbitrator shall be appointed in accordance with Law 9307 (September 23, 1996), article 13, paragraph 6.

26  BAA 1996, art 29.

27  Rules of Arbitration of the Brazilian Center of Mediation and Arbitration, s 11:

Provisional Remedies, Coercitive or Anticipatory Remedies: 11.1—At the request of any of the parties or at its sole discretion, the Tribunal may take any provisional remedies, coercitive [sic] or anticipatory remedies, it deems necessary. 11.2—If it is urgent and the Tribunal has not yet been established, the parties can request provisional or coercitive [sic] remedies to the competent judicial authority. In this in case, the party shall immediately notify such request to the Center.

28  Monteiro and Nanni (n 5) 1.

29  Available at <http://www.ibanet.org>.

30  Pursuant to BAA 1996, art 20, those wishing to make challenges to the ‘disqualification of the arbitrator or arbitrators, as well the nullity, invalidity or inefficacy of the arbitration agreement, must do so at the first opportunity, after the initiation of the arbitration’.

31  SEC 4.837/EX YPFB Andina S/A v Univen Petroquímica Ltda, STJ Reporting Justice Francisco Falcão, Special Chamber (15 August 2012).

32  Interlocutory Appeal no 0025150-66.2012.8.26.0000, Tribunal de Justica São Paulo, 12th Private Law Chamber, Reporting Judge Tasso Duarte de Mello (30 May 2012).

33  BAA 1996, art 22, s 4.

34  Brazilian Civil Procedure Code, art 355 establishes that ‘a judge may order a party to produce documents or present exhibits in its possession’. Nevertheless, in spite of the broad scope of this rule, as an important counterweight, a party will not be compelled to produce unfavourable evidence under Brazilian law, unless required by law or court order (eg by virtue of a court order to allocate the burden to produce evidence to the opposing party).

35  IBA Rules on the Taking of Evidence, art 9.

36  The Rules of Arbitration of the CCBC, art 9.5 (2012) provides as follows:

The parties can submit all the evidences they deem convenient in order to instruct the proceedings and to enlighten the arbitrators. Yet, the parties shall present any other available evidences that any member of the Arbitration Tribunal may consider necessary for the understanding and settlement of the dispute. It is up [to] the Arbitration Tribunal to accept any evidence deemed as convenient, necessary or relevant.

37  The FIESP Rules of Arbitration, art 8.5 establishes that the:

Parties may submit all evidence as they deem useful to the understanding of the facts by the arbitrators, as well as any other available evidence requested by the arbitral tribunal, as may be the case. The arbitral tribunal shall decide whether to admit evidence deemed useful, necessary and pertinent to the dispute.

38  Interlocutory Appeal no 0526704.47.2010.8.26.0000 São Paulo Court of Appeals (16 March 2011).

39  BAA 1996, art 13.

40  Specific requirements as to the seat (Brazil) and language (Portuguese) are found in Law 11.079/2004, article 11(III) (PPP Law) and Law 9.987/1995, art 23A (Concessions Law).

41  BAA 1996, art 5.

42  Under BAA 1996, art 31, with reference to the parties and their successors, the arbitral award shall have the same effects as a judgment rendered by the court and, should it be condemnatory, it will constitute a valid document to commence an prosecution process.

43  BAA 1996, art 26.

44  BAA 1996, art 24, s 2.

45  Under BAA, art 27 ‘The arbitral award shall decide the responsibility of the parties regarding costs and expenses for the arbitration, as well as fees due to bad-faith conduct, as may be the case, following the provisions of the arbitration agreement, if any’ (emphasis added).

46  Brazilian Code of Civil Procedure, art 20. Two distinguished Brazilian authors state that:

For such reasons, a distinction must be drawn between attorney’s fees referred to in Article 27 of the Law 9.307/96—which are broadly recognized as indemnification in the international scenario,—and the recovery of expenses established as such under Art. 20 of the Brazilian Code of Civil Procedure. The former derives from the general principle of reimbursement of losses, covering expenses incurred by the prevailing party in pleas. In effect, these losses correspond to the expenses paid to cover the costs of legal representation in the dispute and, in international arbitration, are attributed to the prevailing party. In contrast, the recovery fees referred to in Art. 20 of the Brazilian Code of Civil Procedure arise out of the legislator’s choice to allow a judge to establish a percentage over the amount attributed to the case, regardless of whether expenses were in effect incurred by a party or of the existence of an attorney’s fee agreement.

See G Tepedino and JE Nunes Pinto, Notas sobre o ressarcimento de despesas com honorários de advogado em procedimentos arbitrais (Padma, 2008); and R Ferraz and J de Paiva Muniz, Arbitragem doméstica e internacional: estudos em homenagem ao. Prof. Theóphilo de Azeredo Santos (Forense, 2008) 194–5).

47  By contrast, an international arbitral award (issued outside the Brazilian territory) will not be vacated on these grounds. The grounds for refusal of recognition and enforcement provided in the New York Convention have been essentially reproduced in the last part of BAA 1996 (arts 38 and 39), and as such will apply for the purpose of setting aside a foreign award.

48  ‘Engineering, Procurement and Construction’, a common form of contracting arrangement within the construction industry.

49  Interlocutory Appeal no 01345527-69.2012.8.26.0000, 34th Chamber of Private Law São Paulo Court of Appeals, Reporter Cristina Zucchi (4 February 2013).

50  BAA 1996, art 10:

The arbitration agreement must mandatorily indicate: I—the name, profession, marital status and domicile of the parties; II—the name, profession and domicile of the arbitrator or arbitrators, or, if applicable, the institution to which parties have delegated the appointment of arbitrators; III—the subject matter of the arbitral proceedings; and IV—the place where the arbitral award shall be made.

51  BAA 1996, art 32.

52  BAA 1996, art 20.

53  For instance, the CCBC Rules of Arbitration provide as follows:

  1. 10.1.  The Arbitration Tribunal shall pronounce the award within a 20 (twenty) day period, which shall be counted: a) if no hearing occurred, from the end of the period mentioned in article 9.3; b) if an instruction hearing occurred, from the end of the period for the final allegations as set forth in article 9.16. 10.2. The period mentioned in the previous article can be extended up to 60 (sixty) days, at the discretion of the chairperson of the Arbitration Tribunal.

54  Appeal no 0039341-36.2010.8.26.0114, 6th Chamber of Private Law, Reporter Paulo Alcides (7 March 2013).

55  See Interlocutory Appeal no 0173883-71.2012.8.26.0000, Special Chamber of Business Law, Reporter Maia Cunha (30 October 2012), here, the São Paulo Appellate Court enjoined enforcement/execution of the arbitral award because the judgment-debtor made a compelling showing that he was denied basic procedural guarantees (due process) during the arbitration proceedings.

56  Monteiro and Nanni (n 5) 1.