The creation of specialised appeal courts has proved successful in several Brazilian states. In Sao Paulo, the nation's richest state, the business law chambers established within the state appellate court have produced relevant precedents that illustrate the interplay between the judiciary and arbitration.

In one such precedent,(1) the court's specialised chamber analysed the scope of pre-arbitral injunctions. The case stemmed from a contract to promote a sports brand in Brazil. The plaintiff sought interim measures to:

  • enjoin the defendant from closing certain retail stores; and
  • authorise the plaintiff to engage other companies in Brazil, despite an exclusivity clause in the underlying contract.

Noting the existence of an arbitration clause, the first instance judge dismissed the lawsuit, thereby denying both injunctions. The appellate court confirmed the dismissal and referred the case to arbitration. The court held that when faced with contracts containing arbitration clauses, the judiciary should refrain from interfering with the merits of the case, and any pre-arbitral injunction should be limited to ensuring the efficacy of arbitration without invading the jurisdiction of the arbitral tribunal.

The specialised chamber stated that a court injunction that interfered with the management of the retail stores or that disregarded the contract's exclusivity provision would be incompatible with the parties' agreement to have such issues resolved by arbitration (and not by the courts). Such injunctions would basically render the arbitration moot, as they could anticipate (and irreversibly resolve) claims that should be dealt with exclusively by the arbitral tribunal.

The court recognised that certain pre-arbitral injunctions can (and should) be granted, in order to safeguard a valid and effective outcome for arbitral proceedings. However, in this particular case, the court felt that the type of relief sought by the plaintiff would not further the desired interplay between courts and arbitration, but would instead set both jurisdictions on a "collision course".

For further information on this topic please contact Fernando Eduardo Serec or Antonio M Barbuto Netoat Tozzini Freire Advogados by telephone (+55 11 50 86 50 00), fax (+55 11 50 86 55 55) or email ([email protected] or [email protected]).

Endnotes

(1) Appeal 0205403-40.2012.8.26.0100, First Reserved Chamber of Business Law, Reporter Justice Ênio Zuliani, decided on April 23 2013.