Amendments To The Brazilian Arbitration Law

Keywords: Brazil, arbitration,

The Brazilian Vice-President signed on 26 May 2014 the law amending the 1996 Brazilian Arbitration Law (Law No. 9.307/96). The amendments will enter into force 60 days after publication in the official gazette, occurred on 27 May 2015.

The 1996 Arbitration Law, resolutely progressive and arbitration friendly, was a crucial step for Brazil, placing it among the biggest arbitration players worldwide.

Rather than a wholesale change, the amendments allow some long standing practices to be consolidated. Formal changes were made merely to align the 1996 Arbitration Law with legislative changes occurred after 1996, such as the enforcement procedure of court decisions, also applicable to arbitral awards, which was modified in 2005; and the authority of the Superior Court of Justice to rule on the recognition of foreign arbitral awards, which belonged to the Federal Supreme Court before constitutional amendments of 2004. A number of changes were also made to correct inaccuracies contained in the original wording of the 1996 Arbitration Law, such as replacing "compromisso" with "convenção de arbitragem" in Article 32, and "decretação" with "declaração" in Article 33.

The amendments also attempt to settle controversial issues, such as the possibility to include arbitration clauses in by-laws of companies and to make the arbitration clause binding upon all shareholders. However, the amendments to the 1996 Brazilian Arbitration Law allowing the submission to arbitration of consumer and employment disputes were vetoed by the Brazilian Vice-President.

Despite its objective to modernize the 1996 Arbitration Law, the amendments lack clarity in some instances and introduce possibilities that will surely be challenging for arbitration practitioners.

Below, the thematically sorted key changes contained in the law:

Key change Signification Public Entities One of the most controversial issues in the 1996 Arbitration Law was whether public entities were allowed to be party to arbitral proceedings. The amendments expressly allow public entities to use arbitration, should the dispute relate to disposable economic rights ("direitos patrimoniais disponíveis": economic rights that can be waived). Pursuant to the amendments, arbitration involving public entities shall always remain public. Constitution of the arbitral tribunal With the amendments, parties may agree to avoid restrictions imposed by arbitration rules on the choice of arbitrators among those listed by the arbitration institution. The restriction on the choice of arbitrators is a recurrent practice in Brazil. For instance...