The Brazilian Superior Court of Justice (STJ) - the court of last resort in federal law issues - recently rendered a decision dealing with the enforceability of arbitral awards in Brazil. In a case stemming from a 2001 accident involving an oil drill platform commissioned by the Brazilian state-owned company Petrobras, the STJ judges overturned the decision of the Rio de Janeiro Court of Appeals. The appellate court had previously denied enforceability to an arbitral award rendered under the auspices of the International Chamber of Commerce, headquartered in Paris.
The issue concerned the definition of a 'domestic award' under the Brazilian Arbitration Act. According to the law, only domestic awards can be directly enforced before a first instance court (in the same way as a judgment rendered by a magistrate). On the other hand, foreign decisions must first go through confirmation proceedings at the STJ before enforcement measures are taken.
The STJ reversed the appellate court's decision which had prevented the creditor from taking attachment measures directly before a court of first instance, even though the award was rendered in Rio de Janeiro. The Rio de Janeiro court, by a majority vote, set aside enforcement proceedings citing the need for confirmation proceedings, given that the arbitral award had been rendered by the ICC.(1)
Citing Article 34 of the Arbitration Act, the judges held that an arbitral award shall be deemed domestic as long it has been rendered within the Brazilian territory. According to the STJ, this is the case even when the arbitrators decide on a conflict that has arisen from international trade by applying foreign law.(2) In addition, confirmation is not required for domestic awards - instead, they can be directly enforced by the court that would have had original jurisdiction to hear the case.
Although the appellate court's decision added at least another year to the creditor's ability to secure assets held by the debtor in Brazil, the STJ's swift answer in favour of arbitration further reinforces the growing importance of the judiciary in ensuring that arbitration remains an effective means of dispute resolution in the country.
For further information on this topic please contact Antonio M Barbuto Neto or Fernando Eduardo Serec 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) The Portuguese version is available at http://srv85.tjrj.jus.br/ConsultaDocGedWeb/faces/ResourceLoader.jsp?idDocumento=00030A9C7CDC4890A77BC2D6522742048E88DFC4023C523B.
(2) The Portuguese version is available at https://ww2.stj.jus.br/websecstj/decisoesmonocraticas/frame.asp?url=/websecstj/cgi/revista/REJ.cgi/MON?seq=13843713&formato=PDF.