Arbitration in Brazil

Introduction

Arbitration in Brazil (arbitragem) is regulated by Law 9.307/1996 (the Brazilian Arbitration Act), which established the modern legal framework for domestic and international arbitration. Initially met with skepticism, arbitration has become a widely accepted and preferred method of dispute resolution in commercial matters, particularly in infrastructure, energy, and corporate disputes. The Brazilian Arbitration Act was amended by Law 13.129/2015, which enhanced its provisions and consolidated Brazil’s position as a leading arbitration jurisdiction in Latin America.

Historical Development

Before 1996, Brazilian law was hostile to arbitration. The 1916 Civil Code and the 1939 and 1973 Civil Procedure Codes required enforcement of arbitration agreements through judicial proceedings before arbitration could commence, effectively allowing a party to unilaterally withdraw from arbitration. The 1996 Act, modeled on the UNCITRAL Model Law and influenced by French and Spanish arbitration law, fundamentally reformed this approach.

The 1996 Act initially contained a constitutional challenge regarding the constitutionality of the arbitration agreement’s binding effect. The STF resolved this in SEC 5.206-9/2001 (the M.B.V. Commercial and Export Management Establishment case), holding that arbitration is a constitutionally valid means of dispute resolution and that the arbitration agreement waives the constitutional right to judicial resolution.

Scope and Applicability

Arbitrability

The Brazilian Arbitration Act distinguishes between subjective arbitrability (capacity to arbitrate) and objective arbitrability (disputes that may be arbitrated). Article 1 provides that disputes concerning patrimonial rights (direitos patrimoniais disponíveis) may be submitted to arbitration. Non-patrimonial rights (e.g., family status, personal rights) and non-available patrimonial rights (e.g., tax matters) are not arbitrable.

The 2015 amendment expanded objective arbitrability to allow public administration entities to submit disputes to arbitration, provided the dispute involves disposable patrimonial rights. This has significantly increased the use of arbitration in infrastructure and public procurement contracts.

Arbitration Agreement

The arbitration agreement comprises two elements: the arbitration clause (cláusula compromissória) — a future dispute agreement — and the submission agreement (compromisso arbitral) — an agreement to arbitrate an existing dispute. Under Article 4, the arbitration clause must be in writing and may be included in a contract or a separate document.

Article 4, §1 (added by Law 13.129/2015) introduced the independent arbitration clause (cláusula compromissória arbitral independente), allowing arbitration clauses to survive the voidness or termination of the main contract.

Pathological Clauses

Brazilian courts have addressed pathological arbitration clauses — deficient clauses that create ambiguity about the arbitral mechanism. The STJ has held that even defective clauses may be validated by reference to institutional arbitration rules or by subsequent agreement of the parties, and that the principle of favor arbitrandum governs interpretation.

Arbitral Tribunal

Composition and Appointment

The parties are free to determine the number and method of appointment of arbitrators (Article 13). If the parties do not agree, the default rule provides for three arbitrators, each party appointing one and the two party-appointed arbitrators selecting the presiding arbitrator.

Arbitrators must be capable persons (pessoas capazes) trusted by the parties. No specific professional qualification is required, though institutional rules may impose requirements.

Challenge and Removal

Arbitrators may be challenged on grounds of impartiality, independence, or lack of qualifications agreed by the parties. The challenge is decided by the arbitral tribunal or, if unsuccessful, by the competent court under the procedure set forth in the Arbitration Act.

Arbitration Procedure

Institutional and Ad Hoc Arbitration

Parties may choose institutional arbitration (administered by a permanent arbitral institution) or ad hoc arbitration (conducted directly by the parties and the tribunal). Major Brazilian arbitral institutions include:

• CAM-CCBC (Chamber of Commerce Brazil-Canada Arbitration Center)
• CAMARB (Mediation and Arbitration Chamber of Brazil)
• FGV (Getulio Vargas Foundation Arbitration Chamber)
• FIESP (Federation of Industries of São Paulo Arbitration Chamber)
• CBMA (Brazilian Center of Mediation and Arbitration)

Procedural Principles

Article 21 establishes the fundamental procedural principles: adversarial proceedings (contraditório), equal treatment of parties (igualdade das partes), impartiality of the arbitrator (imparcialidade do árbitro), and free persuasion of the arbitrator (livre convencimento do árbitro).

Interim Measures

The arbitral tribunal or, in urgent cases before the tribunal’s constitution, the judicial courts may grant interim and conservatory measures (medidas cautelares). The 2015 amendment expressly confirmed that arbitrators have the power to issue interim measures, and that judicial measures granted before arbitration automatically cease if not confirmed by the tribunal within 90 days.

Recognition and Enforcement of Awards

Domestic Awards

Domestic arbitral awards are enforced as res judicata and require no judicial confirmation. The award is subject to annulment (ação anulatória) before the competent court on limited grounds set forth in Article 32, including: (i) nullity of the arbitration agreement; (ii) incapacity of the parties; (iii) violation of due process; (iv) award exceeding the scope of the arbitration agreement; (v) failure to decide all issues submitted; (vi) corruption or misconduct of the arbitrator.

Foreign Awards

Brazil acceded to the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) without reservations in 2002. Recognition and enforcement of foreign awards is processed by the Superior Court of Justice (STJ), which has adopted a pro-arbitration stance. The STJ applies the grounds for refusal strictly, rarely denying enforcement.

Conclusion

Brazilian arbitration law has undergone remarkable development since 1996. The Arbitration Act, as amended, provides a modern and effective framework aligned with international standards. Brazil’s accession to the New York Convention, the pro-arbitration stance of the STJ, and the growing sophistication of arbitral institutions have made Brazil a significant hub for international arbitration in Latin America.