Alternative means of dispute resolution
Dispute boards


There are frequent reports of impasses, delays and suspensions in the realisation of works and infrastructure projects arising from bidding contracts, as well as discussions about the termination of bidding contracts and reports on disputes that have dragged on for years in the court system without a definitive resolution. For this reason, when it comes to bidding contracts, experts and laypeople alike share a general desire to avoid disputes or, if a dispute arises, to find a quick and efficient solution to it, especially in contracts involving infrastructure works and projects. This helps to ensure the continuous execution of a project within the established deadlines and according to budget in order to preserve the contractual relationship between the private sector and the public agent.

Brazil's Bidding Law, which came into force on 1 April 2021,(1) intends to improve public management in this regard. The legal framework, long called for by experts, replaces:

  • the former Bidding Law;(2)
  • the Auction Law;(3) and
  • the Differentiated Contracting Regime.(4)

It is also relevant to several other topics relating to public procurement.

Alternative means of dispute resolution

Among the many amendments promoted by the law, the chapter on alternative means of dispute resolution is worth mentioning. In accordance with the recent legislative practice in similar situations, this chapter establishes the possibility of using appropriate means for the prevention and resolution of conflicts relating to available property rights resulting from bidding contracts.

Article 151 of the Bidding Law states that, in the contracts it regulates, "alternative means of dispute prevention and resolution may be used, notified by conciliation, mediation, dispute resolution committee and arbitration".

The possibility of resolving disputes through arbitration – although not in itself an innovation, since the arbitrability of disputes involving public authorities is widely applied in Brazilian law – is commendable, since it brings greater legal security to those involved.

Although there was no express provision to that effect in the previous legislation, several public contracts already had an arbitration clause. Such clauses were based on article 54 of the former Bidding Law, which provided for the possible application of the "provisions of private law" in the context of bidding contracts. Subsequently, the arbitrability of disputes involving the government was confirmed with the reform of the Arbitration Law, which occurred in 2015. Article 1(1) of this law confirms that "[direct and indirect] public administration may use arbitration to resolve disputes relating to available property rights".


Regarding the objective arbitrability of disputes involving the public authorities, the Bidding Law also aligns with consolidated arbitration practice. The law provides a list of hypotheses in which bidding-related disputes will deal with available property rights, such as issues relating to:

  • the restoration of the economic and financial balance of a contract;
  • the non-termination of contractual obligations by either party; and
  • the calculation of indemnifications.(5)

However, if this list is merely an example, other disputes resulting from bidding agreements, provided that they also concern available property rights, may also be resolved by arbitration.

The legislature made it clear that any arbitration proceeding involving public contracts under the Bidding Law must respect the guidelines of the principle of publicity. This provision is also in line with article 2(3) of the Arbitration Act, which states that "arbitration involving public administration shall always be lawfully binding and shall respect the principle of publicity".

The Bidding Law states that bidding contracts may be added in order to allow the adoption of alternative means of dispute resolution. Here, the legislature's intention converges with Statements 10 and 18 of the First Administrative Law Day, which provide the following, respectively:

  • an addition to administrative contracts resulting from bidding in order to include alternative methods to the judicial system for conflict resolution; and
  • the inclusion of an arbitration clause in administrative contracts.

Once again, therefore, the current Bidding Law clearly promotes the adoption of arbitration in disputes arising from bidding agreements.

Dispute boards

Another notable aspect of the law is the possibility of using a dispute resolution committee – namely, a dispute commission – which can deal with any issues relating to available property rights that depart from bidding agreements. The purpose of using dispute committees is to prevent disputes arising during the execution of a contract from affecting the performance of the parties or resulting in the waste of resources destined for contractual execution.

A dispute committee is a committee, usually appointed at the beginning of the execution of a contract, composed of impartial professionals whose purpose is to:

  • monitor the progress and development of the project;
  • encourage the prevention of disputes; and
  • assist in the resolution of any disputes by issuing recommendations or decisions that will, in turn, be binding on the contracting parties.

The idea is that the committee intervenes quickly and effectively to prevent or resolve an impasse, and assigns responsibilities based on an independent interpretation of contract clauses, according to the technical details of each case.

A dispute committee is composed of three members, who, pursuant to article 154 of the Bidding Law, will be appointed according to "isonomic, technical and transparent criteria". It is advisable that the choice of professionals should be based primarily on their technical knowledge, and that they combine professionals whose know-how has a direct bearing on the characteristics of the project and those whose knowledge may be useful in the legal interpretation of the contractual clauses.

Dispute panels can be characterised as permanent – that is, remaining in place throughout the contractual relationship – even if no disputes arise between the parties, or ad hoc – that is, formed only if contractual disagreements arise and remaining active until the decision is made.

The parties may establish the rules applicable to the committee, and may choose to provide greater security to those involved by using a special institution to guide out-of-court procedures.

Depending on the nature of the decision to be made, panel discussions can be classified as follows:

  • dispute review panels, which provide recommendations of a non-binding nature;
  • dispute adjudication boards, whose decisions require mandatory adoption by the parties; however, such adoption is subject to the right of one party, after communication to the other, to challenge the decision before the judiciary or in the context of arbitration, as the case may be; and
  • combined dispute resolution boards, which merge the previous modalities, issuing recommendations and decisions, depending on the circumstance.

In the case of disputes arising from contracts to be signed under the Bidding Law – especially those whose object is the construction of public works and infrastructure projects, where the level of complexity is known to be higher – one of the main advantages of dispute boards is that they can prevent the work from being halted or even prevented entirely due to technical disputes. This concern was expressed by the Federal Council of Justice in 2016, through statement No. 80 of the first Conference on Prevention and Out-of-Court Settlement of Disputes, which recommended "[the] use of dispute resolution committees, with the insertion of the respective contractual clause . . . for construction contracts or infrastructure works", in order to allow "the immediate resolution of conflicts arising in the course of the execution of contracts".

The legality of dispute boards, in the form provided for in article 3(3) of the Code of Civil Procedure,(6) was also confirmed by the Federal Council of Justice on this occasion, as was the appropriate binding of the parties to the decisions rendered by the commission until the competent judiciary or arbitral tribunal issues a new decision or confirms its original decision, if asked to do so by one of the parties.(7)


The introduction of panel discussions in the Bidding Law, besides being innovative at the federal level, is commendable, and follows a trend that had already been observed in the municipal and/or state spheres. Law No. 16,873/18, enacted in São Paulo and recently regulated by Decree No. 60,067/21, is an example of such a trend. This regulation allows parties involved in continuous contracts signed with the municipality to provide for dispute commissions as a way to prevent and resolve, practically and efficiently, any disputes that may arise during the relationship between the parties, so that the progress of the project does not have to be interrupted and due continuity in the execution of the contracts can thus be maintained.

Therefore, it can be said that the legislature considered, when drafting the Bidding Law, all developments regarding alternative means of dispute resolution in the public sphere – which, year after year, do not stop growing – and rightly included a specific chapter to address the matter. This provision, in addition to offering greater security to all involved, will certainly bring greater efficiency to companies interested in contracting with the public administration, given the speed and specificity that extrajudicial means can provide to stakeholders. The insertion of conflict resolution commissions highlights, above all, the legislature's continuous effort to consolidate the use of extrajudicial means of conflict resolution.

For further information on this topic please contact Leandro Felix, Gisela Ferreira Mation or Mateus Pires Zottarelli at Machado Meyer Advogados by telephone(+55 11 3150 7000) or email ([email protected], gm[email protected] or [email protected]). The Machado Meyer Advogados website can be accessed at


(1) Federal Law No. 14,133/21.

(2) Federal Law No. 8,666/93.

(3) Federal Law No. 10,520/02.

(4) Federal Law No. 12,462/11.

(5) These provisions follow what was discussed in Statement 19 of the first Administrative Law Conference, which highlights that "the controversies about the economic and financial balance of administrative contracts are part of the category of those relating to available property rights" and, therefore, the "appropriate extrajudicial means of prevention and resolution of disputes will be admitted, notified by conciliation, mediation, dispute resolution committee and arbitration".

(6) Set out No. 49: "Dispute Resolution Committees are a method of consensual settlement of conflict, as provided for in § 3 of Art. 3 of the Brazilian Code of Civil Procedure."

(7) Paragraph 76: "Decisions made by a Dispute Resolution Committee, when the contractors have agreed to their mandatory adoption, bind the parties to their compliance until the judiciary or the competent arbitral tribunal issue a new decision or confirm it, if they are provoked by the dissatisfied party."