Arbitration And Execution Proceedings Based On Extrajudicial Title

With the development and consolidation of arbitration as an

effective means of dispute resolution in Brazil, new issues have

arisen that demand the attention of the courts and commentators.

One of these issues is the controversy over the possibility of

bringing execution proceedings in the judicial courts based on a

contract that contains an arbitration provision.

Under the Brazilian Code of Civil Procedure (Código

de Processo Civil ? CPC), a creditor who claims a

certain, liquid and enforceable debt based on "extrajudicial

title for execution" may proceed directly to collection of the

debt through an execution proceeding, without first bringing

cognitive proceedings (i.e. an ordinary action) to have his right

to the debt recognized by the court. One of the documents that

constitutes "extrajudicial title for execution" is a

"private document signed by the debtor and by two

witnesses". Thus, any written contract stipulating a certain

and liquid debt which is signed by the debtor and two witnesses

would, in theory, give the creditor the right to commence an

execution proceeding. In such proceedings, the debtor has the right

to reply by initiating a cognitive proceeding ("embargos

à execução"), connected to the collection

action.

When a contract which constitutes extrajudicial title for

execution also provides for arbitration of disputes, the relation

between the coercive aspect of the collection of the debt and the

cognitive aspect of the embargos à execução

poses some questions, notably by reason of the novelty of the

subject for both case law and legal doctrine.

It can be said that an arbitration proceeding is equivalent to a

cognitive proceeding in the judicial courts, and that consequently

the execution of certain, liquid and enforceable debts falls

outside the scope of arbitration. Thus, a party who claims

performance of an obligation established in an extrajudicial title

for execution may enforce the claim through an execution proceeding

before the judicial courts, even if the contract contains an

arbitration provision.

In this case, the judge in execution proceeding will have

jurisdiction to appreciate and grant all measures related to the

execution, while the arbitrator will have jurisdiction to decide

questions going to the creditor's right to the debt, which

would typically be argued in a cognitive procedure, such as an

action for a declaration of the unenforceability of the debt

(ação declaratória de

inexigibilidade), or in an...