1. Introduction.
The Brazilian Federal Constitution establishes the fundamental right of access to justice, understood as both the right of any citizen or legal entity to submit their disputes for resolution by the courts and to use the several means of dispute resolution that do not exclusively depend on the Judicial Branch, including arbitration proceedings and alternative means (also known as “adequate” or “integrated” means) of dispute resolution. Therefore, we conclude that Brazil is aligned with the most modern legislations in the world in this respect and adopts, for that purpose, a “multidoor system” for dispute resolution.
We note, in this regard, that both the resolution of disputes by third parties and the resolution of disputes by the parties themselves are valid means of dispute resolution under the Brazilian legislation
In the resolution of disputes by third parties, the resolution of disputes is transferred to an impartial third party, which shall provide a final and mandatory answer to the matter submitted to it for analysis. This occurs by means of the jurisdiction of the courts, which is present whenever one of the parties uses its right of action and accesses the Judicial Branch to resolve the litigation, by means of a decision rendered by an authority with coercive power (judge), or by means of arbitral jurisdiction, whenever the parties submit, pursuant to a prior agreement, to arbitration chambers or even to independent arbitrators, which usually have a high degree of expertise on the matter under discussion, to resolve the dispute.
In the resolution of disputes by the parties themselves, the decision is made by the parties themselves, without the imposition of a solution by a third party, such as arbitration chambers, independent arbitrators or the Judicial Branch. In general, it may be divided into three types, which are the negotiation, the conciliation and the mediation.
We should already state that no means of dispute resolution is better than the others, but there is actually the most adequate means for a given specific situation. Thus, each interested party should understand, with the assistance of its counsel, the nuances of the case and the cost-effectiveness involved, considering, among other issues, the time for resolution, the costs involved and the complexity of the matter under discussion, to elect the most appropriate means for that situation.
The parties are even instructed to mutually analyze and agree, whenever possible, on the most appropriate means of dispute resolution for that specific situation even before the litigation arises, such as, for example, in a business agreement that contemplates, since its formalization, the possibility of the creation of dispute boards for the internal resolution of more simple issues, and also elects the applicable jurisdiction in the event of a more significant dispute, which is usually the arbitration or the courts.
Now, we explain the main characteristics of the access to the Judicial Branch, with specific comments on the means that compose the Brazilian “multidoor” system for the resolution of disputes.
2. Access to the Judicial Branch.
In relation to the access to the Brazilian Judicial Branch, we will see, in the following items, that Brazil adopts the system of positive law, with indication of the implications of such system, as well as of the hierarchy of the rules, the division of the jurisdiction of the courts (competent jurisdiction), and the general rules relating to the procedural model and the respective procedure – from the beginning to the end – of a lawsuit, in order to have a broader understanding of the dispute resolution by means of the Brazilian Judicial Branch.
2.1. Positive law.
The Brazilian legal system originates from the Roman and Germanic civil law tradition of positive law (Civil Law), which differs from the Common Law of the countries that adopt the Anglo-Saxon system and from the tradition of the consuetudinary law (Customary Law). Therefore, its main characteristic is the use of written and published rules, which are documented in specific instruments, commonly codified by subjects, it being understood that all rules shall be consistent with the provisions set forth in the fundamental rule, which is, in the Brazilian case, the 1988 Federal Constitution.
In this respect, in relation to general or ordinary laws, the subjects are divided according to their themes (Civil, Civil Procedure, Penal, Criminal Procedure, Consumer, and others), and a compilation of rules is created, forming a Codex for each theme, which includes the respective main material rules, the forms of redress or penalties for failure to comply with a rule, in addition to the procedural rules. In addition, each subject may be regulated in a more specific manner, by means of the following types of law: Supplementary Laws, Delegated Laws, Provisional Measures, Legislative Decrees and Resolutions.
Even if it is possible to mention the prevalence of the written rules in relation to the case law in countries using the positive law system, such as Brazil, it is possible to note a contemporary trend to grant more relevance to court precedents, as a form of settling the understandings on a same subject, in order to improve implementation of the Principle of Legal Certainty, i.e., enabling the individuals to have early and reflexive knowledge of the direct consequences of their acts, by means of previous decisions on a similar situation.
In this respect, the courts are already required, pursuant to the applicable civil procedural law, to settle their case law and keep it stable, complete and consistent, and the judges and courts must observe and follow, within the scope of their decisions, certain qualified court precedents, such as, for example, Federal Supreme Court decisions involving concentrated control of constitutionality, repetitive theses and precedents approved by the Federal Supreme Court or by the Superior Court of Justice, in addition to guidance provided by the highest bodies of the lower Courts.
We note, in this respect, that such duty to observe the precedents does not mean that matters already decided cannot be reexamined from other perspective. However, the distinguishing or overruling mechanisms are clear and there are requirements for application thereof, we repeat, in order to guarantee the principle of legal certainty and of the persons subject to the jurisdiction themselves.
Therefore, it is clear that, in the Brazilian law, court decisions are always rendered upon application of the rule to the specific case under analysis and, differently from the Common Law, observance of the precedents is not mandatory in all cases, and they may serve, in these events, at least as a form of guidance for the decision, in order to prevent different understandings on the same matter.
2.2. Division of the Judicial Branch (Competent Jurisdiction).
The jurisdiction of the courts is exercised throughout the Brazilian territory and over all persons subject to the jurisdiction, which obviously requires a division of work among the bodies that compose the Judicial Branch, which is made based on different rules on jurisdiction for each body, as noted in the court organization rules.
To define the jurisdiction to try a given case, first it is necessary to confirm if the Brazilian Courts have jurisdiction, be it exclusive or concurrently with foreign courts. Thus, if the defendant is domiciled in the Brazilian territory, if the obligation shall be performed in Brazil, if the grounds relate to a fact or act performed in Brazil, among other events, the Brazilian courts will have jurisdiction over the case. The same occurs whenever the agreement that is the subject of the dispute contains a “choice of law clause” establishing that the Brazilian courts are the courts of competent jurisdiction to resolve the dispute.
Second, it is necessary to confirm if the Superposition Courts have jurisdiction for trial, i.e., if the Federal Supreme Court or the Superior Court of Justice have original jurisdiction to try the case or if the case falls under the jurisdiction of the Courts of General Jurisdiction, which involve: (i) the State Courts and (ii) the Federal Courts; or, also, of the Special Courts composed of (i) the Labor Courts; (ii) the Military Courts and (iii) the Electoral Courts.
In relation to the Courts of General Jurisdiction, the jurisdiction of the Federal Courts refer, in general, to actions involving assets or interests of the Federal Government, such as, for example, cases in which one of the parties is a foreign country or international organization; or which discuss international treaties; political crimes, human rights, and others. The jurisdiction of the State Courts, in turn, is subsidiary and defined by exclusion: it shall try all cases that do not fall under the jurisdiction of the Special Courts and of the Federal Courts. As a rule, contractual and/or business litigations are processed in the Courts of General Jurisdiction.
Third, it is necessary to confirm if the matter to be brought to court exceptionally falls under the original jurisdiction of the respective Appellate Court (Federal Regional Court or State Court of Appeals), i.e., of the 2nd level of jurisdiction of the respective Appellate Courts or if, following the general rule, it falls under the lower-court jurisdiction of the respective Appellate Court, on which occasion it is also necessary to define the competent territorial unit (venue), which, as a rule, is defined by the domicile of the Defendant.
In addition, with respect to the Small-Claims Courts, we note that both with respect to the democratization of access to the Judiciary and to the incentive to settlement, said body, which also has a division of jurisdictions (civil, criminal, federal and public treasury), operates as an instrument for the persons subject to the jurisdiction to seek resolution of the their daily disputes in a fast and efficient manner, free of charge. They try less complex cases involving lower amounts, in a speedier, more economic and effective manner, and they always encourage, even before the evidentiary stage, a conciliation between the parties.
2.3. Brazilian Civil Procedural Model.
The Procedural Model adopted in Brazil by the modern and contemporary Code of Civil Procedure in effect is considered a “cooperative” model, in which the proceedings are neither exclusively determined by the parties nor shall be asymmetrically conducted by the judge. The purpose thereof is to conduct all parties to the procedural relationship in a cooperative manner.
Therefore, the judge and the parties have clear responsibilities and actively participate, cooperating with one another, in the search for the outcome of the proceedings, which is the obtainment of a fair and effective decision on the merits, within a reasonable term.
Value is placed upon the adversary proceeding, which permits that the parties actively influence the formation of the judge’s conviction, and also upon the statement of reasons, it being understood that any decision that is not duly reasoned, i.e., any decision that does not demonstrate the reasons that led the judge to that decision, is deemed null.
Due to an International Treaty – Pact of San José, Costa Rica (American Convention on Human Rights), and also for historical reasons, the Brazilian legislation contemplates the guarantee of the two-tiered system, a principle of procedural law that ensures to all persons subject to the jurisdiction the reexamination of their proceedings by a higher level of jurisdiction, as better explained below.
2.4. Procedure
To bring a lawsuit in Brazil, except in the system of the small-claims courts, the party that wishes to submit its case to the Judicial Branch must appoint its counsel by means of a specific ad judicia power of attorney, which will grant the counsel powers to represent it in the Judicial Branch.
The document for entry in the Judicial Branch is the Complaint, in which the Plaintiff narrates its version of the facts, the grounds for its right, attaches the documentary evidence in its possession and includes its claims, informing the other proofs it wishes to produce.
If the requirements of the Complaint are met, the judge receives it and orders the service of process upon the adversary party, for it to present its defense, which may be presented in the form of an Answer, defense, and/or Counterclaim, in which it may include counterclaims, which shall be decided jointly with the claims already made by the Plaintiff. At this time, under penalty of preclusion, the Defendant shall submit all documentary evidence, as well as indicate the proofs it wishes to produce.
With both versions of the facts, the judge will be ready to prepare the case for trial, establishing the disputed issues and the undisputed issues (issues that have been admitted by both parties), and determining the proofs to be produced to eliminate the existing dispute.
In case it is possible to resolve the dispute without the production of further evidence, and if there is no procedural defect, the judge will be able to render summary judgment, deciding on the merits and resolving the dispute.
In case the production of new proofs is required, the judge will determine them, it being understood that the most common means are: the personal deposition of the parties; the exhibition of documents or things; the testimony of witnesses, the conduction of expert evidence and the judicial inspection. If there is no further evidence to be produced, the judge will try the case on the merits, after granting the parties an opportunity to pronounce.
This decision is rendered by a lower-court judge and it is called a ‘judgment’. In attention to the principle of the two-tiered system, it is possible to bring an appeal claiming reexamination of all facts and proofs by the higher court, in a trial by a panel of three judges, with render their decision and their statement of reasons in an ‘appellate decision’ containing their written vote.
There is a provision on new, more restricted appeals, such as, for example, Special Appeal to the Superior Court of Justice, for discussions on violations of federal law, and Extraordinary Appeal to the Federal Supreme Court, for cases of violation of the Brazilian Federal Constitution, provided the requirements for each appeal are met.
Upon lapse of the procedural terms for appeal, and in case none of the parties has appealed, the final and unappealable resolution of the dispute is certified, thus forming the substantive res judicata, i.e., as a rule, the decision becomes unchangeable, preventing a new discussion on the same dispute. As from that time, the winning party may commence the phase of execution of the judgment and satisfaction of the claim.
We note that the civil procedural law in effect in Brazil grants the parties more autonomy in relation to the procedure, contemplating the possibility to carry out procedural legal transactions, by means of which it is possible to change the procedure, agreeing, for example, on the procedural terms, on which party shall produce evidence, on the procedural powers and duties of the parties, among other issues, it being understood, however, that the judge shall control the legality of these provisions, according to the legal system. This power created by the code of civil procedure in effect creates a general clause on procedural negotiation, the subject matter of which are the procedural situations of the parties and the procedure, modernizing the proceedings and granting it more effectiveness.
Based on these brief notes on the access to the Brazilian Judicial Branch, we note that the Judiciary may be a good means for dispute resolution, for example, since its organization is clear, its costs are much lower than those of an arbitration, for example, and its technical body is very competent, sometimes divided by expertise, which facilitates and improves the quality of the decisions rendered.
3. Alternative means of resolution of disputes.
Irrespective of the sufficiency of the jurisdiction for resolution of disputes that arise in society, the need to use alternative means to resolve them – or even avoid them – is more and more present, considering the slow speed that haunts the Brazilian judiciary system and the dissatisfaction of the parties with the bureaucratization of the jurisdictional path.
In this respect, it is currently possible to observe, in Brazil, the presence of various alternative means of resolution of disputes being designed and taking shape, among which we note the following: (i) Arbitration; (ii) Resolution of the Dispute by the Parties Themselves (mediation and settlement); and (iii) the Dispute Board, which, as seen below, are gaining more and more space in the domestic scenario, especially after enactment of the Mediation Law (Law No. 13.140/2015), as amended by Resolution No. 326/20 and Resolution 125 of the National Council of Justice (CNJ).
3.1. Arbitration
Arbitration is characterized as a means of resolution of disputes by third parties and, differently from the judicial means, it is private. This means of resolution of disputes includes the figure of the arbitrator (one or more persons), who is the impartial third party freely chosen by the parties or designated by the arbitration chambers responsible for processing the arbitration, whose power and authority is granted by the parties themselves to render the decision in accordance with the provisions of the procedural law and of the substantive law also previously chosen by the parties, in the arbitration clause existing in an agreement or due to an arbitration clause executed after institution of the litigation. Even though they are not mandatory, sometimes the arbitration chambers play a very important role in the procedural conduction of the arbitration, granting security and righteousness to the procedure.
In Brazil, the execution of the arbitral award, which, we note, has the same status as judgments rendered by the courts, is carried out in the Judicial Branch – which holds the monopoly of coercive measures to cause compliance with the decision. Such execution shall be made by means of enforcement proceedings, under penalty of expropriation of assets, among others, in the event of default, as in the cases of decisions rendered by the Judiciary itself.
For cases resulting from complex corporate disputes, the arbitration is a very interesting means of resolution, be it in view of the expertise of the arbitrations in that matter under discussion, or in view of the swiftness of the procedure and decision or due to the confidentiality, although its costs are usually very high if compared to the other means of dispute resolution.
The Arbitration Law (Law No. 12.129/2015) was recently modernized by means of law No. 13.129/2015, which brought various improvements with respect to the Government; interruption of the limitation period; and by clearly providing on the possibility that the arbitrators render partial awards. These issues were previously controversial and were settled by means of modernization of the law.
3.2. Resolution of disputes by the parties themselves
With respect to the other means of resolution of disputes, there is also, in Brazil, the possibility of resolution of disputes by the parties themselves, an alternative means of resolution of disputes that gained momentum with the amendment made by Resolution No. 326/20 and Resolution 125 of the CNJ, which institutes the “National Judiciary Policy on the Adequate Treatment of Conflicts of Interest”, ensuring the offer of other mechanisms for the resolution of disputes, especially the so-called consensual means, also instituting the creation of the Judiciary Centers of Resolution of Disputes and Citizenship (Centers or CEJUSCs), which were responsible for conducting or management the settlement and mediation sessions and hearings that are incumbent upon settlors and mediators who act in the Courts.
Therefore, it is necessary to say that the resolution of disputes by the parties themselves may be divided into three types, which are, (i) the negotiation: whenever the parties consensually reach a solution, without the interference of third parties; (ii) the conciliation: whenever an impartial third party is present, interfering with relevant facts and information on the litigation, seeking the best form of resolving the dispute; and (iii) the mediation: whenever the dispute is voluntarily resolved in the presence of an impartial third party, who will assist in maintaining the relationship between the parties and the dialogue, leaving the parties to find the best resolution for the dispute themselves. Be it in the event of conciliation, be it in the event of mediation, we note that the impartial third party shall operate as a tool to enable the debates and the resolution, without any coercive or decision-making duty, and these modalities differ only with respect to the degree of interference of the third party.
On the one part, the negotiation is seen as an excellent means of social pacification, because the case neither requires the intervention of third parties nor a mandatory decision, as occurs in the jurisdiction of the courts or in the arbitration. Therefore, it values the autonomy of will of the parties in the settlement and resolution of the disputes, without the intervention of any third party.
On the other hand, the conciliation or mediation requires the presence of an impartial third party to intermediate the dispute. In the conciliation, which may occur out of court or even during a lawsuit, this third party, the conciliator, plays an active and participative role, acting as a facilitator. The conciliator may suggest the terms of a possible settlement, but has no decision-making power.
In the event of judicial conciliation, the Brazilian Code of Civil Procedure in effect sets forth that the conduction of a prior conciliation hearing is mandatory after receipt of the complaint by the judge, but before filing of the defense by the Defendant. Said hearing shall only not be mandatory in case both parties pronounce not to be interested in the conduction thereof or whenever the right under discussion does not permit resolution of the dispute by the parties themselves. A similar procedure is already adopted by the Small-Claims Court Law for more than twenty (20) years. However, in those courts, the preliminary hearing is always mandatory before submission of the defense by the Defendant.
There is also the mediation, which seeks to resolve the conflict of the parties in a broader manner. In this case, the impartial third party is the mediator. Although mediators also do not have decision-making power, differently from conciliators, they never interfere in the terms of the settlement, they do not take any initiative to propose the settlement and they do not make any comment on the merits of the discussion, leaving the parties free to resolve the dispute without their direct intervention. The mediators work as moderators, and their goal is to facilitate the communication of the parties, leading them to an understanding on the disputed matter. The mediation is governed by a specific law and, as the conciliation, it may occur in or out of court. The judicial mediation is controversial, considering that when it is carried out within the scope of the judiciary, we do not see two of the basic principles of the institution: the voluntary nature (considering the provision on mandatory conduction thereof) and the confidentiality – considering the fact that the case records are processed with public access.
It is currently possible to observe, within the scope of corporate conflicts, great progress in conflict resolution with regard to Recommendation No. 71/2020 of the CNJ, which recommended to the Courts the implementation of Corporate Judicial Centers for Conflict Resolution and Citizenship (Corporate CEJUSC), for the purpose of adequately processing conflicts involving corporate matters of any type and amount, in the pre-procedural phase or in claims filed therein.
In this same respect, we have also noted significant attention within the scope of resolution of corporate disputes by the parties themselves with respect to the amendment to the judicial reorganization and bankruptcy law by law No. 14.112/2020, which encouraged and provided on the applicability of techniques for consensual resolution of disputes in corporate insolvency, including in the phases that precede the judicial reorganization proceedings.
3.3. Dispute Board Resolution.
Finally, it is important to note the so-called dispute board resolution (or committee on the prevention and resolution of disputes), which are an alternative mechanism for the resolution of disputes that consists of forming a committee composed of – impartial – experts who will monitor a long-term project from the beginning to the end, seeking to prevent and assist in the resolution of disputes that may arise during the diffusion of a given project – usually civil engineering works.
The dispute board is the most recent modality of dispute resolution, and it may be considered an alternative means, that in addition to resolving a given dispute, seeks exactly to prevent disputes and, lastly, even facilitate the trial of judicial or arbitral proceedings that may be brought. The dispute board members may, depending on the concrete case and of the powers granted to them by the parties, issue recommendations or make decisions.
This modality gives strength to contracts, ensuring that the economic activity represented by the contractual instrument is duly implemented, always considering its purpose. In Brazil, an example of application of this modality of dispute resolution was the action of the “Dispute Board” in the construction agreements of Line 4 Yellow of the São Paulo subway.
And in this respect, in the I Conference on the “Prevention and Extrajudicial Resolution of Disputes” carried out by the Federal Council of Justice, precedent No. 49 was published, which provides as follows: “The Dispute Boards are a consensual method of dispute resolution, in the form provided in art. 3, paragraph 3 of the Brazilian Code of Civil Procedure”, and it is deemed the 1st observance of the modality within the national legislative scope.
On the other hand, in Brazil, this modality of dispute resolution was recently acknowledged by the new bidding law (Law No. 14.133/2021), which admitted, in art. 151, the use of alternative means to prevent and resolve disputes in administrative agreements, expressly mentioning the dispute resolution board, which guarantees further application of this alternative modality.
We also note that the Regulation of the International Chamber of Commerce – ICC on dispute boards contemplates three different modalities of dispute board: (i) dispute review boards (DRBs): which issue non-binding recommendations; (ii) dispute adjudication boards (DABs): which are formed to resolve disputes originating from the agreement, which decision is mandatory to the parties, and (iii) combined dispute boards (CDBs), which committees have characteristics of both types.
Finally, it is also important to note, in the current Brazilian context, the existence of Online Tools for the Resolution of Disputes (Online Dispute Resolution – ODR). These mechanisms have been developed by large companies of the private sector that, due to the very nature of the business, normally linked to large-scale consumer markets, suffer with the very high number of disputes and lawsuits. The operational cost to manage such liabilities severely affects the provisions and results of the companies.
Due to this scenario and to the incapacity of the existing methods of dispute resolution to absorb them with low cost and facilitated operation, since they require the already mentioned means of human intervention in a large number of disputes, they commenced to invest in the creation of these tools, which are customized for the specific needs and characteristics of the corporations.
By combining artificial intelligence and data science, these tools combine rules to manage these liabilities with negotiation and mediation techniques, all in a software format, rendering the management of the volume of complaints and disputes much less burdensome and the resolution thereof much faster, since the information flow is managed by the online platform, leaving for human intervention a small number of cases that escape previously determined filters, generating a large number of settlements, minimizing costs and ensuring the satisfaction of those involved.
4. Choice of the Most Appropriate Means of Resolution of Disputes
After explaining all means of resolution of disputes listed above, there is the doubt: how to choose the most appropriate means?
To resolve this issue, we should have in mind an analysis of the specific case and which characteristics of the models better serve the fundamental interests of the parties, which shall always be preserved and observed.
Is it essential that the means of dispute resolution be fast? Be economical? Be confidential? Preserve the business relationship? Require technical analysis by an expert? Has broad means of defense/appeals? Has coercive or provisory measures? Has binding and final decisions?
For example, the conciliation method shall be preferably chosen in those cases in which there was no previous relationship between the parties. Thus, the conciliation is more appropriate for conflicts of interest that do not involve a continued relationship between the parties, which commenced a relationship exactly due to the litigation, as occurs in a car crash. Or also for those parties that have a specific previous relationship, which originated the litigation, as occurs in an agreement executed for the purchase of a product or provision of a service.
The mediation, in turn, should be preferably chosen whenever there was a previous relationship between the parties. In these cases, the parties already had some continued liaison before the lawsuit, which represents a continued relationship between them, rather than instantaneous. Therefore, the use thereof is more advised in family law, neighborhood and corporate cases.
In cases involving large projects, in turn, especially in the civil construction industry and which involve very high amounts, the creation of dispute prevention and resolution is recommended to avoid the chances of possible conflicts.
Companies that provide services or supply products with large operations in the market and which establish numerous commercial relationships with their consumers, in turn, should analyze the use of online tools for dispute resolution, since it is a swift and economic means, with more probability of preservation of the corporate relationship, due to prompt service to the client, without the need to seek judicial relief for less complex cases.
If the company wishes to seek a method or the resolution of complex cases, which are confidential and highly specific, by a third party with know how, in a swift manner, without procedural formalities, without the possibility, strictly speaking, of reversing the decision by means of appeals, and without necessary caring for the costs of the proceedings, the arbitration is the most appropriate means.
Finally, in case the primary interest of the private institution is the availability of resources to reverse an unfavorable decision, the possibility of obtaining provisional measures advancing the outcome of the final decision or coercive measures for compliance with decisions, the Judicial Branch is the best option.
Autores: João Paulo Balthazar Leite
Schalch Sociedade de Advogados
Avenida Faria Lima, 4509, Itaim Bibi
Postal Code: 04538-133 – São Paulo, State of São Paulo.
Phone: (11) 3889-8996
E-mail: [email protected]
Internet: www.ssaadv.com.br