Introduction

Congress recently approved Federal Law 13.129/2015, which has amended the Arbitration Law (Federal Law 9.307/1996) in order to address questions and concerns, consolidate court precedents and align the Arbitration Law with the new Civil Procedure Code (for further details please see "New Civil Procedure Code and arbitration rules"), which will come into force in January 2016.

The changes introduced by Federal Law 13.129 came into force on July 27 2015 and will be applied retroactively.(1)

New rules on arbitration

Public administration

Although the Supreme Court(2) and the Superior Court of Justice(3) had already recognised the possibility of resolving disputes with involving the public administration through arbitration, Federal Law 13.129 expressly authorises the use of arbitration to resolve such disputes, as arbitration is a disposable patrimonial right (Article 1(1)(2) of the Arbitration Law). However, arbitral proceedings involving the public administration must be decided by law rather than equity (Article 2(3) of the Arbitration Law).

Right to choose arbitrator

In order to give the parties more freedom when choosing an arbitrator, the new law provides that they need not apply the arbitral tribunal's rules on choosing arbitrators – in other words, the parties need not choose from the tribunal's list of arbitrators (Article 13(4) of the Arbitration Law).

Statute of limitations

Although the Arbitration Law already addressed the establishment of arbitral proceedings, it contained no information on the statute of limitations. As such, Federal Law 13.129 has introduced Article 19(2) into the Arbitration Law. In accordance with the new paragraph, the limitation period will be interrupted once the proceedings begin and applied retroactively from the date on which the plea was filed.(4)

Awards and appeals

In relation to arbitral awards, Federal Law 13.129 (Article 23(1) of the Arbitration Law) has introduced partial awards. If the arbitrator's decision contains a material error or is vague, contradictory or incomplete, the parties have five days (or any term agreed by the parties) to appeal. The arbitrator then has 10 days (or any term agreed by the parties) to issue a decision (Article 30 of the Arbitration Law).

On the other hand, the parties may file suit before the state courts to argue that an arbitral award – including a final or partial award – is null (Article 33(1) of the Arbitration Law). Such suits will follow the procedure set out in the Civil Procedure Code.

Parties may also file suit before the state courts in order to oblige the arbitrators to issue a complementary decision if the award does not address all of the pleas set out in the proceedings (Article 33(4) of the Arbitration Law).

Before commencing arbitration, the parties may file suit before the state courts in order to obtain a preliminary order or urgent injunction.(5) Such orders will be void if the party does not initiate arbitral proceedings within 30 days of the order's effective date (Article 22(A) of the Arbitration Law).

Once proceedings have commenced, the arbitrators may maintain, modify or revoke a preliminary order or injunction and can plead those orders before the state courts (Article 22(B) of the Arbitration Law).

All communications between the arbitral tribunal and the state courts – including requests for court enforcement of tribunal awards – must be made by arbitral letter. The state courts will observe confidentiality if duly proved (Article 22(C) of the Arbitration Law).

Shareholders' rights

Finally, Federal Law 13.129 has amended Federal Law 6.404/1976, which regulates the legal system that companies must follow.

Under Article 109(3) of Federal Law 6.404, companies could outline the use of arbitration in their bylaws; however, dissenting shareholders had no right to withdraw. The only option available to them was to sell their shares.

Federal Law 13.129 has introduced Article 136-A to Federal Law 6.404. This new article not only permits the use of arbitration to resolve company disputes, but also allows dissenting shareholders to exercise their right to withdraw in certain circumstances.

Comment

In addition to the new Civil Procedure Code and the new Mediation Act, Law 13.129 demonstrates Brazil's eagerness to encourage the use of alternative dispute resolution in order to reduce the number of suits filed before the courts.

For further information on this topic please contact André Gondinho or Emerson Soares Mendes at Doria, Jacobina e Gondinho Advogados by telephone (+55 21 3523 9090) or email (gondinho@djga.com.br or esoares@djga.com.br). The Doria, Jacobina e Gondinho Advogados website can be accessed at www.djga.com.br.

Endnotes

(1) Precedent 485 of the Superior Court of Justice.

(2) Bill of Review 52.181, September 14 1973.

(3) Special Appeal 612.439-RS, October 25 2005.

(4) Federal Court of Appeals, Appeal 8.472, July 16 1959.

(5) Superior Court of Justice, Special Appeal 1.297.974-RJ, December 6 2012.

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