Arbitration

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

Under the Brazilian Arbitration Act, an arbitration agreement can be either an arbitration clause - applicable to future disputes that may arise from a contract - or a submission agreement, which may be entered to submit a particular dispute to arbitration or to rectify or complement an unclear arbitration clause once a dispute has arisen.

In accordance with articles 4 and 9 of the Brazilian Arbitration Act, the arbitration agreement must be made in writing, directly inserted in the relevant contract or in a separate document with specific reference to a contract.

Considering its contractual nature, the same requirements for valid contract formation are applicable to arbitration agreements. Thus, a valid arbitration agreement shall be:

  • entered into by legally capable parties;
  • with the necessary powers to contract;
  • manifesting their consent with regard to a lawful and possible subject matter; and
  • in compliance with any specific formalities determined by law.

As per article 10 of the Brazilian Arbitration Act, a submission agreement (a definition that encompasses the terms of reference) is required to contain:

  • the name, profession, marital status and domicile of the parties;
  • the name, profession and domicile of the arbitrator or arbitrators, or, if applicable, the identification of the institution to which the parties have entrusted the appointment of the arbitrators;
  • the subject matter of the arbitration; and
  • the place where the award shall be rendered.

As decided by the STJ in the judgment of SEC 856, an arbitration agreement, although in writing, does not need to be signed as long as consent can be proved by other means.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

The Arbitration Act has fortunately privileged procedural flexibility and party autonomy and established, through article 21, that the arbitration shall follow the procedure established by the parties or, in the absence of specific provisions, as determined by the arbitrators.

Apart from these provisions, the law establishes only a minimal framework of principles that shall guide the procedure, that is: due process of law, equal treatment of the parties, impartiality of the arbitrator and the arbitrator’s freedom of reasoning for reaching a decision.

Award

When and in what form must the award be delivered?

Once again privileging party autonomy and procedural flexibility, the Arbitration Act provides that parties may agree on a term for the arbitral award to be issued. This might be done either expressly or by adopting the rules of an arbitral institution.

If the parties have not agreed on said term, the default rule of article 23 of the Arbitration Act shall apply, meaning that the arbitral award must be delivered within six months as from the date of commencement of arbitration or, if the case may be, from the substitution of a sole arbitrator.

The Arbitration Act establishes mandatory formal requirements for arbitral awards. In accordance with article 26, an award must contain:

  • a report including the names of the parties and a summary of the dispute;
  • the grounds of the decision with due analysis of factual and legal issues, and an express mention if the judgment has been made in equity when applicable;
  • the express orders issued by the arbitrators settling the issues presented before them, and a time limit for the compliance with those orders, as the case may be; and
  • the date and place where the award is rendered.

Additionally, the arbitral award shall be signed by all arbitrators. If one or more arbitrators is unable or refuses to sign the award, the chairman of the arbitral tribunal shall certify this fact.

Appeal

On what grounds can an award be appealed to the court?

Article 18 of the Arbitration Act clearly establishes that arbitral awards are ‘not subject to appeal or recognition by judicial court’. An arbitration agreement can override that default position providing for the possibility of appeal.

Furthermore, parties may seek to vacate an award before the courts within 90 days of the receipt of the award.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

Foreign awards must be recognised by the STJ, as per question 21. Once the foreign award has been recognised by the STJ, it acquires enforceability under Brazilian law. In this scenario, the party that wishes to enforce an award, whether foreign (after recognition) or domestic, must file enforcement proceedings. Enforcement proceedings are a separate action designed specifically to satisfy the orders of an enforceable decision.

Upon filing of the proceedings, the court will summon the debtor to comply with the orders of the enforced decision. If the debtor does not voluntarily comply with payment, the creditor may request measures for seizing the debtors’ assets, freezing amounts contained in bank accounts being the preferable first option. In enforcement proceedings, the debtor will have a limited number of defences available. These defences are not able to rediscuss the merits of the enforced decision but rather relate only to the enforceability of the decision itself (eg, the competence of the court where proceedings where proposed, or exceeding the amount requested).