Arbitration in Brazil
Brazil is one of the most litigious countries in the world, making the adoption of alternative dispute resolution methods increasingly necessary.
Arbitration in Brazil, as an alternative form of conflict resolution, is governed by Law No. 9,307/1996 (“Arbitration Law”), which reflects the principles of the UNCITRAL Model Law (United Nations Commission on International Trade Law). Subsequently, the Arbitration Law underwent substantial reform, promoted by Law No. 13,129/2015, to improve its application. Concurrently, Brazil´s new Code of Civil Procedure enacted in Brazil (Law No. 13,105/2015) recognized and permitted the use of arbitration.
Since the enactment of the Arbitration Law, its use has grown steadily in Brazil due to the significant delays in resolving disputes in the Judiciary, particularly due to judges´ lack of specialization and the public nature of judicial proceedings, except in cases where confidentiality is granted.
The Arbitration Law is a sophisticated statute that incorporates modern principles and guarantees for litigants. It provides an efficient mechanism for dispute resolution, allowing parties to select impartial and independent arbitrators, particularly those with technical expertise, while ensuring confidentiality, speed, and informality.
Its primary feature is the partie´s autonomy to appoint an impartial third party with the prerogatives of a judge to resolve a specific dispute.
The arbitrator’s award carries the same legal weight as a state judge´s ruling and is final and unappealable with respect to the merits.
Arbitration is an effective mechanism for resolving international trade disputes involving companies, suppliers, and consumers from different countries.
As arbitration gained recognition and its awards were widely upheld by the courts, parties gained confidence to include arbitration clauses in the contracts. They were encouraged by faster decisions, arbitrator´s expertise in the relevant matters and the confidentiality of awards (except in cases involving Public Administration or publicly traded companies).
Over the years, several Arbitration Chambers have gained prominence in Brazil, including the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (CAM-CCBC), ICC Brazil, the CIESP/FIESP Conciliation, Mediation, and Arbitration Chamber, and also the FGV Mediation and Arbitration Chamber, among others, all duly approved and accredited by the CCEE Administrative Council.
Certain disputes must be submitted to specialized Chambers, such as the Arbitration Chamber of the Market, whose Regulations indiscriminately obligate the following participants from the Special Listing Segments of BOVESPA: I) BOVESPA; II) Companies; III) Controllers; IV) Administrators; V) members of the Fiscal Council; and VI) Investors, as agreed according to Item 5.2.2 of the Regulations.
In the electric sector, disputes among agents of the Electric Energy Commercialization Chamber (“CCEE”), must be resolved through arbitration, as mandated by Law No. 10,848/2004. Since the authorization of multiple Arbitration Chambers for resolving divergences, they must be accredited by the CCEE.
A significant development in Brazilian arbitration is the ability to include arbitration clauses in contracts entered into with Public Administration. Such arbitrations must comply with the constitutional principle of publicity under Article 37 of the Federal Constitution) and cannot be decided based on equity due to the principle of legality, and must be conducted in Brazil.
Over the years, arbitration has extpanded to include smaller disputes, such as those involving lease agreements, consumer relations, and labor claims, often akin to the cases of Small Claims in the Courts.
Since 2022, major arbitration chambers in the country, such as ICC and CAM-CCBC, have updated their regulations to permit electronic written communications for arbitration procedures (unless agreed otherwise by the parties, in the case of CAM-CCBC). They also allow hearings to be conducted remotely.
Thus, it is evident that the use of Arbitration in Brazil has grown significantly over the years, and there is no doubt that this evolution is due not only to the recognition of the institution by the Judiciary but also to the excellent preparation of the main Chambers and Arbitration Centers in the country. In cases of foreign arbitration awards (issued outside Brazilian territory), it is important to highlight that Brazil has been a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) for over twenty years, according to Decree No. 4,311, dated July 23, 2002.
Recently, the Brazilian National Congress has been discussing bills aimed at expanding the matters that can be subject to arbitration.
For instance, the Chamber of Deputies is currently considering Bill 2,486/22, which seeks to regulate arbitration in tax and customs matters, with the objective of preventing and resolving conflicts between the Brazilian tax authorities and taxpayers. The proposal allows for arbitration at any stage of public credit, with the arbitrator’s decision not subject to appeal or judicial ratification.
There is also ongoing discussion regarding Bill 4,081/21, which addresses the possibility for condominium associations to provide for the resolution of internal disputes through arbitration.
Despite its growth, arbitration faces challenges, such as its inability to address disputes involving inalienable rights, among other limitations.
Authors: Maria Alice Deucher e Ângelo Vieira
De Luca, Derenusson, Schuttoff & Advogados
Rua James Joule, 92 – 6th floor – Brooklin
04576-080 – São Paulo – SP
Tel.: +55 (11) 3040 4040