Arbitration Law of Brazil: Practice and Procedure

1. Scope of the book

2. General overview

2.1. Historical background of arbitration in Brazil.

2.1.1. Early legal framework.

2.1.2. The Civil Code of 1916 and the Code of Civil Procedure of 1973.

2.1.3. The Arbitration Bill.

2.1.4. The Arbitration Law of 1996.

2.1.5. Constitutionality of the Arbitration Law of 1996.

2.1.6. The Civil Code of 2002.

2.2. Definition and nature of arbitration under the Brazilian legal framework

2.2.1. Definition of arbitration.

2.2.2. Legal nature.

2.3. Forms of amicable dispute resolution.

2.3.1. Mediation.

2.3.1.2. Mediation clauses.

2.3.1.2. Clauses combining arbitration and mediation.

2.3.2. Conciliation

2.3.4. Other ADRs.

3. Arbitrability

3.1. Exposition of the issue.

3.2. Subjective limits to arbitration – who can be a party to arbitration

3.2.1. Arbitration in concession of public services

3.2.2. Arbitration in oil and gas exploration and production agreements

3.2.3. Arbitration in telecommunication disputes

3.2.4. Arbitration in transportation disputes

3.2.5. Arbitration in public-private partnership

3.3. Objective limits to arbitration - matters which cannot be arbitrated

3.4. Arbitration in consumer contracts and adhesion contracts

3.5. Arbitration in agency agreements

3.6. Procedure for preliminary questions that cannot be arbitrated

4. Law applicable to the merits

4.1. Choice of substantive law.

4.1.1. Choice of foreign law in domestic arbitration.

4.1.2. Applicable law if the contract is silent.

4.2. Public policy

4.3. Judgment ex aequo et bono.

4.4.General principles of law, commercial usage, custom, international business principles andlexmercatoria.

4.4.1. General principles of law.

4.4.2. Trade usages and customs.

4.4.3. International business rules.

4.4.4. Lex mercatoria.

5. Arbitration Agreements

5.1. Arbitration agreements

5.2. Arbitration clauses: nature and validity

5.2.1. Representation of a party through a power of attorney.

5.2.2. Lack of signature of a party in the contract containing the arbitration clause.

5.3. Autonomy of arbitration clauses

5.4. Negotiating and drafting an arbitration clause.

5.5. Scope of the clause

5.6. Institutional or ad hoc arbitration.

5.6.1. Institutional arbitration.

5.6.1.1. Advantages and disadvantages of institutional arbitration.

5.6.1.2. Choice of arbitration institution.

5.6.1.2.1. Administrative fees charged by arbitration institutions.

5.6.1.3. Selection of an institution as deterrence against future claims.

5.6.1.4. Administration of arbitration by one institution under another institution’s rules.

5.6.2. Ad hoc arbitration.

5.7. Language.

5.7.1. Applicable language if the arbitration agreement is silent.

5.8. Seat of arbitration

5.8.1. Seat of arbitration, in the absence of agreement

5.8.2. Performance of procedural acts in places other than the seat of arbitration

5.9. Efficacy of burdensome arbitration clauses

5.10 Pathologic arbitration clauses

5.11. Effects of arbitration clauses against third parties.

5.11.1. Effects of an arbitration clause on a contract’s assignee.

5.12. Specific performance of arbitration clauses.

5.12.1. Controversy as to the need to seek judicial enforcement, in case of a full arbitration clause.

5.12.2. Previous notice before judicial enforcement.

5.12.3. Procedure for judicial enforcement of arbitration clauses.

5.12.4. Judicial enforcement of arbitration awards involving contracts executed before the Arbitration Law of 1996.

5.13. Submission agreements.

5.14. Termination of the arbitration agreement

5.14.1. Bankruptcy

6. Arbitrators

6.1. Requirements to serve as arbitrator

6.2. Number of arbitrators

6.3. Choosing an arbitrator

6.3.1. Knowledge of the subject matter

6.3.2. The arbitrator’s nationality.

6.3.3. Language.

6.4. Chair of the arbitral tribunal

6.5. Co-arbitrators.

6.6. Secretary of the arbitral tribunal.

6.7. Procedure for appointment of arbitrators.

6.7.1. Arbitrator appointment in institutional proceedings.

6.7.1.1. List of recommended arbitrators.

6.7.2. Arbitrator appointment in ad hoc proceedings.

6.7.3. Arbitrator appointment in multiple-party arbitrations.

6.7.4. Judicial court assistance in appointment.

6.8. Arbitrators’ duties

6.8.1. Competence.

6.8.2. Diligence.

6.8.3. Discretion.

6.8.4. Independence and impartiality.

6.8.4.1. Neutrality.

6.8.4.2. Ex parte contacts with the arbitrator.

6.8.5. Duty to disclose.

6.9. Challenge of arbitrators.

6.9.1. Grounds for challenge.

6.9.2. Procedure for challenge.

6.9.3. Confirmation of arbitrators.

6.10. Replacement of arbitrators.

6.11. Arbitrators’ liability.

6.11.1. Civil liability.

6.11.2. Criminal liability.

6.12 Arbitrators’ fees

7. Arbitral Proceeding

7.1. Procedural rules.

7.1.1. Subsidiary application of foreign procedural rules.

7.2. Mandatory principles.

7.2.1. Full defense and proper response (contraditório).

7.2.2. Equal treatment of the parties.

7.2.3. Arbitrators’ impartiality and free convincement.

7.3. Confidentiality.

7.3.1. Confidentiality and administrative law entities.

7.4. Representation of the parties.

7.5. Initial written submissions

7.5.1. Request for arbitration.

7.5.2. Answer to the claim.

7.5.3. Respondent’s default.

7.5.4. Counterclaims.

7.5.5. Amendment to the claim or counterclaim.

7.5.6. Further written statements.

7.6. Multiple-party disputes.

7.6.1. Compulsory joinder.

7.6.2. Permissive joinder.

7.6.3. Consolidation of claims.

7.7. Third party intervention.

7.8. Formal institution of the arbitration.

7.9. Pleas against jurisdiction and/or the arbitrator.

7.10. The arbitral tribunal’s competence to rule on its own jurisdiction (“competence-competence”) andanti-suit injunctions.

7.11 Terms of reference

7.12. Mandatory conciliation of the parties.

7.13. Coercive and urgent measures during the arbitration.

7.13.1 Urgent measures before formation of the arbitral tribunal

7.13.1.1. Revocation by an arbitration tribunal of preliminary injunctions granted by a judicial court.

7.13.2. Coercive and urgent measures after the formation of the arbitral tribunal.

7.13.3. Venue for coercive and urgent measures.

7.13.4. Antecipação de tutela.

7.14. Interlocutory orders.

7.14.1. Mandamus against interlocutory orders.

7.15. Summary judgment.

7.16. Submission of evidence.

7.16.1. Statements of representatives and witnesses.

7.16.2. Request for documents and discovery.

7.16.3. Expert examinations.

7.17. Hearings.

7.17.1. Hearing dates.

7.17.2. Place of the hearing.

7.17.3. Language of the hearing.

7.17.4. Calling of witnesses or the parties’ representatives to appear at the hearing.

7.17.5. Attendance at hearings.

7.17.6. Hearing procedure.

7.17.7. Cross examination at hearings.

7.17.8 Record of the hearing.

7.17.9. Post-hearing submissions.

7.18. Closing the proceeding.

7.19. Repetition of evidence, in case of arbitrator replacement.

8. The Award

8.1. Time limit to issue the award.

8.1.1. Extension of the time limit.

8.2. Formal requirements of the award.

8.2.1. Summary of the proceeding.

8.2.2. Reasoning.

8.2.3. Decision.

8.2.3.1. Liquidated awards.

8.2.3.2. Interest and indexation for inflation.

8.2.4. Date and place of the award.

8.2.5. Signature of the arbitrators.

8.2.6. Practical note on drafting an award.

8.2.7. Tied decision.

8.2.8. Dissenting arbitrator’s opinion.

8.3. Partial arbitral awards.

8.4. Settlement award.

8.5 Scrutiny of the award by the arbitration institution.

8.6. Delivery of the arbitral award.

8.7. Correction and clarification of the award.

8.8. Res judicata in arbitration.

8.9. Application to set aside an arbitral award.

8.9.1. Invalidity of the arbitration agreement.

8.9.2. Incompetence of the arbitral tribunal.

8.9.3. Formal defects of the award.

8.9.4. Awards outside the scope of the arbitration agreement or that do not decide all the issues submitted to arbitration.

8.9.5. Criminal misbehavior of the arbitrators.

8.9.6. Failure to issue the award within the applicable time limit.

8.9.7. Breach of procedural principles.

8.9.8. Procedure for such application.

8.9.9. Partial invalidity of the arbitral award.

8.9.10. Application to set aside foreign arbitral awards.

8.9.11. Suspension of the enforcement of an arbitration award pending an annulment lawsuit.

8.9.12. Rescission lawsuit

8.10. Challenge to judicial enforcement of an arbitral award (impugnação).

8.11.Decision on costs and expenses.

8.11.1. Attorney’s fees.

9. Recognition and enforcement of foreign awards

9.1. Domestic and foreign awards.

9.2. Recognition and enforcement of foreign awards

9.3. The New York Convention

9.3.1. Alleged abolishment of the exequatur requirement.

9.4. Grounds to deny exequatur of foreign awards.

9.4.1. Incapacity of a party.

9.4.2. Invalidity of the arbitration agreement.

9.4.3. Absence of proper notice and other impediments to presenting a proper defense.

9.4.4. Awards outside the scope of the arbitration agreement.

9.4.5. Arbitration proceedings conducted contrary to the arbitration agreement.

9.4.6. Not yet binding, annulled or suspended arbitral awards.

9.4.7. Arbitral award on a non-arbitrable matter.

9.4.8. Arbitral award against public policy.

9.4.8.1. Ungrounded foreign awards.

9.4.8.2. Service of process as a public policy issue.

9.5. Standard exequatur procedure.

Appendices

I) Commentary

1. Ten Years of the Arbitration Law of 1996: Overview and Prospects.

Pedro Baptista Martins

2. Arbitration in Brazil: Case Law Perspective

Arnoldo Wald

3. Arbitration in Brazil: The ICC Experience

Cristian Conejeros Roos and Renato Grion

4. Treaties on Arbitration in Force in Brazil

Carmem Tiburcio

5. Some Remarks on Arbitration in Corporate Law

Nelson Eizirik

6. The Arbitration Process

Carlos Alberto Carmona

II) Selected Treaties and Legislation.

1. Laws

1.1. Arbitration Law of 1996.

1.2. UNCITRAL Model Law

2. International Treaties

2.1. New York Convention of 1958.

2.2. Geneva Protocol of 1923

2.3. Panama Convention of 1975.

2.4. Montevideo Convention of 1979.

2.5. Protocol of Brasilia of 1991

2.6. Las Leñas Protocol of 1992 (Portuguese)

2.7. Protocol of Ouro Preto of 1994

2.8. Buenos Ayres Convention of 1998 (Portuguese)

2.9. Olivos Protocol of 2002

3. Rules of International Arbitration Institutions (On CD-ROM)

3.1. Arbitration Rules of the International Court of Arbitration of the International Chamber of Commerce - ICC.

3.2.International Dispute Resolution Procedures for the International Centre for Dispute Resolution - ICDR

3.3. Rules of Procedure of the London Court of International Arbitration - LCIA

3.4. UNCITRAL Arbitration Rules

3.5. UNCITRAL Conciliation Rules

3.6. Rules of Procedure of the Inter-American Arbitration Commission

4. Rules of Brazilian Arbitration Institutions

4.1. Arbitration Rules of the Arbitration Center of the American Chamber of Commerce São Paulo

4.2. Arbitration Rules of the The Brazilian Center of Mediation and Arbitration – CBMA

4.3. Arbitration Rules of the Brazil-Canada Chamber of Commerce

Joaquim T. de Paiva Muniz is a Partner of the Rio de Janeiro office of Trench, Rossi & Watanabe - associated with Baker & McKenzie International. He is also Professor of Business Law and Arbitration in the graduate courses of Fundação Getúlio Vargas (FGV) and Rio de Janeiro State University (UERJ), as well as General Secretary of the Arbitration and Mediation Chamber and coordinator of the Arbitration Commission of the Brazilian Bar, Rio de Janeiro Chapter (OAB/RJ) and author of several articles on international arbitration and Brazilian corporate law.

Ana Tereza Palhares Basílio is a Partner of Andrade & Fichtner Advogados in Rio de Janeiro. Admitted to practice in Brazil, she is also Professor of Arbitration in the graduate courses of Fundação Getúlio Vargas (FGV) and. a member of the chapter management council of the OAB/RJ, Chairwoman of the Arbitration and Mediation Chamber and the Corporate Law Commission of OAB/RJ, as well as Vice-President of its Arbitration Committee. She is a member of the editorial board of Revista de Arbitragem e Mediação and author of several articles on international arbitration and Brazilian civil law.

About the Collaborators:

Arnoldo Wald is a lawyer practicing in São Paulo, Rio de Janeiro and Brasília and is Admitted to practice in Brazil and France. He has a Doctor Honoris Causa - University of Paris II.  He is a Senior Professor of the Rio de Janeiro State (UERJ) Law School. Mr. Wald is a Member of the ICC International Court of Arbitration and Editor–in–Chief of Revista de Arbitragem e Mediação. He is author of several books on arbitration, commercial law and civil law.

Carlos Alberto Carmon was one of the three members of the committee that drafted the Brazilian Arbitration Law. He is a lawyer in São Paulo with a Ph.D. from University of São Paulo (USP) Law School. He is Professor of Civil Procedure at USP and author of several books and articles on arbitration.

Carmem Tiburci is a lawyer practicing in Rio de Janeiro. Admitted to practice in Brazil, she has a Ph.D. and LL.M. from the University of Virginia Law School. She is Professor of International Private Law at State of Rio de Janeiro State University (UERJ) Law School and author of several books on international law and international arbitration.

Cristián Conejero Roos is a counsel of the Secretariat of the ICC International Court of Arbitration (Paris, France). Admitted to practice in Chile, she has an LL.M. and was a recipient of the Parker School Recognition for Achievement in International and Comparative Law - Columbia University School of Law.

Nelson Eizirik is a lawyer practicing in Rio de Janeiro and São Paulo. He is a Professor of Corporate Law at the Rio de Janeiro State Magistrate School. He is the author of several books on Brazilian Corporate Law.

Pedro Baptista Martins was one of the three members of the committee that drafted the Brazilian Arbitration Law. He is a lawyer practicing in Rio de Janeiro and São Paulo and Professor of Arbitration at the Rio de Janeiro State Magistrate School. He is the author of several books and articles on arbitration.

Renato S. Grion is an assistant counsel of the Secretariat of the ICC International Court of Arbitration (Paris, France). Admitted to practice in Brazil, he has an LL.M. from Northwestern University School of Law, a graduate certificate in Business Administration from the Kellogg School of Management and a DESS juriste d’affaires international, with honors from University of Paris V.