International arbitration law and rules in Brazil

The Centre for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (CAM-CCBC) was the first Brazilian arbitral institution. It was founded in 1979 and has dealt with over 1,000 cases since its inception. Today there are other institutions that also operate in Brazil such as the International Chamber of Commerce (ICC) based in São Paulo.

With thanks to Madalena Houlihan for her contribution to the Guide.

1.1 Since the enactment of the Brazilian Arbitration Act in 1996 (Brazilian Arbitration Act), arbitration in Brazil has grown exponentially. Some key milestones contributing to the growth of arbitration in Brazil are: the decision of the Federal Supreme Court confirming the constitutionality of the Brazilian Arbitration Act in 2001; 1 MBV Commercial and Export Management Establishment v Resil Indústria e Comércio Ltda, December 2001, Federal Supreme Court (full court), Procedure for the Recognition and Enforcement of Foreign Award no. 5206–712.  the ratification of the New York Convention in 2002; 2 Over this period, Brazil also approved and brought into force a number of other international treaties which enhanced its reputation as an arbitration-friendly jurisdiction, including the 1975 Panama Convention in 1996; the 1992 Protocol on Jurisdictional Assistance in Civil, Commercial, Labour and Administrative Matters (Las Leñas Protocol) in 1996; the Mercosur Protocol on International Commercial Arbitration in 2003, and the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention) in 2014.  the reform of the Brazilian Arbitration Act; and the enactment of a new Civil Procedure Code which came into force in 2016 to introduce improvements and efficacy in arbitration (Brazilian Code of Civil Procedure).

1.2 Brazil has experienced a very rapid expansion in the use of arbitration as a method of dispute resolution and has become one of the key centres for arbitration in Latin America. One of the main drivers behind this expansion has been the growth in foreign investment and foreign acquisitions made by Brazilian multinational companies. These transactions frequently involve arbitration agreements.

1.3 Another important factor contributing to the growth of arbitration in Brazil is the crisis in the Brazilian judiciary. In 2018, according to the National Council of Justice, 78.7 million cases were pending before the Brazilian courts. 3 Relatório Justiça em Números, 2019, Ano base 2018, Conselho Nacional da Justiça (Report Justice in Numbers, 2019, year considered 2018, National Council of Justice).  As a result of the backlog of pending cases, it can take many years for cases to be determined. Faced with the prospect of such delays, it is unsurprising that commercial parties are increasingly opting to have their disputes resolved through arbitration.

2.1 The Brazilian Arbitration Act was created by Law No. 9.307 of 23 September 1996, which is based on the UNCITRAL Model Law (1985) and various provisions of the Brazilian Code of Civil Procedure that relate to the competence of the arbitral tribunal vis-à-vis state courts, and regulates the interrelation between the state and arbitral jurisdictions. The new Brazilian Code of Civil Procedure came into force in March 2016 and reaffirmed Brazil’s commitment to arbitration by including provisions that guarantee its effectiveness and protects its confidentiality.

2.2 Law No. 13.129 was enacted in 2015 and introduced important changes to the Brazilian Arbitration Act. The 2015 law consolidated practices that had already been adopted and clarified the applicability of arbitration to certain legal relationships, such as those involving public bodies.

2.3 In addition, the reform of the Consolidation of Labour Laws by Law no. 13.467 of 13 July 2017 provided for the possibility of dispute resolution by arbitration between employers and employees under certain conditions, as explained in more detail in paragraph 12.2 below.

2.4 Arbitration in Brazil may be conducted on an ad hoc basis or under the auspices of arbitral institutions. The main Brazilian arbitral institutions are:

• the São Paulo Chamber of Mediation and Arbitration (FIESP/CIESP);
• the Getúlio Vargas Foundation Chamber of Conciliation and Arbitration (FGV); 
• the Arbitration and Mediation Centre of the Brazil-Canada Chamber of Commerce (CCBC); 
• the Corporate Chamber of Commerce in Brazil (CAMARD); and 
• the Arbitration and Mediation Centre of the American Chamber of Commerce in São Paulo (AMCHAM).

3.1.1 The provisions of the Brazilian Arbitration Act apply to all types of arbitration including institutional and ad hoc arbitration, arbitration at law and arbitration ex aequo et bono, provided that the seat of the arbitration is Brazil. 4 Brazilian Arbitration Act, art 2.

3.1.2 The provisions of the Brazilian Arbitration Act apply to domestic and international arbitration and include rules for the enforcement of foreign awards. 5 Ibid, art 34 to 40.

3.1.3 Parties may choose arbitration as a dispute resolution mechanism for disputes relating to freely transferable rights. 6 Ibid, art 1. Under Brazilian law, transferable or disposable rights are rights that the parties can freely negotiate, transfer, assign, waive or settle. Not all matters involving government entities are considered un-disposable rights, and government entities or bodies may elect to use arbitration for disputes involving disposable patrimonial rights. 7 The concept of patrimonial rights is explained further in paragraphs 4.2.1 to 4.2.2 below.

3.1.4 Disputes relating to family law issues, tax, criminal cases and probate matters, for example, do not arise out of freely transferable rights and may not be submitted to arbitration. 8 Ibid, art 1.

3.2.1 The Brazilian Arbitration Act is divided into seven chapters:

• Chapter I – General provisions;
• Chapter II – The arbitration agreement and its effects;
• Chapter III – Arbitrators
• Chapter IV-A – Preliminary and emergency injunctions; 
• Chapter IV-B - Arbitral letter; 9 See paragraph 6.2.3 below.
• Chapter V – Arbitral award;
• Chapter VI – Recognition and enforcement of foreign arbitral awards; and
• Chapter VII – Final provisions.

4.1.1 In order to be valid, the arbitration agreement must be in writing. 10 Ibid, art 4(1).  The agreement must be contained in the contract itself or in a separate document.

4.1.2 The arbitration agreement may consist of a separate agreement or form part of a clause within the relevant contract. An arbitration agreement will be valid and binding even where it is included in agreements that were executed prior to the enactment of the Brazilian Arbitration Act in 1996. 11 Conflict of Jurisdiction (cc) no. III230/DF.

4.1.3 In a contrato de adesão (an “adhesion” or standard form contract), the arbitration agreement will only be valid if:

• the party that did not propose the adhesion contract initiates the arbitral proceedings or agrees expressly to the commencement of proceedings; 
• the arbitration agreement is written in a separate document or is marked in bold in the adhesion contract; or 
• the arbitration agreement is specifically signed or endorsed by the weaker party. 12 Brazilian Arbitration Act, art 4(2).

4.1.4 The Brazilian Code of Civil Procedure provides that a valid and enforceable arbitration agreement deprives the courts of any jurisdiction to determine the dispute. 13 Subject to the Brazilian Code of Civil Procedure, art 42.  In the event that a party to an arbitration agreement commences proceedings in the courts, the other party will be able to rely on the existence of the arbitration agreement or the acceptance of competence by the arbitral tribunal to persuade the court to dismiss those proceedings for lack of jurisdiction (as discussed further in paragraphs 9.1.1 and 9.2.1 below). 14 Ibid, art 485 VII.

4.1.5 The Compromisso Arbitral will contain all of the specific provisions necessary to give effect to the arbitral proceedings, including provisions dealing with the appointment of arbitrators, the selection of institutional rules (if any) and a statement of the issues to be submitted to the arbitral tribunal. 15 Brazilian Arbitration Act, art 10.

4.1.6 If a party refuses to execute the Compromisso Arbitral, the other party may apply to the relevant court for an order for specific performance to that effect .16  Ibid, art 6 and 7. The relevant court is stated in the Brazilian Arbitration Act, art 6 as the State Court originally At the hearing, the court will first attempt conciliation, failing which it will try to convince the respondent to sign the Compromisso Arbitral. If necessary, the court will rule on any issues on which the parties disagree and appoint a sole arbitrator if the arbitration agreement does not specify otherwise. The order made at this hearing will take effect as a valid and binding Compromisso Arbitral, even if not signed by the respondent. A judgment of this nature may be appealed, but the arbitration will proceed while the appeal is pending. If a respondent fails to attend a court hearing to agree on the Compromisso Arbitral, after hearing the claimant, the judge shall determine the content of the Compromisso Arbitral and shall appoint a sole arbitrator for the dispute. Failure by the respondent to participate in the arbitration having been duly notified will not prevent the award from being issued. 

4.2.1 Only disputes relating to parties’ freely transferable rights, that is ‘patrimonial rights’ (ie pecuniary or economic rights) that are capable of being negotiated and agreed by parties, are capable of being determined by arbitration. No guidance is given as to what exactly is meant by ‘patrimonial rights’. In practice, most commercial disputes will be arbitrable, including most disputes relating to intellectual property (such as patents and trademarks). 18 Brazilian Arbitration Act, art 1

4.2.2 It is well established that the state government and other public bodies may agree to resort to domestic or international arbitration, provided that the dispute relates to patrimonial rights of which they may dispose. 19 See, for example, Agravo de Instrumento no. 52.181 of 14 November 1973; Federal Supreme Court; and Statutory Instrument no. 1312 of 15 February 1974.  However, where the government or a government-controlled entity enters into a contract representing the authority of the state, the arbitrability of the dispute may, under certain circumstances, be challenged or subject to additional formal requirements (such as local venue and language: as explained in paragraph 12.3 below).

4.2.3 Family matters, certain public law matters and some individual employment-related matters are not capable of being determined by arbitration because they do not relate to disposable economic rights. 20 Brazilian Arbitration Act, art 1.  Similarly, disputes involving issues of major public interest, such as cases involving antitrust and unfair competition issues or those relating to environmental regulations, are not arbitrable.

4.2.4 The procedure of officially declaring a bankruptcy is a privilege reserved to the courts. In contrast, a bankrupt estate, acting through its legal representative or ‘administrator’ (Síndico) may engage in arbitrations dealing with patrimonial rights over which the estate may dispose.

4.3.1 The arbitration agreement is considered separate from the main contract. The validity and enforceability of the arbitration agreement will be assessed independently from the validity and enforceability of the main contract. The arbitral tribunal decides on the existence and validity of the arbitration agreement and whether or not it is binding. 21 Brazilian Arbitration Act, art 8

4.4.1 If the parties have concluded a valid and enforceable arbitration agreement, they are required to arbitrate all disputes that fall within the scope of that agreement and cannot submit such disputes to the Brazilian courts. If, notwithstanding the existence of a valid arbitration agreement, court proceedings are initiated, the Brazilian courts are required to refer the case to arbitration and dismiss the court proceedings without hearing the merits of the dispute. 22  Brazilian Code of Civil Procedure, art 267 II.

5.1.1 The Brazilian Arbitration Act provides that parties are free to decide how many arbitrators will constitute the arbitral tribunal, provided that the tribunal is comprised of an odd number of members (usually three). Should the parties propose an even number of members, the arbitrators are automatically empowered to nominate a further member of the tribunal. 23 Brazilian Arbitration Act, art 13(1).

5.1.2 The arbitral tribunal is appointed by any method agreed between the parties or in accordance with the rules of the arbitral institution chosen by them. 24 Ibid, art 13(3).  The usual practice for appointing an arbitral tribunal comprising three arbitrators is for each of the parties to nominate one arbitrator and mutually agree upon the identity of the third. Alternatively, the parties may agree that the two party-nominated arbitrators can appoint the third arbitrator. In the event that the parties fail to reach an agreement, the court decides how many arbitrators will constitute the arbitral tribunal and has the authority to appoint those arbitrators. 25 Ibid, art 13(2)

5.1.3 Where multiple arbitrators are named, they elect, by majority, the chair of the arbitral tribunal. 

5.1.4 The parties may choose an arbitrator outside of the list provided by the arbitral institution. 26 Ibid, art 13(4).  Anyone can be appointed as an arbitrator so long as they are capable of exercising their civil rights. Pursuant to the Brazilian Civil Code, 27 Law no. 10.406 of 10 January 2002.  in general terms, people under the age of 18, of unsound mind and persons who have been declared unable to exercise their rights by a judge because of drug or alcohol abuse, or temporary mental illness, cannot exercise their civil rights.

5.2.1 Once appointed, an arbitrator has a duty to behave competently and to act independently and impartially at all times. 28 Ibid, art 13(6). The appointment of an arbitrator may be challenged by the parties on the same grounds that would call into question the credibility of a judge. 29 Brazilian Arbitration Act, art 14.  The grounds for challenging an arbitral appointment include:

• where the arbitrator fails to act impartially, independently, competently, diligently or with discretion; 30 Brazilian Arbitration Act, art 13(6).
• where the individual is linked to the parties or the dispute to the same extent that would prevent a judge from acting pursuant to the Brazilian Code of Civil Procedure; 31 Brazilian Arbitration Act, art 14(1). or
• where an arbitrator intervened as agent on behalf of one of the parties, acted as an expert or as a member of the Public Prosecutor's Office, or testified as a witness. 32 Brazilian Civil Code of Procedure, art 144(1).

5.2.2 Prior to accepting an appointment, arbitrators must disclose to the parties any facts that may be deemed to impact their impartiality or independence. 33 Brazilian Arbitration Act, art 14(1).

5.2.3 In principle, challenges may only be raised against party-appointed arbitrators for reasons arising after their appointment. If the reason for the challenge against the arbitrator only became apparent after the appointment, an arbitrator may be challenged for a reason that occurred prior to the appointment. 34 Ibid, art 14(2).

5.2.4 If a party wishes to challenge the appointment of an arbitrator, it should raise its objection to the tribunal at its first opportunity following commencement of the arbitration. 35 Ibid, art 20.  

5.2.5 In the event of a successful challenge against an arbitrator, that arbitrator’s position is filled by the alternate member nominated by the parties prior to the constitution of the arbitral tribunal, if any. 36 Pursuant to Brazilian Arbitration Act, art 13(1), when appointing an arbitrator, parties may also nominate an alternate arbitrator  If no such nomination was made, the agreed procedure for nominating arbitrators applies. 37  Brazilian Arbitration Act, art 20(1) and 16. A judge is entitled to determine the issue if there is no agreed procedure for the appointment of a replacement arbitrator. 38 Ibid, art 16.

5.2.6 If the arbitral tribunal rejects a challenge against an arbitrator, the arbitration will proceed as normal. However, once the outcome of the arbitration is known, the challenging party may, on the basis of the rejected challenge, make an application to the court to set aside the award rendered by the arbitral tribunal. 39 Ibid, art 32.  If the court finds that the arbitral tribunal should have accepted the challenge, the award will be set aside. 40  Ibid, art 33 (1 and 2) and 20; see also appeal no. 70005797774, 12th Civil Chamber of the Rio de Janeiro Court of Appeal.

5.3.1 Arbitrators who breach the duties set out above have a general obligation to compensate the parties for damages caused by negligence or willful misconduct. 41 Ibid, art 14 and Brazilian Code of Civil Procedure, art 143 I.

5.3.2 As well as civil liability for breaching these duties, the criminal law provisions that specifically apply to public servants apply to arbitrators. 42 Brazilian Arbitration Act, art 17. For example, arbitrators who do not properly exercise their function, or illegally delay their duties for their own purposes, may be sentenced to between three months and one year in prison, and fined. 43 Law-decree no 2848, 7 December 1940, art 319.

5.4.1 The Brazilian Arbitration Act contains no express provisions on arbitrators’ fees. Arbitrators may only secure payment of their fees if this is provided for in the arbitration agreement. Generally, payment of arbitrators is contingent on rendering the award.

5.4.2 In practice, advance payment of a part of the arbitrator’s fee is used as a guarantee. If no specific amount is agreed upfront, the parties and the arbitrators can set the amount based on the number of hours that the arbitrators are expected to work.

5.4.3 In respect of institutional arbitral proceedings, each arbitral institution has its own rules governing the payment of administrative fees and the remuneration of arbitrators. For ad hoc arbitrations, there will be no administrative fees payable, and the remuneration of arbitrators will be agreed between the parties and the arbitrators (usually in the Compromisso Arbitral).

5.5.1 There are no specific legal provisions dealing with the immunity of arbitrators. As the function of an arbitrator is equivalent to that of a judge, similar immunity applies in relation to liability for their decisions. However, the precise extent of that immunity is still not fully defined.

6.1.1 The arbitral tribunal is entitled to rule on its own jurisdiction, including on the existence and validity of the arbitration agreement. 44 Brazilian Arbitration Act, art 8. See also Conflito de Competência no. 139.519/RJ, of 11 October 2017, Superior Tribunal of Justice (STJ) and Conflito de Competência no. 151.130/SP, of 09 May 2018, Superior Tribunal of Justice (STJ).

6.1.2 An arbitration agreement which is part of another agreement is treated as an independent (and severable) arbitration agreement (see paragraph 4.3.1 above). The invalidity of the agreement containing the arbitration agreement will therefore not automatically affect the validity of the arbitration agreement.

6.2.1 After the arbitral tribunal is established, it is empowered to grant any interim measures to protect the parties’ rights and the integrity of the arbitral proceedings, and also to maintain, modify or cancel any interim or protective measures issued by a court before the commencement of the arbitration. 45 Ibid, art 22-B.

6.2.2 Before the arbitral tribunal is constituted, the Brazilian Arbitration Act expressly establishes that the parties may apply directly to the state courts for any urgent interim measures of protection that may be necessary (see paragraph 9.4.1 below). To maintain the efficacy of such interim measures, the party must request the commencement of the arbitration within 30 days from the date that the court order is operative. 46 Ibid, art 22-A.

6.2.3 No decision or order on interim measures by the arbitral tribunal is directly enforceable. For that, the arbitrator or arbitral tribunal may issue an arbitration letter (carta arbitral) directed to a court, in accordance with the court’s territorial competence, requesting enforcement of the interim measures granted by the arbitral tribunal. Provided that the confidentiality of the arbitration award is verified, compliance with the arbitration letter is treated under seal. 47 Ibid, art 22-C, and Brazilian Code of Civil Procedure, art 237 IV, and art 260(3)

7.1.1 Arbitral proceedings are deemed to commence when all the arbitrators have accepted their appointment. 48 Ibid, art 19.

7.2.1 Parties are free to choose the procedure to be followed by the arbitral tribunal. 49 Ibid, art 19.

7.2.2 If the parties cannot agree upon the procedure to be applied, the arbitral tribunal decides the procedure to be adopted. 50 Ibid, art 21 (1).

7.2.3 There is tension between the unfettered discretion accorded by the Brazilian Arbitration Act and the provisions of the Panama Convention, which stipulates that, absent an express choice of procedural rules by the parties, the rules of procedure of the Inter-American Commercial Arbitration Commission apply. 51 Panama Convention, art 3, incorporated into Brazil as per Decree no. 1.092 of 9 May 1996.

7.2.4 Strictly speaking, the provisions of the Brazilian Arbitration Act prevail over those of the Panama Convention. 52 International treaties ratified by Brazil have the same status as internal Brazilian laws but are subject to the principle lex posterior derogat priori (the later law abrogates an inconsistent earlier law): see RE 80.004-SE. The Brazilian Arbitration Act was passed after the presidential decree bringing the Panama Convention into force in Brazil (Decree no. 1.902 of 9 May 1996).  It follows that, in an arbitration seated in Brazil to which the Panama Convention applies, 53 The Panama Convention applies to international commercial arbitrations between parties of the following signatory States: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Panama, Paraguay, Peru, United States, Uruguay and Venezuela.  the arbitral tribunal may choose the procedural rules that it considers appropriate. In such circumstances, arbitral tribunals may elect to exercise their discretion in favour of adopting the rules of procedure of the Inter-American Commercial Arbitration Commission.

7.3.1 In general, parties are free to choose the seat and language of the arbitration. However, disputes arising under or out of certain contracts entered into with public bodies or government entities may only be resolved by arbitration if the seat of the arbitration is in Brazil and Panama Convention, art 3, incorporated into Brazil as per Decree no. 1.092 of 9 May 1996.the language of the arbitration is Portuguese (see paragraph 12.3.4 below for further details). 54 Concession Law (Law 8.987/1995) and the Public-Private Partnership Law (Law 11.079/2004).

7.3.2 The seat of the arbitration must be set out in the Compromisso Arbitral and stated in the award. 55  Brazilian Arbitration Act, art 10, 11 and art 26, IV respectively

7.4.1 There are no specific rules under the Brazilian Arbitration Act regarding the effects of an arbitration agreement on third parties. As a matter of doctrine, third parties cannot be included in arbitrations, even in cases of compulsory joinder, permissive joinder or third-party intervention. However, the jurisprudence on this issue is not unanimous. The courts have been prepared to accept third party intervention in certain limited circumstances, for instance where the third party is an interested member of one of the party’s corporate groups, 56  Appeal no. 267450.4/6-00, 7th Chamber of Private Law of the São Paulo Civil Court. or where there is commonality of issues. 57 REsp no. 653733.

7.5.1 The Brazilian Arbitration Act provides that the arbitrator or the arbitral tribunal may decide on the scope of and process for evidence to be produced, such as oral hearings, expert reports and other necessary evidence, at the request of the parties or at its discretion. 58 Brazilian Arbitration Act, art 22.

7.5.2 The arbitral tribunal must hear the parties and give them the opportunity to make oral submissions, if so requested. The arbitral tribunal must also hear all the witnesses and experts (if they are called by the arbitral tribunal to explain their written reports). The parties are to be given sufficient notice of hearings, which shall be transcribed and signed by the deponent and by the arbitral tribunal. 59 Ibid, art 22(1).

7.6.1 Apart from the principles of due process, equal treatment of the parties and independence of the arbitrators, 60 Ibid, art 21(2).  there are no mandatory rules of evidence. Specific rules on evidence will be governed by the procedural rules applicable to the arbitration.

7.6.2 The arbitral tribunal may allow or request witness or expert evidence, or the production of further evidence. If an arbitrator is substituted during the arbitral procedure, the substitute may determine what evidence is to be repeated. 61 Ibid, art 22(5).

7.7.1 The parties may rely on expert evidence in support of their case. Subject to any procedural rules agreed by the parties, an independent expert may also be appointed by the arbitral tribunal. 62 Art 22- of the Brazilian Arbitration Act determines that if the arbitration is confidential and there is evidence of that in the arbitral order (“carta arbitral”), the arbitral order is to be processed in secrecy at court. Art 189 IV of the Brazilian Code of Civil Procedure establishes that any procedural act that deals with arbitration shall be secret if there is evidence that the arbitration is confidential.

7.7.2 There is no need for the arbitral tribunal to consult with the parties as to the questions to be submitted to experts. Arbitral tribunals will usually give parties the opportunity to make their own observations on any expert report.

7.7.3 Where the arbitral tribunal appoints its own independent expert, the parties may appoint ‘technical assistants’ to assist the expert. The technical assistants may also prepare reports that the arbitral tribunal will consider.

7.7.4 Alternatively, the arbitral tribunal’s expert and the parties’ technical assistants may decide to issue a joint report. The arbitral tribunal’s expert and/or any technical assistants appointed by the parties may be required to appear at hearings to respond to questions from the tribunal and/or the parties.

7.8.1 Brazilian law does not expressly deal with the confidentiality of arbitral proceedings. Parties concerned about the confidentiality of proceedings should make express provision for this in the arbitration agreement or the Compromisso Arbitral. 

7.8.2 The new Brazilian Code of Civil Procedure and the reformed Arbitration Act of 2015 include provisions establishing that that if the parties agree that the arbitration is confidential, then even if the parties seek input from the local courts, the confidentiality of the arbitration shall be preserved.

7.8.3 Arbitrations involving a public entity are not confidential. According to the Brazilian Arbitration Act (art.2(3)), if an arbitration involves a public entity, proceedings must always be public, in compliance with the principle of transparency.

7.8.4 The parties are also free to provide for confidentiality themselves through a confidentiality agreement. Many of the institutional arbitration rules in Brazil include confidentiality obligations. 63 See, for example, the São Paulo Chamber of Mediation and Arbitration Code of Ethics art. 1 and 5, or the Arbitration and Mediation Centre of the Brazil-Canada Chamber of Commerce Rules art. 14.

7.9.1 The arbitral tribunal may request the assistance of the state courts to obtain evidence. For instance, they may ask the court to summon witnesses that have refused to attend a hearing voluntarily. If a witness fails, without good cause, to comply with the arbitral tribunal’s request to give oral testimony, the arbitral tribunal shall take such behaviour into account when determining the weight to be given to that witness’ evidence. 64 Brazilian Arbitration Act, art 22(2).

7.9.2 Any such requests from the arbitral tribunal to a local state court are made via an arbitral letter (carta arbitral), as explained above in paragraph 6.2.3.

8.1.1 Parties are free to choose the rules that are to be applied to the arbitration, provided that they do not violate Brazilian public policy. Parties may also agree that the award is to be granted based on basic principles of law, common practice, or rules of international commerce. 65 Ibid, art 2(2).

8.1.2 As an alternative, the parties may authorise the arbitral tribunal to issue its decision ex aequo et bono (instead of pursuant to the applicable law). 66 Ibid, art 2.

8.2.1 The parties can stipulate the timeframe within which the award is to be issued, in accordance with the Compromisso Arbitral. In the absence of such provision, the award is to be rendered in writing within six months of the constitution of the arbitral tribunal. However, during the course of the arbitration, the parties and the arbitral tribunal may agree to extend this period. 67 Ibid, art 11.

8.2.2 Any award based on law (rather than ex aequo et bono) must be properly reasoned both in fact and in law. It must deal with all the issues submitted to arbitration as well as ancillary matters such as the costs of the arbitral proceedings. 68 Ibid, art 26(2).  Where there are several arbitrators, the decision is reached by a majority vote. Where there is no majority, the decision of the chair prevails. 69 Ibid, art 24(1).

8.2.3 The award itself must be in writing and must contain:

• a report setting out the names of the parties and a summary of the dispute;
• the reasoning for the decision, including the reasons for an award made by an arbitral tribunal acting as amiable compositeur;
• the actual decision, or dispositive, including the time limit for the fulfilment of obligations imposed on the parties; and
• the date and place of the award. 70 Ibid, art 26.

8.2.4 The award must be signed by each member of the tribunal. If one or more arbitrators cannot or does not wish to sign the award, the chair of the arbitral tribunal must certify this. 71 Ibid, art 26, sole paragraph.

8.3.1 Where the parties settle their dispute, the arbitral proceedings will terminate. At the request of the parties, the arbitral tribunal records the settlement in the form of an award on agreed terms. 72 Ibid, art 28. An award on agreed terms has the same effect as any other award made by an arbitral tribunal and must comply with the requirements set out in paragraph 8.2.3 above.

8.4.1 The parties can decide in the Compromisso Arbitral how future costs of the arbitration will be borne (including the arbitrators’ fees and the parties’ legal fees). 73 Ibid, art 11.

8.4.2 In the absence of any prior agreement between the parties on this issue, the arbitral tribunal will determine the costs of the arbitration and allocate the responsibility for paying such costs between the parties. 74 Ibid, art 27.  The arbitral tribunal may order the parties to make deposits to cover expenses and actions as it deems necessary. 75 Ibid, art 13(7).

8.4.3 As a general rule, the winning party is entitled to recover its costs from the losing party. However, if the winning party is only partly successful, its recovery may be limited to those costs attributable to the extent of its success.

8.5.1 The arbitral proceedings terminate when the final award is issued. In certain limited circumstances, the arbitral proceedings may terminate before the final award is issued (for example, where an arbitrator dies or refuses appointment and cannot be replaced).

8.6.1 The award is effective and binding on the parties to the arbitration, as well as their successors, in the same way as a court judgment. Once approved, a foreign award has the same effect as a Brazilian court judgment (further details of the approval process are set out in paragraph 11.2 below).

8.6.2 The courts do not have the power to redetermine or analyse the merits of the award, but they may grant injunctions or enforce awards. 76 Brazilian Code of Civil Procedure, art 961.

8.7.1 Any party may, within five days of receipt of an award, file a motion for the arbitral tribunal to clarify the terms of the award. 77 Brazilian Arbitration Act, art 30.  The motion may request that the arbitral tribunal correct any material error; clarify the grounds on which the award has been determined; or decide a claim presented in the arbitral proceedings that it failed to determine in the award. Such motions may be submitted even where the party expressly confirms that it will not be appealing against the award. If the request is accepted, the arbitral tribunal has to issue the corrected award or addendum to the parties within ten days of the request. 78 Ibid, art 30, sole paragraph.

9.1.1 The courts are excluded from assuming jurisdiction over disputes that the parties have agreed to submit to arbitration (as explained in paragraph 4.1.4 above).

9.1.2 In addition to the courts’ powers in relation to the appointment and challenge of arbitrators (as discussed above), the courts also have the power to determine whether the arbitration agreement is null and void, inoperative, or incapable of being performed. In accordance with the principle of kompetenz-kompetenz, matters concerning the validity of the arbitration agreement may only be decided by the court, after the tribunal’s decision on whether it has jurisdiction to hear the matter. 79 KwikasairCargasExpressas S/A; KwikasairCargasExpressas S/A – Bankrupt Estate and others v AIG Venture Holdings Ltd in the Special Appeal n. 1.355.831, Superior Court of Justice, Judgement of 19 March 2013, published on 22 April 2013.

9.1.3 The courts may also assist in the enforcement of interim measures rendered by the arbitral tribunal (see paragraph 6.2.3 above).

9.2.1 If an action concerning a dispute which is subject to an arbitration agreement is brought before a court, the court is required to immediately terminate the proceeding without deciding on the merits. 80 Brazilian Code of Civil Procedure, art 485 VII.  The court will terminate the proceedings unless it considers the arbitration agreement to be null and void, inoperative, or incapable of being performed. If the court fails to terminate the proceedings, the respondent can raise the existence of the arbitration agreement as a defence. 81 Ibid, art 337 X.

9.3.1 Where the arbitral tribunal rules on its own jurisdiction (see paragraph 6.1.1 above), a party has 90 days from the date of receipt of the arbitral tribunal’s ruling on jurisdiction to appeal to the competent court on whether the arbitral tribunal has jurisdiction. 82 Brazilian Arbitration Act, art 20 and art 33 (1).

9.4.1 The courts in Brazil have jurisdiction to grant interim measures in support of arbitral proceedings before constitution of the arbitral tribunal. 83 Examples of such powers are discussed at paragraph 5.2.6 in relation to challenging an award based on rejection of a challenge to an arbitrator and paragraph 9.5.1 in relation to obtaining evidence.  Once the arbitration has commenced, the arbitral tribunal may maintain, modify or revoke the court’s interim measures. 84 Brazilian Arbitration Act, art. 22-B.  The arbitral tribunal may also issue an arbitral letter, to request that the local court performs, or orders performance, of certain measures. 85  Brazilian Arbitration Act, art 22-C.

9.5.1 The local courts have jurisdiction to assist the arbitral tribunal in obtaining evidence (see paragraph 7.9 above). 86 Brazilian Arbitration Act, art 22-C.

10.1.1 A party has 90 days from the date the award is rendered or modified to apply for an order annulling the award. Such application has to be made to the court which would ordinarily have had jurisdiction over the substantive dispute in arbitration were it not for the arbitration agreement. 87 Ibid, art 33 s 1.

10.1.2 The arbitrator acts as a judge of fact and law. Awards are not subject to appeal to the courts. 88 Ibid, art 18.  An award may, however, be annulled if one of the limited grounds set out in paragraph 10.2.1 below applies.

10.2.1 The award may be challenged before the competent court and set aside for any one or more of the following reasons:

• the arbitration agreement is null;
• the award is issued by one or more individuals who are not capable of acting as an arbitrator;
• the award does not comply with the requirements provided in the Brazilian Arbitration Act as set out in paragraph 8.2.3 above;
• the award extends to issues that fall outside the scope of the arbitration agreement;
• the award was rendered under prevarication, extortion or as a result of corruption;
• the award was issued after the agreed time limit; or
• an arbitrator failed to act impartially or independently when rendering the award; or ignored the obligation to treat parties fairly. 89 Ibid, art 32.

10.2.2 If the court declares the arbitral award null and void, it will either set aside the award, or require, the arbitral tribunal to render a new award. 90 Ibid, art 33(2).

10.2.3 If the arbitrators fail to decide all matters subject to arbitration, a party may request that the state courts issue an order for the arbitral tribunal to issue a complementary arbitral award dealing with the outstanding issues. 91 Ibid, art 33(4).

11.1.1 The determining factor as to whether an arbitral award is foreign or domestic is the geographic location where the award was rendered, meaning that the member(s) of the Tribunal were physically situated there when the Tribunal issued the award. 92 Brazilian Arbitration Act, art 34; and Nuovo Pignone SpA v Marítima Petróleo e Engenharia Ltda and Petromec Inc, (Special Appeal No 1.231.554/RJ)  Awards rendered in Brazil or by an arbitral tribunal having its legal seat in Brazil are treated as domestic awards. This is the case even where the parties have selected foreign arbitration rules, such as the ICC Rules, to govern the procedure of the arbitration. 93 Recurso Especial 1.231.554.

11.1.2 An award has the same effect as a final, binding and non-appealable court judgment. 94 Brazilian Arbitration Act, art 18.  The court which has jurisdiction for enforcement is the local court where the arbitration procedure was held, except in respect of a foreign award, the enforcement procedure for which is set out in paragraph 11.2 below.

11.2.1 Awards rendered outside Brazil are enforceable in Brazil according to international treaties ratified by Brazil (principally the New York Convention – see paragraph 11.2.3 below). 95 Ibid, art 34, sole paragraph  In the absence of any applicable treaty, foreign awards must be recognised by the Brazilian courts and enforced in accordance with the rules provided in the Brazilian Arbitration Act.

11.2.2 Foreign awards are subject to approval by the Superior Court of Justice. 96 Ibid, art 35. Jurisdiction to hear approval applications was transferred from the Brazilian Supreme Court to the Superior Court of Justice under Constitutional Amendment No.45 of 8 December 2004.  The grounds for refusing the recognition of a foreign award are:

• lack of capacity of the parties to enter into the arbitration agreement;
• invalidity of the arbitration agreement according to the governing law or, in the absence of an express choice of law, according to the law of the seat where the award was issued;
• improper notice of the arbitration procedure being given to the respondent, including not being afforded the right to submit its defence;
• the award exceeding the scope of the arbitration agreement (unless it is possible to sever the excess part(s) from the valid part of the award);
• failure to comply with the arbitral process envisaged in the arbitration agreement; 
• the award being unenforceable, set aside or suspended by a court of the jurisdiction in which it has been issued;
• the award involving a dispute which, according to Brazilian law, may not be resolved by means of arbitration; and
• the award being contrary to Brazilian public policy.

11.2.3 The grounds for refusal set out above are virtually identical to those set out in the New York Convention and the Panama Convention, two treaties on the enforcement of foreign awards to which Brazil is a signatory. The provisions of the New York Convention are in force in Brazil and apply to the recognition and enforcement of foreign awards. Brazil has not made any reservations to the New York Convention, 97 <<https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2> (last accessed 19 June 2020).  and therefore, subject to the grounds for refusal set out in paragraph 11.2.2 above, all foreign awards should be recognised and enforced in Brazil under the New York Convention (even if made in the territory of a non-signatory state).

11.2.4 Once the award is approved by the Superior Court of Justice, it can be enforced by a lower Brazilian federal court. It should be noted that the approval process renders the award public.

12.1.1 The requirements set out in paragraph 4.1.3 above for an arbitration clause which appears in a contrato de adesão or adhesion/standard form contract are equally applicable where the weaker party is a consumer. As such, a consumer will not be bound by any arbitration agreement in a contrato de adesão unless the requirements set out in paragraph 4.1.3 above have been satisfied. 98 Brazilian Arbitration Act, art 4(2).

12.1.2 Article 51, VII of the Consumer Code (Law no. 8.087/1990) establishes that a clause in a consumer contract providing for the compulsory use of arbitration is null and void. However, recent jurisprudence considers that such a clause satisfies the requirements of article 4(2) of the Brazilian Arbitration Act, if the consumer initiates the arbitration or, if the arbitration is initiated by the service/product provider and the consumer agrees to it. 99 REsp 1.189.050/SP, 01 March 2016, Superior Tribunal of Justice (Superior Tribunal de Justica – STJ).

12.2.1 For the purposes of Brazilian employment law, a distinction is drawn between collective and individual employment disputes. Collective employment disputes (ie those involving a group of employees and an employer or a group of employers) may be submitted to arbitration. 100 Brazilian Constitution, art 114(2).

12.2.2 In relation to individual employment disputes, since the labour reform of 2017, arbitration is permitted if (a) the employee’s salary is higher than twice the maximum limit for social security benefits, and (b) the employee initiates the arbitration, or if initiated by the employer, the employee voluntarily accepts it. 101 Art. 507-A of the Consolidation of Labour Laws (Decree-Law no. 5.452 of 01 May 1943, amended by Law no. 13.467, of 13 July 2017).

12.3.1 Historically, rights of the government were non-disputable under Brazilian law and, as such, could not be subject to arbitration. However, legislative changes have made it possible for parties contracting with public authorities to provide for arbitration (or other private dispute resolution methods) as a means of resolving disputes.

12.3.2 One of the most important laws for foreign investors in Brazil is the 2004 Public Private Partnerships Law (PPP Law), 102 Law no. 11079 of 30 December 2004.  which sets out the general rules for bidding and contracting via public private partnerships (which are arrangements between public authorities and the private sector for the performance of large-sized works and utility services, by means of sponsored or administrative concessions, sharing the venture risks and primarily relying on private funding). Parties to contracts entered into under the auspices of the PPP Law may resolve disputes arising from those contracts using alternative dispute resolution methods, including arbitration. 103 Ibid, art 11, III.

12.3.3 Similarly, the law governing the concession of public services 104 Law no. 8987 of 13 February 1995.  was amended in 2005 to allow for the use of alternative dispute resolution methods, including arbitration. 105 Law no. 11196 of 21 November 2005, art 120.  Another example is the Petroleum Law, which provides that concession agreements for the exploration and production of oil and gas between the government and a private party should contain an arbitration clause. 106  Law no 9.478 of 6 August 1997, art. 43,X.

12.3.4 However, both the PPP Law and the law governing the concession of public services stipulate that:

• any such arbitral proceedings must be held in Brazil;
• the language of the arbitration must be Portuguese; and
• the arbitration be conducted in accordance with the Brazilian Arbitration Act. 107

12.3.5 The scope of arbitration in the context of PPPs and concessions has been debated. As discussed in paragraph 4.2.2 above, only patrimonial rights of public entities may be subject to arbitration. This was reaffirmed by an amendment to the Brazilian Arbitration Act in 2015. This amendment included certain provisions expressly allowing public entities to resort to arbitration to resolve conflicts involving disposable patrimonial rights. The Brazilian Arbitration Act further provides that whenever an arbitration involves a public entity, the arbitration must be public, in accordance with the principle of publicity applied to governmental entities. 108 Brazilian Arbitration Act, art. 1(2), and art. 2(3).

13.1.1 Arbitration has grown exponentially in Brazil and is now perceived as the natural method of dispute resolution among private contracting parties in Brazil.

13.1.2 Although the Brazilian Arbitration Act may not always have been applied uniformly by the courts in the 26 states of Brazil, the Brazilian judiciary has an excellent track record of upholding arbitration agreements and supporting the arbitral process, where called upon to do so. 

13.1.3 The vast majority of arbitral proceedings in Brazil run smoothly without any major obstacles, with the parties complying voluntarily with the award. Few awards are the subject of an application for annulment. On the rare occasion that an application for annulment is upheld by the state court, this tends to be for technical reasons, relating to the jurisdiction of the arbitral tribunal or the scope of the Brazilian Arbitration Act or the arbitration agreement.

13.1.4 The recent changes to the Brazilian Arbitration Act (Law no. 13.129/2015), the provisions dealing with arbitration in the new Brazilian Code of Civil Procedure (Law no. 13.105/2015), and new employment law provisions show that arbitration in Brazil is here to stay. The changes to the Brazilian Arbitration Act have resulted in practices with widespread application, such as arbitrations involving public entities, powers of the arbitrators to issue interim protective measures, and applications concerning companies’ constitutional documents. The Brazilian Code of Civil Procedure has established coordination between the arbitral tribunal and the courts, through the arbitral letter (carta arbitral), which affords further protection of the arbitral procedure.