Arbitration would have never become a viable mechanism for resolution of commercial disputes were it not for the decisive role played by the Brazilian courts.
Starting with the Supreme Court's 2001 landmark ruling on the Arbitration Law's constitutionality, and continuing with the subsequent pro-arbitration decisions rendered by the Superior Court of Justice, the Brazilian judiciary has paved the way for the widespread use of arbitration clauses, particularly in commercial transactions.
Brazilian judges no longer view arbitration as a threat to their constitutional mission, but instead see it as an effective way to deliver justice pursuant to the parties' autonomy to select their own decision makers. More importantly, courts are increasingly aware of their importance to the proceedings - both before and after the appointment of arbitrators - in ensuring proper enforcement of arbitration agreements.
This positive attitude towards arbitration has produced a string of pro-arbitration precedents by first instance judges, appellate bodies and superior courts. The quality of arbitration jurisprudence is likely to improve even more with the creation of a specialised chamber of the Sao Paulo Appellate Court which has exclusive jurisdiction over commercial law disputes (eg, corporation law, unlawful competition, intellectual property and licensing/franchise agreements), including lawsuits arising from arbitration.
Thus, as of August 2011, the Camara Reservada de Direito Empresarial is the court of last resort (at the state level) for actions in aid of arbitral proceedings - such as actions to compel arbitration, pre-arbitration injunctions and discovery orders - as well as actions to set aside or nullify domestic arbitral awards.
Despite the recent establishment of this specialised chamber, a review of its arbitration-related decisions since August reveals a pro-arbitration stance among its members:
- In LP v Bauer,(1) the chamber defined the limits between arbitration and court intervention, holding that an agreement between the parties to vacate a building could be judicially enforced irrespective of an agreement to arbitrate all other disputes stemming from the lease contract. The case illustrates the interplay between courts and arbitrators when it comes to judicially executable titles - such as promissory notes, bills of exchange, cheques or settlements - which can always be directly enforced in court without having to institute arbitral proceedings.
- In Luna v Machado,(2) the chamber enforced an arbitration clause included in the bylaws of a limited liability company. The appellate court noted that the clause's failure to include an arbitral institution or the method to appoint the arbitrators could not be viewed as a waiver of arbitration.
- In Rego v Amaro,(3) the chamber rejected an attempt to challenge an arbitral award arising from the termination of a franchise agreement. The court held that a writ of mandamus could not be used to challenge final arbitral awards, because the Arbitration Law provides for a specific action - vacatur proceedings - for that purpose.
The driving force behind the creation of a specialised chamber is to streamline and enhance the decision-making process concerning commercial law in general and arbitration in particular. The above-mentioned decisions demonstrate that this goal is certainly well within reach. The Brazilian judiciary's courtship of arbitration is expected to blossom into a true love affair, and will continue to strengthen the confidence of businesses in the rule of law.
For further information on this topic please contact Fernando Eduardo Serec or Antonio M Barbuto Neto at 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) Interlocutory Appeal 0160803-74.2011.8.26.0000, November 8 2011.