Arbitration in corporate law
Public Hearing Notice SDM 01/21


Arbitration is the method of dispute settlement based on the autonomy of parties that decide to submit their dispute to private judicial system instead of the judiciary branch. There are several advantages commonly associated with arbitration, such as:

  • a faster process;
  • procedural flexibility;
  • the possibility of achieving a more technical decision; and
  • confidentiality.

Arbitration is considered more suitable for disputes involving complex contractual relationships and expressive amounts, but it can also be used for any disputes related to freely transferable property rights.(1)

Arbitration in corporate law

The main reason for use of arbitration in corporate law is the reform of the Corporate Law, through Federal Law 10.303/01, which expressly authorised the inclusion of an arbitration clause in the bylaws of companies (section 109(3)).(2) Another factor is the mandatory arbitration for publicly held companies listed in the special listing segments of B3, including Novo Mercado, which is to be managed by the Market Chamber.(3)

Although the confidentiality of arbitration is not prescribed by law,(4) but rather results from the choice of the parties and/or provisions of the arbitration chambers' regulation, in practice it is extremely common for procedures to be processed confidentially. This results in discussions and decisions not generally accessible to the public or anyone who is not directly part of the dispute. Consequently, ignorance about arbitration could, within the capital market, affect the exercise of rights by shareholders and investors.

Public Hearing Notice SDM 01/21

To improve the mechanisms for the protection of investors and minority shareholders, the Securities and Exchange Commission (CVM) formed a working group to study measures to improve the mechanisms of private enforcement in the Brazilian capital market:

  • in partnership with the former Ministry of Finance;
  • with the financial support of the UK Prosperity Fund; and
  • with the technical support of the Corporate Governance Committee of the Organisation for Economic Cooperation and Development.

The final report of this study was published in November 2020.

Among the various recommendations of the working group, the confidentiality of arbitration procedures was a prominent theme, given the concern with the possible restriction of the exercise of rights by shareholders and investors that might be interested in participating in arbitration proceedings or having knowledge of the issues discussed and their outcomes.

To resolve the issue, the CVM published Public Hearing Notice SDM 01/21 in order to change CVM Instruction 480/09 by creating a duty for publicly held companies to communicate corporate claims to the market. The instruction sets out the rules for registration of issuers of securities and it contains several rules applicable to publicly held companies, including those related to periodic and occasional informational duties.

Under the proposal, corporate claims are judicial or require arbitration proceedings when:

  • it involves corporate and securities market legislation, including the CVM's rules;
  • the issuer, its controlling shareholders or its directors appear as parties;
  • the diffuse, collective or individual homogeneous rights or interests are involved; or
  • a decision may be given that affects the legal sphere of the company or other holders of securities that are not part of the proceedings.

As an example, the proposal mentions lawsuits for the annulment of corporate resolutions as well as actions for civil liability against officers, administrators or controlling shareholders. In relation to such corporate claims, the issuing company would be required to disclose:

  • news about the commencement of the arbitration, including an indication of:
    • the parties;
    • amounts;
    • assets or rights involved;
    • main facts; and
    • requests;
  • interim decisions (granted or denied);
  • decisions on the jurisdiction of arbitrators (positive or negative);
  • decisions on arbitrator challenges (accepting or rejecting);
  • the result of merit decisions; and
  • any agreement proposal or any agreement entered into during the proceeding.

The public hearing was opened for contributions until mid-April 2021 and, in all, 18 commentaries were presented by the legal community, including lawyers, associations and arbitration chambers.

Among the contributions, some procedural aspects related to the application of the new regulations were suggested, such as:

  • the inclusion of a period of vacatio legis for better suitability of issuers and arbitration chambers; and
  • the need for a transition rule for ongoing proceedings.

On the merits, the contributions were quite varied, including comments on the definition of "corporate demands" and the content of mandatory disclosure. Among the most recurrent – and most controversial – topics was the disclosure of settlement agreement proposals and of decisions on arbitrator challenge.


Currently, the notice is under analysis by the CVM and there are several relevant suggestions to be considered by the autarchy. The initiative to update the provisions involving the duty of disclosure related to corporate disputes is a positive step, as is the broad involvement of the legal community in the debates on the subject. It is now expected that the result of the notice will fulfil the intended purpose and be a benefit to the Brazilian capital market and arbitration.

For further information on this topic please contact Amanda Costa Vilela or Leandro Felix at Machado Meyer Advogados by telephone (+55 11 3150 7000) or email ([email protected] or [email protected]). The Machado Meyer Advogados website can be accessed at


(1) Article 1 of Law 9.307/96 – persons able to hire may use arbitration to settle disputes relating to available property rights.

(2) Article 9(3) of Law 6.404/76 – Companies' bylaws may establish that disagreements between shareholders and the company, or between controlling shareholders and minority shareholders, may be resolved by arbitration as specified.

(3) Companies listed in Tier 2, Bovespa Mais and Bovespa Mais Tier 2 are also subject to mandatory statutory arbitration.

(4) Although the Arbitration Law provides that arbitrators must act with discretion (article 13(6)), there is no provision under the same law that demands confidentiality.