Highlights Of Arbitration Developments In Brazil

This article was previously published in the International Bar Association Legal Practice Division - March 2011.

The old and the new: a clear change in Culture

Brazil is a country in constant economic and social development, steadily participating in more and more international trade. As a result, arbitration has become an important tool with which to provide greater certainty and comfort about dispute resolution matters, particularly to foreign investors.

The Brazilian Arbitration Act1 (BAA) came into force 15 years ago. It was not until 2004, however, after challenges to its constitutionality were resolved by the Brazilian Federal Supreme Court (declaring the law constitutional), that Brazil saw the use of arbitration significantly increase.2

Over the past few years there has been marked change with respect to arbitration in Brazil's legal practice. Until recently, it was only the larger and foreign/multinational companies which chose ADR on a regular basis. Now, local Brazilian companies and smaller companies routinely choose arbitation or other ADR methods to resolve commercial disputes.

Arbitration and the judiciary: recent rulings are encouraging

The increasing use of arbitration in Brazil is evident in several recent decisions issued by the judiciary – decisions which address the central tenets of arbitration.

Application of the kompetenz-kompetenz principle.

The BAA states that the kompetenzkompetenz principle is to be followed in Brazil. Nevertheless, it remains at the centre of disputes and court decisions.

The Superior Court of Justice recently issued a decision which reinvigorated the debate about kompetenz-kompetenz and divided practitioners throughout the country.3 The Superior Court's decision concerned a circuit court's decision to grant an injunction against arbitration proceedings that had been requested by a party, even though the arbitral tribunal had already been formed. In response, the arbitral tribunal reaffirmed its jurisdiction and ordered that the injunction be revoked. One of the parties filed a petition to the Superior Court of Justice, and Justice Aldir Passarinho Júnior accepted the matter for review – stating that the Brazilian Federal Constitution provided the Superior Court of Justice with jurisdiction to adjudicate conflicts between courts and tribunals of any type whatsoever.

The merits of the underlying dispute have yet to be resolved as of the date of this article, but the Superior Court's decision to...