Roberto Scacchetti Isabella Guerrero September 1 2022 Importance of consensual methods of dispute resolution in expropriation processes Machado Meyer Advogados | Arbitration & ADR - Brazil Roberto Scacchetti, Isabella Guerrero Arbitration & ADR IntroductionAdvantages of extrajudicial negotiationEnsuring fairness in out-of-court negotiation processesCommentIntroductionThe reforms promoted in the Expropriation Act(1) by Federal Law 13,867/19 have brought significant changes to public expropriations, especially in relation to the negotiation process between private and public administration (for further details, see "Law 13,867/19 authorizes arbitration or mediation in disputes over compensation arising from acts of expropriation").The new provisions allow the use of mediation or arbitration to define indemnity amounts and conduct negotiations. To this end, the specific conditions of the rule must be observed,(2) as well as the provisions of applicable federal laws.(3) These changes were highly anticipated as a way to reduce the initiation of disputes.Advantages of extrajudicial negotiationThe process of extrajudicial negotiation, either through mediation or arbitration, is swifter and more efficient than court proceedings. Despite criticism from some scholars about the evaluation criteria – it is argued that extrajudicial negotiation could be harmful to the population because the amount of compensation is not ratified by the judiciary – there are several ways to ensure that public expropriation through out-of-court means occurs in a way that is more beneficial to the expropriated.For this purpose, expropriation must be analysed from a legal and social perspective, considering the public interest and the importance of the eviction – the gains generated for the community or even the need to vacate the area to ensure the safety of the population – and the constitutionally guaranteed right to private property. Considering that eviction for public utility is inevitable, even if it interferes in some way in the right to property, there are ways to ensure a fair, fast and economically advantageous indemnity process for the resident forced to vacate the property, placing them at the centre of the negotiation to avoid greater losses.Ensuring fairness in out-of-court negotiation processesOne way to ensure isonomy in trading is related to the methodology of real estate valuation. Often, the area and value of real estate are outdated in the official documents issued by the municipal government. In these cases, it is possible to elaborate a specific evaluation methodology, using the real area of the property and the Brazilian Association of Technical Standards for valuation purposes. This evaluation methodology helps mitigate the effects of informality, which describes the living situation of a large part of the population.Another way is to plan well-defined stages and flows of negotiation, making the process of extrajudicial expropriation faster than lawsuits. The large number of demands in progress in the judiciary and the slowness of payments made with writ of payments to public authorities are well known.Not by chance, consensual conflict resolution was one of the principles emphasised by the 2015 Code of Civil Procedure.(4) While the judicial expropriation process can last for years until the due indemnity is paid, out-of-court negotiation can be completed in a few months when well defined and organised. The speed of the expropriation process is important considering that a fast procedure avoids causing more damage to the expropriated, while offering an efficient solution. Of course, the process must be allied to compensation based on fair criteria.CommentThe use of alternative methods of negotiation and dispute resolution to solve situations involving expropriation, therefore, proves to be quite advantageous, and can generate benefits to both the expropriator and the expropriated.For further information on this topic please contact Roberto Scacchetti or Isabella Ávila Guerrero 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 www.machadomeyer.com.Endnotes(1) Decree-Law 3,365/41.(2) Article 10-A reads as follows:The public authority shall notify the owner and offer him compensation.1 - The notification dealing with the caput of this article shall contain:I - copy of the act of declaration of public utility;II - plan or description of the goods and their confrontations;III - value of the offer;IV - information that the deadline for accepting or rejecting the offer is 15 (fifteen) days and that silence will be considered rejection;. . . .2 - Accepts the offer and made the payment, will be drawn up agreement, which will be a skilled title for the transcription in the registration of real estate.3 - After the offer, or after the period without manifestation, the government will proceed in the form of the arts. 11 and following of this Decree-Law.Article 10-B reads as follows:After the option for mediation or arbitration, the individual shall indicate one of the bodies or institutions specialized in mediation or arbitration previously registered by the body responsible for expropriation.1 - Mediation shall follow the rules of Law No. 13,140 of June 26, 2015, and, in the alternative, the regulations of the body or institution responsible.2 - The mediation chamber created by the government may be elected pursuant to Article 32 of Law No. 13,140 of June 26, 2015.. . . .4 - Arbitration shall follow the rules of Law No. 9,307 of September 23, 1996, and, in the alternative, the regulations of the body or institution responsible.(3) Namely:Law 13.140/15, which provides for mediation between individuals as a means of resolving disputes and on the self-composition of conflicts within the public administration; andLaw 9.307/96, which provides for arbitration.(4) Article 3 reads as follows:Threat or right-to-injury shall not be excluded from the judicial assessment.1 - Arbitration is permitted in the form of law.2 - The State shall promote, whenever possible, the consensual settlement of conflicts.3 - Conciliation, mediation and other methods of consensual settlement of conflicts shall be encouraged by judges, lawyers, public defenders and members of the Public Prosecutor's Office, including in the course of the judicial proceedings.