1. Introduction Notes.
Access to justice is a fundamental right provided for in the Federal Constitution of Brazil, and it can be understood as the right of any citizen or legal entity to submit the resolution of their disputes to judicial protection (“the right to have your day in Court”), as well as the right to use various means of dispute resolution that do not depend exclusively on the Judiciary Branch. Unlike what was defended in the past, state resolution of controversies is no longer exclusive; nowadays, there is a tendency to identify the most appropriate means for the dispute at hand.
Therefore, the law currently provides a multi-door dispute resolution system, which can be understood as the coexistence of various means of resolving disputes that citizens may use. Besides the Judiciary Branch, it is possible to resort to alternative means, which generally include arbitration, mediation, and dispute board resolution.
Through both judicial and alternative means, it is possible to reach a solution to the conflict either by direct action of the interested parties or by a decision imposed by a third party. The first case is called self-composition, as the decision is made by the parties themselves without the imposition of a solution by a third party. Generally, self-composition can be divided into three types: negotiation, conciliation, and mediation.
In heterocomposition, the conflict’s resolution is transferred to an impartial third party, who will establish a definitive and binding response to the issue presented for consideration. This occurs through state jurisdiction when one of the parties, exercising their right of action, accesses the Judiciary with the aim of resolving the dispute, resulting in a decision issued by an authority vested with coercive power (a career judge); or through arbitration jurisdiction, when the parties, by prior agreement, submit themselves to arbitration chambers or even to an independent arbitrator.
It should be stated upfront that there is no dispute resolution method better than the others; rather, there is indeed the method most appropriate for each specific situation. Thus, it is up to each interested party, with the assistance of their lawyer, to understand the nuances of the case and the cost-benefit involved, considering, among other factors, the time of resolution, applicable costs, and the complexity of the matter at hand, so as to select the most suitable means for that situation.
It is even recommended that, whenever possible, such analysis and choice of the most appropriate dispute resolution method be made by mutual agreement between the parties, even before the dispute arises, as happens, for example, in a commercial contract where, from the moment of its formalization, the possibility of creating dispute boards for internal resolution of more minor issues is foreseen, and also which jurisdiction will apply in the case of a larger conflict, usually either arbitral or judicial.
Having said that, the following sections will outline the main characteristics of access to state jurisdiction, with specific comments on the means that compose the Brazilian “multi-door” dispute resolution system.
2. Access to the Judicial Branch.
Regarding the access to the Brazilian state jurisdiction, the following sections will show that Brazil follows a system of codified law, indicating the implications arising from such a system. It will also address how the hierarchy of norms is structured, the division of state jurisdiction (competence), as well as the general rules related to the procedural model and the respective procedure—from beginning to end – of a judicial process, aiming at a better overall understanding of how conflict resolution takes place through the Brazilian judiciary branch.
2.1. Positive law.
The Brazilian legal system originates from the Romano-Germanic civil law tradition of codified law (Civil Law), which differs from the Common Law tradition of Anglo-Saxon countries and the customary law tradition (Customary Law). Its main characteristic is the use of written, published, and documented rules contained in specific legal codes, usually codified by subject matter. All norms must comply with the provisions established in the fundamental law, which in Brazil is the 1988 Federal Constitution.
In this regard, with respect to the general or ordinary laws, subjects are divided according to their themes (Civil, Civil Procedure, Criminal, Criminal Procedure, Consumer Law, among others), creating a compilation of rules that form a codex for each theme. These codices set out the main substantive rules, the respective remedies or penalties for noncompliance with a rule, and also the procedural norms. Furthermore, each subject can be regulated more specifically through the following types of normative acts: Complementary Laws, Delegated Laws, Provisional Measures, Legislative Decrees, and Resolutions.
And, although it is possible to talk about the prevalence of written law over case law in countries that use positive law, such as Brazil, there is a contemporary trend toward giving greater importance to judicial precedents as a way of settling disputes on the same subject, with a view to ensuring greater certainty in the application of the Principle of Legal Certainty, that is, making it possible for individuals to have advance and reflective knowledge of the direct consequences of their actions through past decisions on a similar situation.
In this regard, the current Civil Procedure Code already establishes the obligation of courts to unify their jurisprudence and keep it stable, integral, and coherent. Additionally, judges and courts must observe and respect, within their decisions, certain qualified judicial precedents, such as Supreme Court rulings on concentrated constitutional review, repetitive theses, and precedents approved either by the Supreme Federal Court or the Superior Court of Justice, as well as guidelines from the highest bodies of lower Courts.
It is important to highlight that this duty to observe judicial precedents does not mean that matters already decided cannot be reconsidered from another perspective. However, the mechanisms of distinguishing or overruling are clear and have requirements for their application, always aiming to guarantee the principle of legal certainty and the protection of the parties involved.
Therefore, it is clear that in Brazilian law, judicial decisions are always based on the application of the norm to the concrete case and that, unlike in Common Law, the adherence to precedents is not mandatory in all cases. At least in these situations, precedents can serve as guidance to prevent disparate interpretations on the same matter.
2.2. Division of State Jurisdiction (Jurisdiction).
State jurisdiction is exercised over the entire national territory and over all those subject to its jurisdiction, which obviously implies a division of labor between the bodies that make up the Judiciary Branch, which is done by assigning different powers to each body, as can be seen in the rules of judicial organization.
In order to determine jurisdiction over a particular claim, it is first necessary to verify whether the Brazilian courts have exclusive or concurrent jurisdiction with foreign courts. Thus, if the defendant is domiciled in national territory, if the obligation must be fulfilled in Brazil, if the basis is related to a fact or act committed in Brazil, among other cases, the Brazilian courts will be able to judge the case, as well as in cases where the contract in dispute provides for a “choice of jurisdiction clause” agreeing that Brazilian state jurisdiction is the competent entity for resolving the dispute.
The definition of jurisdiction combines criteria relating to subject matter, value of the claim, territory, and function. To this end, it is first verified whether the jurisdiction to hear the case lies with the Higher Courts, that is, whether the original jurisdiction to hear the case lies with the Federal Supreme Court, the Superior Courts of specialized justice (Labor, Military, and Electoral) or the Superior Court of Justice. Next, it is determined whether the case falls under one of the lower Courts of the specialized justice system, and then whether it will be processed by the so-called Ordinary Justice, which includes: (i) the State Justice and the (ii) Federal Justice.
With regard to Ordinary Justice, the jurisdiction of the Federal Court generally refers to cases involving assets or interests of the Union, for example, cases in which one of the parties is a foreign State or international organization; or cases involving international treaties; political crimes, human rights, among others. The jurisdiction of the State Courts is subsidiary and defined by exclusion, being responsible for prosecuting and judging all matters that do not fall under the jurisdiction of the Special Courts or the Federal Courts. As a rule, contractual and/or business disputes are heard before the Ordinary Justice.
It is also worth highlighting the importance of the Special Courts, both in terms of democratizing access to the judiciary and in encouraging settlement between parties. These courts — which are also divided by jurisdiction (civil, criminal, federal, and public treasury) — serve as an effective mechanism through which individuals can seek solutions to everyday disputes in a quick, efficient, and cost-free manner. These courts handle cases considered to be of lower value and complexity, in a faster, more cost-effective, and efficient manner, always encouraging conciliation between the parties even before the case proceeds to trial.
2.3. Brazilian Civil Procedural Model.
The procedural model adopted by Brazil in its modern and contemporary Code of Civil Procedure is considered a “cooperative” model, in which the process is not determined exclusively by the parties, nor should it be conducted asymmetrically by the judge, with the objective of conducting the proceedings by all participants in the procedural relationship in a cooperative manner.
Therefore, the judge and the parties have clear responsibilities and actively participate, cooperating with each other in pursuit of the ultimate goal of the proceedings, which is to obtain a fair and effective decision on the merits within a reasonable time.
The adversarial process is valued, allowing the parties to actively influence the judge’s decision, as well as the reasoning behind it. Any decision that is not properly reasoned, that is, any decision that does not demonstrate the reasons that led the judge to that decision, is considered null and void.
By virtue of an International Treaty – the Pact of San José, Costa Rica (American Declaration of the Rights and Duties of Man) – and also for historical reasons, Brazilian law guarantees the right to a second hearing, a principle of procedural law that ensures that all persons subject to jurisdiction have the right to have their case reviewed by a higher court, as will be discussed in more detail below.
2.4. Procedure
To initiate legal proceedings in Brazil, except in the case of the special court system, it is mandatory for the party wishing to bring their case before the courts to appoint a lawyer through a specific power of attorney, ad judicia, which will grant powers to represent them before the Judiciary Branch.
The entry point to the Judiciary Branch is the Complaint, in which the plaintiff presents their version of the facts, the legal grounds for their claim, attaches any documentary evidence they possess, and sets out their requests, indicating any additional evidence they intend to produce
Once the requirements of the Complaint have been met, the judge receives it and orders the opposing party to be summoned to present their response, which may take the form of an Answer, presenting their defense, and/or a Counterclaim, which may include counterclaims, which will be decided together with the claims already presented by the Plaintiff. At this point, under penalty of forfeiture, the Defendant must submit all documentary evidence, as well as indicate the evidence it intends to produce.
With both versions of the facts, the judge will be prepared to clear up the case, establishing which points are controversial and which have become uncontroversial (accepted by both parties), as well as determining what evidence will be produced to eliminate the existing controversy.
With both versions of the facts, the judge will be prepared to clear up the case, establishing which points are controversial and which have become uncontroversial (accepted by both parties), as well as determining what evidence will be produced to eliminate the existing controversy.
If new evidence is required, the judge will determine what it should be, the most common forms being: personal statements by the parties; the presentation of documents or objects; the hearing of witnesses; expert evidence; and judicial inspection. In the absence of new evidence to be produced, the judge after giving the parties the opportunity to express their views, will issue his decision on the merits.
This decision is rendered in the first instance by a judge and is called a ‘judgment’. In accordance with the principle of double jurisdiction, it is possible to file an appeal requesting a review of all facts and evidence by a higher court, in a trial by a panel of three judges, who issue their decision and the reasons for their conviction in a ‘appellate decision’, containing their written vote.
New appeals are expected, but with more restricted scope, such as Special Appeals to the Superior Court of Justice, to discuss violations of federal law, and Extraordinary Appeals to the Federal Supreme Court, for cases of violations of the Federal Constitution, provided that the requirements for each type of appeal are met.
Once the procedural deadlines for filing appeals have passed without either party appealing, the final and unappeallable decision is certified (res judicata), thereby establishing what is known as material res judicata, that is, as a rule, the decision becomes final and unalterable, and the matter can no longer be disputed. From that point on, the prevailing party may initiate the enforcement phase to execute the judgment and obtain satisfaction of the claim.
It should be noted that the civil procedural law in force in Brazil grants the parties greater autonomy in relation to procedural rules, providing for the possibility of entering into procedural legal transactions, through which the procedure may be altered, agreeing, for example, on procedural deadlines, on who is responsible for producing evidence, on the procedural rights and duties of the parties, among other issues, with the judge being responsible for , however, to control the legality of such provisions in light of the legal system. This power conferred by the current code of civil procedure creates a general clause for procedural negotiation, which may cover the procedural situations of the parties and the procedure, modernizing the process and making it more effective.
From these brief notes on access to Brazilian state jurisdiction, it appears that the judiciary can indeed be a good means of conflict resolution, for example, since its organization is clear, its costs are much lower than those of arbitration, for example, and its technical staff is highly competent, sometimes divided by specialty, facilitating and improving the quality of the decisions rendered.
3. Alternative means of resolution of disputes.
Although judicial jurisdiction is sufficient to resolve conflicts arising in society, there is an increasingly evident need to resort to alternative methods – not only to resolve but even to prevent such disputes – given the slowness that plagues the Brazilian judicial system and the dissatisfaction of parties with the bureaucratic nature of court proceedings.
In this context, Brazil has seen the growing development and implementation of various alternative dispute resolution mechanisms, among which the following deserve particular attention: (i) the Arbitration; (ii) the Self-composition (mediation and conciliation); and (iii) the Dispute Board, which, as will be further detailed below, have increasingly gained prominence in the national landscape, especially following the enactment of the Mediation Act (Law No. 13,140/2015) and the amendments introduced by CNJ Resolution No. 326/2020 to Resolution No. 125.
3.1. Arbitration
Arbitration is characterized as a means of heterocomposition for conflict resolution; however, unlike judicial proceedings, it is private. In this method of conflict resolution, there is the figure of the arbitrator (one or more persons), who acts as an impartial third party freely chosen by the parties or appointed by the arbitration chambers responsible for processing the arbitration, endowed with the power and authority conferred by the parties themselves to render a decision in accordance with the procedural law and substantive law also chosen in advance by the parties, within the scope of the arbitration clause existing in a contract or pursuant to an arbitration agreement entered into after the dispute has arisen. Arbitration chambers, although not mandatory, sometimes play a very important role in the conduct of arbitration proceedings, ensuring security and fairness.
In Brazil, the enforcement of arbitration awards – which, it should be emphasized, have the same force as court judgments – is carried out by the Judiciary, which has a monopoly on coercive measures to ensure compliance with the decision. Such enforcement shall be carried out through the procedure for compliance with judgments, under penalty of expropriation of assets, among other measures, in the event of non-compliance, as well as in cases of judgments rendered by the Judiciary Branch itself.
For cases arising from complex business disputes, arbitration is an extremely interesting means of resolution, whether due to the expertise of the arbitrators in the matter under discussion, the speed of the proceedings and decision, or the confidentiality involved, despite the fact that its costs are usually quite high compared to other means of dispute resolution.
The Arbitration Law (Law No. 12,129/2015) was modernized by Law No. 13,129/2015, bringing several advances regarding conflicts involving the Public Administration; the interruption of the statute of limitations; and making explicit the possibility for the arbitrator to render partial awards. Issues that were once controversial have been settled by the modernization of the law.
3.2. Resolution of disputes by the parties themselves
Moving on to other means of conflict resolution, in Brazil, there is also the possibility of self-composition, an alternative means of conflict resolution that gained momentum with the amendment made by Resolution No. 326/20 to Resolution 125 of the CNJ, which establishes the “National Judicial Policy for the Proper Treatment of Conflicts of Interest,” ensuring the provision of other mechanisms for dispute resolution, in particular the so-called consensual means, also establishing the creation of Judicial Centers for Conflict Resolution and Citizenship (Centers or CEJUSCs), which are responsible for conducting or managing conciliation and mediation sessions and hearings that are the responsibility of conciliators and mediators working in the Courts.
That being the case, it should be noted that self-composition can be divided into three types, namely, (i) negotiation: the parties reach a consensual solution without the intervention of third parties; (ii) conciliation: an impartial third party is present, interfering with relevant facts and information about the dispute, seeking the best way to resolve the impasse; and (iii) a mediation: the solution is voluntarily agreed upon in the presence of an impartial third party, who will help maintain the relationship between the parties and the dialogue, allowing the parties themselves to find the best solution to the conflict. Whether in conciliation or mediation, it is important to highlight that the impartial third party will act as a facilitator of debate and composition, without any coercive or decision-making powers, with the only difference between the two modalities being the degree of intervention of the third party.
On the one hand, negotiation is seen as an excellent means of social pacification, because in this specific case there is no intervention by third parties or an imposed decision, as occurs in state or arbitral jurisdiction, valuing the autonomy of the parties in the transaction and resolution of conflicts, without the intervention of a third party.
On the other hand, in conciliation or mediation, there is necessarily the presence of an impartial third party, who acts as an intermediary in the conflict. In conciliation, which may take place out of court or even during legal proceedings, it is worth noting that this third party, the conciliator, takes an active and participatory role, acting as a facilitator and suggesting the terms of a possible agreement, without, however, having any decision-making power.
And when it comes to judicial conciliation, the Brazilian code of civil procedure in force has made it mandatory to schedule a preliminary conciliation hearing, which takes place after the magistrate receives the initial petition and before the Defendant presents their defense. Such hearing shall only not be mandatory if both parties express a lack of interest in its occurrence, or in cases where the right in dispute does not allow for self-composition. A similar procedure has already been adopted by the Special Courts Law for more than twenty (20) years, however, in that area, the conciliation hearing is always mandatory before the presentation of the defense by the Defendant.
There is also mediation, which seeks to resolve the conflict between the parties in a more comprehensive manner. In this case, the impartial third party is the mediator, who, despite also having no decision-making power, unlike the conciliator, never interferes in the terms of the agreement, takes no initiative to propose a settlement, and makes no comments regarding the merits of the discussion, leaving the parties to resolve the conflict without their direct intervention. The mediator acts as a moderator and their goal is to facilitate communication between the parties, leading them to an understanding of the issue in dispute. Mediation has its own governing law and, like conciliation, can take place in or out of court. There is controversy surrounding judicial measurement, since when practiced within the judiciary, two of the institute’s basic principles are not observed: voluntariness (given the mandatory nature of the procedure) and confidentiality, given that the report is publicly accessible.
Currently, in the context of business disputes, significant progress has been made in conflict resolution with regard to Recommendation No. 71/2020 of the CNJ, which recommended that courts implement Judicial Centers for Conflict Resolution and Business Citizenship (CEJUSC Empresarial), with the aim of adequately addressing conflicts involving business matters of any nature and value, in the pre-trial phase or in lawsuits already filed.
In the same vein, there was also a significant change in the area of corporate self-composition with regard to the updating of the court-supervised reorganization and bankruptcy law, amended by Law No. 14,112/2020, which encouraged and affirmed the use of consensual dispute resolution techniques in corporate insolvency, including in the stages prior to the judicial reorganization process.
3.3. Dispute Board Resolution.
Finally, it is necessary to highlight the so-called dispute board resolution (or dispute prevention and resolution committee), which is an alternative conflict resolution mechanism consisting of the formation of a committee made up of impartial experts who will monitor a long-term project from start to finish, with the aim of preventing and helping to resolve any disputes that may arise during the implementation of a given project, usually civil engineering works.
The dispute board is the most recent form of conflict resolution and can be considered an alternative means which, in addition to resolving a particular dispute, seeks to prevent conflicts and, ultimately, even facilitate the judgment of any legal or arbitration proceedings that may be brought. The members of the dispute board may, depending on the specific case and the powers granted to them by the parties, issue recommendations or take decisions.
This modality gives force to contracts, ensuring that the economic activity represented by the contractual instrument is duly implemented, always considering its purpose. In Brazil, an example of the application of this type of conflict resolution was the work of the “Dispute Board” in the construction contracts for Line 4 Yellow of the São Paulo subway system.
In this regard, at the First Conference on “Prevention and Extrajudicial Resolution of Disputes” held by the Federal Justice Council, statement no. 49 was issued, which states: “Dispute Boards are a method of consensual conflict resolution, as provided for in § 3 of Article 3 of the Brazilian Code of Civil Procedure, and are considered the first instance of this method in the national legislative sphere.”
On the other hand, recently in Brazil, this method of conflict resolution was recognized by the new public procurement law (Law No. 14,133/2021), which, in art. 151, allows for the use of alternative means of dispute prevention and resolution in administrative contracts, expressly mentioning the dispute resolution committee, which ensures greater application of this alternative method.
It is also worth noting that the International Chamber of Commerce Rules on Dispute Boards provide for three different types of dispute board: (i) dispute review boards (DRBs): which issue recommendations that are not binding; (ii) dispute adjudication boards (DABs): which are formed to decide disputes arising from the contract, with the decision being binding on the parties, and (iii) combined dispute boards (CDBs) committees that have characteristics of both types.
Finally, it is also important to highlight, in the current context of Brazil, the existence of Online Dispute Resolution (ODR) tools. Such mechanisms were developed by large private sector companies which, due to the very nature of their business, are usually linked to large-scale consumer markets and suffer from a very high number of conflicts and legal claims, the operating costs of which have a severe impact on the companies’ provisions and results.
Faced with this scenario and the inability of existing conflict resolution methods to absorb them at low cost and with ease of operation, as they require the means already discussed for human intervention in a very large number of conflicts, investment began to be made in the creation of such tools, customized to the specific needs and characteristics of corporations.
These tools, combining artificial intelligence and data science, combine rules for managing this liability with negotiation and mediation techniques, all in a software format, making the management of complaints and conflicts much less costly and their resolution much faster, since the flow of information is managed by the online platform, leaving human intervention to a small number of cases that escape the predetermined filters, generating a large number of agreements, minimizing costs, and ensuring the satisfaction of those involved.
4. Choosing the Most Appropriate Means of Conflict Resolution
From the presentation of all the conflict resolution methods listed, the question arises: how to choose the most appropriate method?
To resolve the issue, one must bear in mind the analysis of the specific case and the characteristics of the models that best serve the fundamental interests of the parties, which must always be preserved and observed.
Is it essential that the resolution process be swift? Be economical? Be confidential? Preserve the business relationship? Need technical analysis from an expert? Provides an ample means of defense/resources? Provides coercive or provisional measures available? Provides binding and definitive decisions?
For example, the conciliation method should be chosen preferably in cases where there has been no previous relationship between the parties. Therefore, conciliation is more appropriate for conflicts of interest that do not involve an ongoing relationship between the parties, who have come to maintain a link precisely because of the dispute that has arisen, as in the case of a vehicle collision. Or even for those parties that have a previous specific relationship, with the dispute arising precisely from that link, as occurs in a contract entered into for the purchase of a product or for the provision of a service.
On the other hand, mediation should be chosen preferably in cases where there has been a previous relationship between the parties. These are cases in which the parties already had some kind of ongoing relationship prior to the emergence of the legal claim, which characterizes a continuing relationship between them, rather than a momentary one. Therefore, its use is recommended in cases arising from family, neighborhood, and corporate law.
In cases involving large projects, particularly in the construction industry, where very high values are involved, it is advisable to set up dispute prevention and resolution committees in order to minimize the chances of conflicts arising.
In turn, service providers or product suppliers with significant market share and numerous commercial relationships with their consumers should consider using online dispute resolution tools, as they are a fast and economical means of resolving disputes with a higher probability of preserving the business relationship, given the prompt customer service they offer without the need to seek state intervention in less complex cases.
If the company is interested in finding a method for resolving complex, confidential, highly specialized cases through a third party with know-how, quickly, without procedural formalities, without the possibility, strictly speaking, of reversing the decision through appeals, and without necessarily caring about the costs of the procedure, the most appropriate means is arbitration.
Finally, if the primary interest of the private institution is the availability of resources to reverse an unfavorable decision, the possibility of obtaining provisional measures that anticipate the results of the final decision, or coercive measures to enforce decisions, the judiciary branch is the best option.
Autores: João Paulo Balthazar Leite and Felipe Carvas
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