Apr 2023

Brazil

Law Over Borders Comparative Guide:

Arbitration

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1 . Key considerations in deciding whether to arbitrate in this jurisdiction

Since Brazil enacted its first modern arbitration law in 1996, the country has become one of the most active and important arbitration markets in the world. The number of arbitrations seated in Brazil, the amounts in dispute involved, and the quantity of institutions and practitioners acting in the field can hardly be found in any other jurisdiction.

Choosing an arbitral seat in Brazil is a safe option for foreign parties, considering its modern arbitration legislation (namely the Brazilian Arbitration Act (BAA), which was reformed in 2015) and the very pro-arbitration approach taken by Brazilian courts over the past few years.

Nonetheless, it would be helpful for foreign users to get acquainted with the particularities of Brazilian arbitrations to avoid surprises, facilitate communication with local lawyers, and ensure that the most advantageous strategic decisions are taken.

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1.1. Advantages

The most commonly considered advantages of having an arbitral seat in Brazil are:

  • its modern arbitration law;
  • generally arbitration-friendly state courts;
  • the broad variety of institutions, including specialized institutions (such as the Câmara do Mercado (CAM-B3), which specializes in the resolution of corporate law/capital market disputes) experienced in handling both domestic and international arbitrations;
  • a diverse pool of Brazilian arbitrators, experienced in handling both domestic and international arbitrations;
  • respect for party autonomy;
  • flexibility of the arbitral proceedings;
  • recognition of the competence-competence principle;
  • limited grounds for annulment of the award; and
  • possibility of direct enforcement of arbitral awards rendered in Brazil, without the need for recognition proceedings.
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1.2. Disadvantages and common pitfalls

Depending on the Arbitral Tribunal, certain aspects of the proceedings may be highly influenced by Brazilian local practice and culture, for example:

  • the use of legal expert reports provided by party-appointed scholars;
  • neutral experts regularly appointed by the Arbitral Tribunal;
  • written witness statements not being the general rule;
  • adoption of local practices regarding the organisation of the arbitral procedure, including incomplete procedural calendars;
  • succumbence fees (honorarios de sumbência  a type of penalty fee or defeat costs to be paid to the lawyers of the winning party) may prompt discussions regarding costs; and 
  • some courts’ reluctance to uphold the confidentiality of the arbitral proceedings once court assistance is requested, because some judges understand that arbitration does not fall within the exceptions to the constitutional requirement that all court proceedings be public. Accordingly, even when parties have agreed that the arbitral proceedings should remain confidential, once court assistance to the arbitration is sought, a Brazilian judge may reject a party’s request to keep the judicial proceedings under seal.
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1.3. Other distinctive features

Brazil is a very large country comprised of numerous states. State courts from different states of the Brazilian Federation may have very different levels of familiarity with arbitration.

The Brazilian public administration has recently become one of the main users of arbitration (for example, in disputes involving concession contracts and public infrastructure projects).

Purely domestic arbitrations make up a large share of the market; despite the ongoing trend towards internationalization, most arbitration proceedings in Brazil provide for domestic rather than international elements.

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2 . Principal laws and institutions relating to international arbitration in this jurisdiction

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2.1. Legal framework

The principal legislation relating to arbitration is the BAA of 1996, which was modified in 2015. The BAA was inspired by the UNCITRAL Model Law, although with some adjustments, such as, for example, when it comes to the distinction between international and domestic arbitrations (Brazil follows the so-called monist approach).

The 2015 amendment maintained all the main pro-arbitration features of the 1996 law, including:

  • respect for party autonomy;
  • the monist approach;
  • recognition of the competence-competence principle;
  • separability of the arbitration agreement;
  • flexibility of the arbitral proceedings;
  • flexibility on the production of evidence; and
  • limited grounds for annulment of the award. 

The essential modernizations of the 2015 reform of the BAA include:

  • the express authorization for the State and State-owned entities to enter into arbitration agreements (Article 1);
  • the possibility for parties to nominate arbitrators who are not listed on institutional lists of arbitrators (Article 13(4));
  • clear provisions on provisional measures and interim relief (Art. 22-A, 22-B) (see Section 7.1 below);
  • introduction of an “arbitral letter” (carta arbitral), a legal instrument of communication and cooperation between Arbitral Tribunals and state courts (Article 22-C);
  •  the express authorization for Arbitral Tribunals to render partial awards (Article 23(1));
  • inclusion of Article 136-A into the Brazilian Corporation Law to indicate that shareholders are bound by arbitration agreements contained in by-laws; and
  • clarification that the commencement of an arbitration interrupts the prescription period (Article 19(2)).

Since 2002 Brazil has been a member of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).

Brazil is not a member of the Washington Convention of 1965 (“ICSID Convention”) and is not a party to any bilateral investment treaties providing for investor-state arbitration. In the context of foreign investment, it seems noteworthy that many of the arbitrations taking place in Brazil are “commercial” or “contractual investment arbitrations” involving the State or State-owned entities. This is, of course, favoured by the 2015 BAA which explicitly provided that the State or State-owned entities may enter into arbitration agreements. 

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2.2. What qualifies as international arbitration?

The BAA does not distinguish between international and domestic arbitrations (the monist system), and only distinguishes between foreign and domestic awards. According to Article 34, sole paragraph of the BAA, any award rendered outside of Brazilian territory is a foreign award, regardless of factors such as the nationality of the parties, the nature of the underlying contract, or the applicable law.

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2.3. Main local international arbitration institutions

There are many different important arbitral institutions in Brazil. The most commonly used institutions are:

  • the Centre for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (CAM-CCBC);
  • the International Chamber of Commerce (ICC), which opened its first Latin American office in the city of São Paulo in 2017;
  • the Business Mediation and Arbitration Chamber – Brazil (CAMARB);
  • the Chamber for Conciliation, Mediation and Arbitration of the State of São Paulo (CIESP-FIESP);
  • the Market Arbitration Chamber (CAM-B3);
  • the Brazilian Centre for Mediation and Arbitration (CBMA);
  • the Centre for Arbitration and Mediation of the American Chamber of Commerce (AMCHAM); and
  • The Fundação Getulio Vargas Chamber of Mediation and Arbitration (FGV).

In general, parties in Brazil tend to choose one of these institutions to administer their disputes instead of opting for ad hoc proceedings. Whilst CAM-CCBC remains the largest institutional player in Brazil in terms of the number of cases, and ICC’s São Paulo office handles the highest overall amount in dispute, there is a relatively balanced division of the market among the remaining major institutions.

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3 . Arbitration agreements

The definition of arbitration agreement can be found in Article 3 BAA, which distinguishes between agreements concluded before the existence of a dispute (cláusula compromissória) and agreements concluded by the parties after a dispute has arisen (compromisso arbitral). 

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3.1. Requirements as to content and form

According to Article 4(1) of the BAA, the arbitration agreement must be in writing, and may either be inserted directly into the relevant contract or included by reference to the clause in a separate document. There are no specific requirements regarding the content of the arbitration agreement, as long as it provides that the parties agree to submit the relevant disputes to arbitration, thereby waiving their right to a state court judge. It is judicious, however, to either refer to the institutional rules the parties wish to apply or otherwise clarify that the arbitration shall be ad hoc (notably, ad hoc proceedings are very rare in Brazil). There are special requirements for arbitration clauses inserted in standard form contracts (so-called adhesion contracts), according to Article 4(2) of the BAA (see Section 3.3 below).

If parties cannot agree on the basic elements for the commencement of the arbitration (e.g., the constitution of the Arbitral Tribunal) and the arbitration agreement does not provide for any rules in that respect (so-called “empty” arbitration clause), the interested party can seek assistance from state courts, according to Article 7 of the BAA.

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3.2. Validity of arbitration agreements

According to Article 1 of the BAA, persons that have the capacity to conclude contracts may enter into arbitration agreements (subjective arbitrability), and arbitration may be agreed to solve disputes concerning disposable patrimonial rights, i.e., rights that can be alienated or assigned (objective arbitrability). 

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3.3. Special formalities

Special formalities apply regarding adhesion or standard form contracts according to Article 4(2) of the BAA, in which the arbitration clause only becomes effective if the adhering party initiates the arbitration or expressly agrees to its commencement, provided that the written clause is contained in an attached document, or in bold, with signature or initials to be inserted especially for this clause.

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3.4. Governing law

Considering the importance of the seat attributed by the BAA, the seat tends to be the decisive factor when determining the law applicable to the arbitration agreement, unless otherwise expressly agreed by the parties. 

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4 . Arbitrability

See Section 3.2 above for comments on subjective and objective arbitrability.

As also mentioned above in Section 2.1 regarding the 2015 reform of the BAA, Article 1(1) of the BAA allows for the public administration to enter into arbitration agreements. Article 1(2) of the BAA determines further which authority or competent public administration entity may enter into the agreement, namely the same authorized to enter into settlement or transaction agreements. Disputes involving the public administration cannot be decided ex aequo et bono and must be public (Article 1(3) of the BAA).

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4.1. Applicable restrictions

Generally, according to Article 1 of the BAA, all disputes regarding patrimonial transferable rights can be resolved by arbitration. That being said, there are many discussions in Brazil on restrictions regarding objective arbitrability, for example, regarding disputes involving tax law issues, certain aspects of family law, IP, labour law, consumer law and restructuring proceedings. Even when they involve public law, disputes concerning competition and antitrust law are usually deemed to be arbitrable. 

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5 . Enforcing arbitration agreements

Brazilian courts respect arbitration agreements and recognize the competence-competence principle (Article 8 of the BAA).

If state court proceedings are initiated in breach of an arbitration agreement, the interested party must raise the issue as a preliminary objection, when submitting its answer to the claim before the state court. Once the arbitration agreement has been relied upon, the state court judge must dismiss the claim according to Article 337, X, and Article 485, VII, of the Brazilian Civil Procedure Code. If the interested party fails to raise the objection to the state court judge’s jurisdiction based on the arbitration agreement within the relevant time limit, the party is deemed to have waived its right to resort to arbitration and the judge can proceed to decide the case.

If an arbitration clause does not include the requirements for the commencement of the arbitration (i.e., if it does not include the process for the constitution of the Arbitral Tribunal), and a party objects to the commencement of the arbitration, the interested party may request that the other party be served to appear in court so that a submission agreement is drawn up and the arbitration initiated (Article 7 of the BAA). In case of a so-called “full” clause (see Section 3.1 above on the “empty” clause), that provides for the appointment process, arbitration can be commenced immediately (Article 5 of the BAA).

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5.1. Stay of proceedings

Brazil is an arbitration-friendly jurisdiction and generally respects party autonomy and the competence-competence principle, by not interfering in ongoing arbitral proceedings. Controversially, the Brazilian Superior Tribunal de Justiça (Superior Court of Justice or “STJ”) has ordered the suspension or termination of arbitral proceedings in the past, particularly where the Brazilian Federal Union (that is, the Brazilian State) was involved. The STJ has also granted applications for anti-suit injunctions in protection of arbitration, namely, to stop proceedings initiated overseas in breach of an arbitration agreement — on the basis of Article 22-A of the BAA — and the negative effect of the competence-competence principle contained in Article 8 of the BAA.

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5.2. Anti-suit injunctions

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6 . Arbitral Tribunal

Arbitral Tribunals can be comprised of one or several arbitrators, in an uneven number (Article 13(1) of the BAA). If the parties appoint arbitrators in an even number, these arbitrators are authorized to appoint an additional arbitrator to act as president. If the arbitrators fail to reach an agreement, the state court will appoint the president, if so requested by any of the parties (Article 13(2) of the BAA). 

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6.1. Restrictions on the parties’ freedom to choose arbitrators

Any individual with legal capacity, who is trusted by the parties, may serve as arbitrator, according to Article 13 of the BAA. There is no legal requirement regarding the arbitrator’s nationality or qualifications.

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6.2. Requirement of arbitrator independence and impartiality

According to Article 13(6) of the BAA, an arbitrator shall proceed with impartiality, independence, competence, diligence and discretion. Additionally, according to Article 14 of the BAA, individuals somehow linked to the parties or to the dispute are prevented from serving as arbitrators. Under Article 14(1), arbitrators have a duty to disclose when there is a justifiable doubt to their impartiality and independence.

The impartiality and independence requirements are very strictly controlled by local courts. For example, in a recent decision by the São Paulo Court of Appeals, it was considered that a breach of the arbitrator’s duty to disclose could, in and of itself, compromise the arbitrators’ impartiality and independence.

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6.3. Mandatory rules applicable to the appointment process

The equality of the parties with respect to the process of constitution of the Arbitral Tribunal must be guaranteed (Article 21(2) of the BAA), which is particularly relevant in multi-party scenarios. To grant this equality, institutional arbitration rules provide that in the absence of an agreement of the parties regarding the appointment process, and in order to protect the enforceability of the award, the institution may appoint all members of the Arbitral Tribunal.

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6.4. Appointment mechanism in the absence of party agreement or applicable institutional rules

In the absence of an appointment mechanism agreed by the parties, the state court may decide thereon (Article 7(4) of the BAA, see Section 5 above). 

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6.5. Mandatory rules applicable to the replacement process

Article 6 of the BAA sets forth the basic rules for the replacement of arbitrators, which could occur if they:

  • withdraw prior to accepting the appointment;
  • pass away after acceptance; 
  • become unable to carry out their duties; or 
  • are successfully challenged.

The provision essentially foresees that the alternative arbitrator indicated in the arbitration clause (if there is one) will assume the position of the arbitrator, failing which the agreed institutional rules shall apply. If no such rules have been agreed, the provision refers to Article 7 of the BAA, and a process as if no appointment mechanism had been agreed from the outset will apply (see above Section 5). In practice, given that it is rare for arbitral agreements to provide for an alternative arbitrator, and considering the sophistication of arbitral institutions in Brazil, the institutional rules will usually provide for a process to replace the arbitrator.

Notably, some of the circumstances listed in Article 16 of the BAA that may lead to a replacement may also lead to the termination of a submission agreement according to Article 12 of the BAA.

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6.6. Mandatory disclosure obligations

Before accepting a nomination as an arbitrator, a person appointed must disclose any fact that would give rise to justified doubts concerning their impartiality or independence (Article 14(1) of the BAA).

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6.7. Grounds for challenge

An arbitrator can be challenged if they do not comply with the requirements of impartiality and independence as set forth in Article 13(6) and Article 14 of the BAA (see Section 6.2 above), and, similar to a state court judge, in specific cases of relations to the parties and the dispute as addressed in Articles 144 and 145 of the Brazilian Civil Procedure Code.

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6.8. Mandatory rules governing the challenge of arbitrators

According to Article 14(2) of the BAA, a party can challenge an arbitrator only due to reasons that occurred after the appointment has been made, unless:

  • the arbitrator was not appointed directly by the party; or 
  • the reason for the challenge of the arbitrator becomes known after the appointment. 

As institutional arbitration rules mostly contain similar and even stricter requirements in terms of admissibility of a challenge, this provision rarely becomes relevant.

Article 15 of the BAA, which only becomes relevant when the parties have not agreed to any specific rules in this regard, foresees that a challenge should be filed directly to the sole arbitrator or to the president of the Arbitral Tribunal, setting forth the reasons for the challenge and containing pertinent evidence. In this case, the challenge will be decided by the sole arbitrator or the arbitral tribunal, as the case may be. However, as the most commonly used institutional rules contain specific provisions on challenge of arbitrators, usually such challenges will be decided by the institutions according to such rules (and not by the arbitrators according to Article 15). 

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6.9. Removal

The most commonly used institutional rules contain specific provisions pursuant to which the institution can remove arbitrators, see Sections 6.7 and 6.8 above).

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6.10. Liability and immunity of arbitrators

Article 14 of the BAA provides that arbitrators have the same obligations and liabilities as judges under the Civil Procedure Code.

Furthermore, Article 17 of the BAA states that arbitrators, in the exercise of their functions or as a result thereof, are subject to the same criminal law provisions applicable to civil servants.

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7 . Assistance by the State courts

Brazilian state courts are available to assist in arbitral proceedings in several ways, such as (amongst others):

  • to enforce an “empty” arbitration clause and assist with the constitution of the arbitral tribunal or appointment of the sole arbitrator;
  • to appoint or replace arbitrators, in the absence of an appointing authority agreed upon by the parties or provided for in the applicable rules;
  • to grant interim measures before the constitution of the arbitral tribunal;
  • to assist with the taking of evidence;
  • to enforce a domestic arbitral award;
  • to grant recognition and exequatur to a foreign arbitral award;
  • to enforce a foreign arbitral award that has been granted exequatur; or
  • to set aside a domestic arbitral award.
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7.1. Interim measures

Overview of interim measures

Before the constitution of the arbitral tribunal, a party may seek interim measures from a local court. Once the interim measure is granted, the party has 30 days to initiate the arbitral proceedings, according to Article 22-A, sole paragraph, BAA. Once the arbitral tribunal is constituted, it will review, confirm, modify or revoke the interim measure (Article 22-B of the BAA). Once the arbitral tribunal is constituted, it has the jurisdiction to grant interim measures.

Relevance of availability of emergency arbitrator mechanism

Some Brazilian institutions provide for emergency arbitrator proceedings in their arbitration rules. Parties should carefully consider whether the applicable rules provide for an “opt-in” or an “opt-out” mechanism regarding emergency arbitration.

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7.2. Taking of evidence

Brazilian state courts are available to assist parties and/or arbitral tribunals with the taking of evidence related to an arbitration. Some examples are:

  • interim measures for the anticipatory production of evidence before the initiation of the arbitral proceedings; and 
  • a motion to compel a witness to testify before the arbitrator or arbitrators, according to Article 22 (2) of the BAA.
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7.3. Appointment or challenge of arbitrators

In the absence of an appointment and replacement mechanism agreed by the parties (including the applicable institutional rules, if any), the national court may decide thereon (Article 7 BAA, see Sections 5, 6.4 and 6.5 above). 

As for the challenge of the arbitrators, the applicable institutional rules usually specify the authority to decide on the challenge. In the absence of such rules, Article 15 of the BAA establishes that a challenge should be filed either directly to the arbitrator or the president of the Arbitral Tribunal, setting forth the reasons for the challenge and containing pertinent evidence (see Section 6.8 above). Accordingly, Brazilian state courts do not decide on the challenge of arbitrators during the course of the proceedings, and only do so afterwards, at the enforcement/setting-aside stage.

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7.4. Other available assistance

Other types of assistance to arbitrations are, amongst others: 

  1. enforcing an “empty” arbitration clause and assisting with the constitution of the arbitral tribunal or appointment of the sole arbitrator (see Sections 3.1 and 5 above); 
  2. enforcing a domestic arbitral award; 
  3. granting recognition and exequatur to a foreign arbitral award; 
  4. enforcing a foreign arbitral award that has been granted exequatur; 
  5. setting aside a domestic arbitral award.

With respect to 1, 3, 4 and 5, see Sections 11 and 12 below.

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8 . General procedural (minimum) requirements

As mentioned above, the BAA respects party autonomy and is flexible on procedural aspects. As a general rule, the arbitral procedure will follow the parties’ agreement, with very few exceptions contained in mandatory rules to, if needed, ensure respect for due process and the adversarial principle (contraditório), as established by Article 21 (2) of the BAA.

The BAA does not require arbitrators to hold a hearing. If hearings are held, they do not need to be in-person. The BAA also indicates that the refusal of a party to testify before the arbitrator or the arbitral tribunal without any proper cause will be taken into consideration when issuing the arbitral award.

Moreover, the BAA is also flexible on the production of evidence, granting the arbitrators broad powers to determine which evidence is to be produced and how such evidence will be produced.

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9 . Confidentiality

On one hand, the BAA does not provide for the confidentiality of the arbitral proceedings. It only states that the arbitrator has the duty of discretion (Article 13 (6) BAA).

On the other hand, most institutional rules in Brazil provide for the confidentiality of the arbitral proceedings.

Arbitral institutions and arbitrators are obliged to respect the parties’ agreement to keep the proceedings confidential, except when the State or State-owned entities are parties to the arbitration, since the BAA requires that the arbitration be public in such cases. Even so, not every document will be in the public domain in arbitrations involving the State or State-owned entities, only selective information and documents.

In addition, as indicated in Section 1.2 above, some Brazilian state courts are reluctant to uphold the confidentiality of the arbitral proceedings once court assistance is necessary, because some judges understand that arbitration does not fall within the exceptions to the constitutional requirement that all court proceedings be public. Accordingly, even when parties have agreed that the arbitral proceedings should remain confidential, once court assistance to the arbitration is necessary, a Brazilian judge may reject a party’s request to keep the judicial proceedings under seal.

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10 . Awards

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10.1. Requirements as to content and form

According to the BAA, an arbitral award should be in writing and should observe the requirements of Article 26, including:

  • a summary section, containing the parties and their pleadings;
  • a reasoning section, containing the factual and legal issues determined by the tribunal;
  • the final section, containing the decisions on the parties’ requests and the tribunal’s orders; and
  • the date and place of the rendering of the award. 
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10.2. Time limit

Parties are free to agree on a time limit for rendering the award (and usually do so by choosing institutional rules that set forth such time limits, which most Brazilian institutions’ rules provide for). In the absence of the parties’ agreement, Article 23 of BAA stipulates a time limit of 6 months as a default rule (which may be postponed if parties and the arbitrators agree).

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10.3. Remedies

There are no restrictions under Brazilian law as to what remedies arbitrators can award. Arbitrators have the same powers as judges, except for the coercive powers (for instance, relating to enforcement proceedings and law enforcement agents).

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11 . Post-award proceedings

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11.1. Interpretation and correction of awards

The BAA provides for a specific remedy for the interpretation and correction of awards, which is called “motion for clarification” (pedido de esclarecimentos), encompassing, under Article 30:

  • material errors;
  • obscurity;
  • doubt;
  • contradiction; and
  • omission.

As for the time limit for submitting such a motion for clarification, the BAA provides 5 days from the receipt of the award, unless otherwise agreed by the parties. Likewise, the BAA establishes a 10-day time limit for the arbitrators to decide on such motion for clarification. Usually, the institutional rules in Brazil have longer time limits and parties and arbitrators are free to adapt or adjust them in the terms of reference.

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11.2. Challenge of an award

The BAA establishes that a party has 90 days, upon the receipt of the award, to challenge it in set-aside proceedings based on the following exclusive (and narrowly construed) grounds:

  • that the arbitration agreement is null and void;
  • that it was rendered by a person who could not be an arbitrator;
  • that it does not contain the requirements of Article 26;
  • that it is rendered outside the limits of the arbitration agreement;
  • that it was proven to have been rendered by prevarication, concussion or corruption;
  • that it was rendered after the time limit;
  • that the principles dealt with in Article 21, paragraph 2, have been disregarded, such principles being: “contraditório” (adversarial principle); equality of the parties; impartiality of the arbitrator; and the arbitrator's free deliberation and reasoned decision.

Such grounds are related to procedural errors, not substantive ones. Accordingly, the set-aside proceedings are not an appeal on the merits and Brazilian courts are reluctant to review any decision on the merits taken by the arbitrators.

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11.3. Recognition and enforcement proceedings

Under the BAA (Article 18), a domestic arbitral award is immediately enforceable, does not depend on any judicial recognition and is not subject to any appeal (the set-aside proceedings are not an appeal on the merits, as indicated above in Section 11.2).

With respect to the enforcement of a domestic arbitral award, it will follow, in principle, the same rules applied for the enforcement of a judgement rendered by state courts (Article 31, BAA). Such enforcement shall take place before state courts. The time limit for such enforcement will follow the statute of limitations.

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11.4. Cost of enforcement

The costs of enforcement vary from State to State and are updated regularly, so it is not possible to provide a general estimate.

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11.5. Enforcement of orders of emergency arbitrators

The BAA does not provide for a specific measure to enforce orders of emergency arbitrators. As a general rule, the emergency arbitrator can resort to the so-called arbitral letter and request assistance from state courts (see Section 2.1 above).

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12 . Enforcement of foreign awards

As mentioned, since 2002, Brazil has been a member of the New York Convention. An award is deemed foreign in Brazil when it is rendered outside the Brazilian territory (Article 34).

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12.1. Process for enforcing New York Convention awards

According to the BAA (Article 34), foreign awards may be enforced irrespective of the existence of a treaty — such as the New York Convention — between Brazil and the countries where the awards were rendered. Thus, Brazil has not invoked the “reciprocity” declaration. 

In any case, the filing of an application for exequatur before the STJ is required and there is no merit review by STJ.

The filing of an application for exequatur is not a requirement for domestic awards. Nevertheless, despite the provisions of the New York Convention (Article III), this additional step is due to constitutional provisions regarding foreign awards.

All other aspects of the application for exequatur are strictly formal (e.g., the supplying of duly certified copies of the award and the original agreement) and are also present in the New York Convention.

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12.2. Grounds for resisting enforcement of New York Convention awards

Articles 38 and 39 of the BAA replicates the main aspects of Article V of the New York Convention. Therefore, the recognition and enforcement of an award issued by any other state may be resisted under limited (and exhaustive) grounds, which have been generally construed narrowly by the STJ: 

  • The incapacity of a party or the invalidity of the agreement.
  • The violation of due process.
  • The tribunal exceeding its authority.
  • The improper constitution of the tribunal or other procedural irregularities.
  • When the award has not yet become binding or has been suspended.
  • The dispute’s subject matter is not capable of settlement by arbitration under the law of the enforcing country.
  • The enforcement of the award would be contrary to the public policy of the enforcing country.
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12.3. Enforcing Non-Convention awards

As stated above, Brazil has incorporated the New York Convention by mirroring its relevant aspects into its domestic legislation, making no distinction between awards from New York Convention jurisdictions and from non-Convention jurisdictions.

Under Brazilian Law, any international treaty signed by the president and ratified by the National Congress is incorporated to the national legislation at the same level as federal acts and, therefore, prevails over the older law. Since the New York Convention entered into effect in Brazil in 2002, while BAA took effect in 1996, the Convention should be applied in any case.

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13 . Professional and ethical rules

The OAB (Ordem dos Advogados do Brasil) is the Brazilian equivalent to the Bar Association and is the entity responsible for the regulation of the legal profession in the country. The OAB’s Code of Ethics and Discipline prescribes the general rules concerning the practice and the behavior expected from its members.

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13.1. Applicable to counsel

In Brazil, any information exchanged between a client and a lawyer (or attorney) is considered confidential/privileged. However, unlike other jurisdictions, any documents and communications exchanged between opposing parties and/or lawyers during settlement negotiations are not protected by any form of confidentiality, unless both parties agree on signing a non-disclosure agreement.

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13.2. Applicable to arbitrators

The BAA provides some general rules on the arbitrator’s duty to act with impartiality, independence, competence, and discretion, as well as the arbitrator’s obligation to reveal any fact that might give rise to justifiable doubts as to their impartiality and independence. 

A more comprehensive set of ethical rules has been provided by arbitral institutions in Brazil.

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14 . Third-party funding

Third-party funding in Brazil has increased in the last 10 years, but it is still a green field compared to other jurisdictions. Although there is a consolidated market for the acquisition of liquidated credits (particularly matured credits against the State), third-party funding, in turn, is still growing and there is a lot to be done in that regard. In view of the foregoing, there has been a comparable increase in concerns regarding the interests involved in the process. 

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14.1. Applicable regulatory requirements

The main concern regarding third-party funding is the disclosure of the financing by the party backed by the investor. The IBA Guidelines on Conflicts of Interest in International Arbitration, which may be considered in this context, provide that the parties’ duty of disclosure has been extended to relationships with others having a direct economic interest in the award, such as the investor, since these aspects are not prone to be discovered by the arbitrators or any other party.

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14.2. Overview of the third-party funding market in this jurisdiction

In Brazil, third-party funding has not been regulated by the state yet. Nonetheless, the main arbitration institutions, such as CAM-CCBC and ICC, have set forth provisions regarding third-party funding, and require that the parties inform the tribunal and the other parties involved about the investment made by the third-party, to allow the arbitrators to verify any potential conflict of interests. 

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15 . Trends and recent developments

Arbitration in Brazil is undoubtedly a case of success. The main hot-topics in the Brazilian arbitration arena have been the rules on the duty of revelation of potential conflicts of interest, as well as the confidentiality of proceedings, disputes arising out of capital markets, and disputes involving State-companies and public services.

Pursuant to BAA and most institutional rules, the arbitrator must disclose any interest or relationship that may potentially be seen as affecting their impartiality or independence. This general rule has been tested by Brazilian Courts. Although few awards were in fact declared void by Brazilian Courts, most of the decisions upheld the awards challenged on the grounds of arbitrator’s alleged failure to disclose.

Another trend in the Brazilian market is the potential growth on disputes connected with capital markets. In view of the low national interest rates seen few years ago, a massive trend of new investors came into capital markets. Differently from other jurisdictions, given a mandatory requirement to be listed before B3 (the Brazilian stock market exchange), public companies are compelled to include arbitration clauses in their bylaws. As a result, a growth of disputes brought by shareholders is expected.

Lastly, in recent years there has been a steady increase in the amount of disputes related to state-owned companies and to public services in general, a trend that is expected to grow even more in the next few years, especially due to possible disputes related to the infrastructure and to the sanitation sectors, considering the new regulatory framework for basic sanitation, designed to promote universal access to basic services by enabling competition and investments from the private sector.

EXPERT ANALYSIS

Chapters

Australia

Cara North
Eleanor Clifford
Nastasja Suhadolnik
Samuel Kay

Colombia

Juan Felipe Merizalde
Juan Pablo Gómez-Moreno

Ecuador

Adriana Rodas
David Toscano
Gabriela Ortega

England and Wales

Gregory Fullelove
Katie Bewlock

France

Carl Szymura
Julie Spinelli

Hong Kong

Kim M. Rooney

India

Sanskriti Sidana
Shaneen Parikh
Tushar Karkaria

Italy

Gregorio Baldoli
Massimo Benedettelli

Nigeria

Igonikon Adekunle
Konyinsola Osipitan
Sesan Sulaiman

Saudi Arabia

Fahad N. AlArfaj

Singapore

Joel Quek
Koh Swee Yen SC
Wendy Lin

South Africa

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Jackie Lafleur
Jonathan Barnes
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Hangil Lee
In Hyuk Hwang
Tony DongWook Kang

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Benjamin Guthrie
Carlos Hafemann
Daniela Páez
Emma McGrath
Lucila Marchini
Louis Thivierge

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