Law and policy

Definitions

Is there any legal definition in your jurisdiction of the terms ‘ADR’, ‘conciliation’ and ‘mediation’?

There are two laws related to the theme: Law No. 13140/2015, which regulates public and private mediation, and Law No. 13105/2015, the Civil Procedure Code. The first law defines mediation as the ‘technical activity practised by an impartial third party without decision-making power, who helps parties to identify or develop consensual solutions to a dispute’. This law provides a common ground for both private mediation and at courts. It also sets the ground for mediation with public entities.

The Civil Procedure Code sets norms mainly related to cases within courts. It gives incentives for the use of mediation, conciliation and ‘consensual resolution methods’. Throughout the Code, there are constant references to mediation and conciliation. The system differentiates mediation and conciliation. The mediator is a neutral and impartial third party that helps the communication of parties. It is recommended for cases where there is some sort of relationship between parts (either personal or commercial relation). Mediators should restrain from influencing parties in closing deals. Conciliation is recommended for cases in which there is no prior or meaningful relationship between parties, such as consumer law. It is accepted that conciliators adopt a more proactive attitude, encouraging deals.

Mediation models

What is the history of commercial mediation in your jurisdiction? And which mediation models are practised?

Since the 1990s, there has been a great demand for family mediation in the country. In 2010, the National Council of Justice (the Administrative Council for the Judicial Branch) published an act to encourage the use of ADR (Resolution 125/2010), after which the major arbitration chambers began to invest in regulations related to the theme and developing qualified and certified mediators in this area. Companies started incorporating mediation clause in contracts.

In 2015, the Mediation Law and the New Civil Procedure Code came into force. Commercial mediation gained even more strength owing to the legal certainty brought by the regulation. In the public sphere, facilitative mediation should be used. There are clear norms related to confidentiality, deadlines and enforcement of agreements. In the same year, large organisations such as the Federation of Industries of São Paulo and the Federation of Commerce of Rio de Janeiro signed the Mediation Pact, recognised by the International Institute for Conflict Prevention and Resolution, to prioritise consensual mechanisms in addressing conflicts such as mediation and conciliation.

Domestic mediation law

Are there any domestic laws specifically governing mediation and its practice?

Yes, there are two laws related to the theme: Law No. 13140/2015, the Mediation Law or Mediation Act and Law No. 13105/2015, the Civil Procedure Code. The Mediation Law regulates both judicial and extrajudicial mediation. There are common principles for both types, such as impartiality, equal treatment, orality, informality, autonomy of parties, consensus building, confidentiality and good faith. It is forbidden for mediators to act as lawyers or even give professional assistance to the parties of a mediation. Extrajudicial mediation is that which occurs outside any judicial procedure. Regarding this type of mediation, the law provides basic rules, such as, any person can act as an extrajudicial mediator, regardless of any requirement to be enlisted in associations or unions, and if one party is assisted by a lawyer, the other part should also have one. It provides a list of criteria that can be used in private mediation if the mediation clause in contracts is incomplete. For example, article 22, §2º, IV, establishes a fine for the party that does not show at the first meeting, unless the contract establishes a different rule.

Judicial mediation occurs within a judicial trial. It usually happens at the beginning of the procedure, but it can also occur near the end. The most important aspect of the law is that it establishes the courts as the main actor for controlling both the enrolment of mediators in official lists and the practice for mediation at courts. Courts should create centres for mediation within their structures (CEJUSC) to help, guide and encourage mediation.

The Civil Procedure Code promotes conciliation and mediation as dispute resolution models. It forecasts and regulates its application in many situations. It states, for instance, that the state shall always promote, when possible, the consensual resolution of conflicts. Conciliation, mediation and other consensual methods of resolving conflict should be encouraged by judges, lawyers, public defenders and prosecutors, including during the course of legal procedure. The judge shall guide the trial according to the provisions of the Code, promoting, at all times, the parties’ own agreement, preferably with the aid of conciliators and court mediators. Courts should create judicial centres of consensual conflict resolution, responsible for conducting sessions and conciliation and mediation hearings, and developing programmes to assist, guide and stimulate self-agreement for the parties.

Singapore Convention

Is your state expected to sign and ratify the UN Convention on International Settlement Agreements Resulting from Mediation when it comes into force?

Not in the short term, since this type of decision takes a long time in Brazil. It needs to be approved by both houses of the Congress and then published by the president. However, there are other norms that can be useful for the enforcement of international agreements.

Incentives to mediate

To what extent, and how, is mediation encouraged in your jurisdiction?

In 2010, the National Council of Justice (the Administrative Council for the Judicial Branch) published a norm (Resolution 125/2010) that encouraged mediation within the Judicial Branch. This norm established the mediation centres created in every court in the country. In 2015, the Mediation Law came into force. This law provides a wide regulation that applies to all branches, including public entities and also sets principles and ground rules for private mediation. In the same year, the Civil Procedure Code made mediation or conciliation mandatory in our system (to bypass this requirement, both parties need to say so).

Sanctions for failure to mediate

Are there any sanctions if a party to a dispute proposes mediation and the other ignores the proposal, refuses to mediate or frustrates the mediation process?

According to the Civil Procedure Code (article 334, §8°), if a party refuses to mediate, he or she must say so through a petition. If a party does not attend the first meeting and provides no written reason, he or she must pay a fine of 2 per cent of the value of the cause of action. In extrajudicial mediation, the sanction must be fixed in the contract mediation clause. In the case of a contract with a mediation clause and the absence of a provision regarding the sanction, article 22, §2º, IV of Law 131.40/2015, establishes a fine of 50 per cent of the costs of the cause of action for the party that does not attend the first meeting.

Prevalence of mediation

How common is commercial mediation compared with litigation?

There is no official information about commercial mediation. Commercial mediation is still rare when compared to litigation, because of the litigation culture in Brazil. Research by Fundação Getulio Vargas’ (FGV’s) professor Daniela Gabay shows an increase in the number of commercial mediations in recent years. She gathered numbers from three large Chambers between 2012 and 2017 (Centro Brasileiro de Arbitragem e Mediação da CCBC, Câmara de Conciliação, Mediação e Arbitragem Ciesp/Fiesp and Câmara de Comércio Internacional). In 2015, 20 mediation procedures took place. In 2017, there were 45 mediations in these chambers. For more information, see https://www.jota.info/opiniao-e-analise/artigos/mediacao-empresarial-em-numeros-onde-estamos-e-para-onde-vamos-20042018.

Mediators

Accreditation

Is there a professional body for mediators, and is it necessary to be accredited to describe oneself as a ‘mediator’? What are the key requirements to gain accreditation? Is continuing professional development compulsory, and what requirements are laid down?

The Mediation Law establishes no mandatory accreditation for extrajudicial mediators. For judicial mediators, there is the requirement of completing a course (40 hours of theoretical classes and 60 hours of practice under supervision). The course should be accredited by a court. The mediator is required to be enlisted at each jurisdiction in which he or she seeks to practise judicial mediation. Each court might create other requirements, within its own jurisdiction.

Besides the official mandatory enlistment by courts, the National Council of Justice registers mediators nationally on its website. However, this does not work as an accreditation, but as a list of professionals, with their credentials, expertise and contact information. There are also private accreditations, such as the Accreditation for Portuguese-speaking Mediators Institute. However, this is not mandatory. There is no requirement for continuing professional development or continuing professional education.

Liability

What immunities or potential liabilities does a mediator have? Is professional liability insurance available or required?

Mediation in Brazil is always confidential. Mediators are not allowed to share information discussed during sessions. There is one exception: the mediator should inform the authorities of any crime.

They cannot act as witness or arbitrator in any judicial or arbitration proceedings regarding conflicts in which he or she has been a mediator. In addition, the mediator is prevented from advising, representing or sponsoring any party for a period of one year from the end of the last hearing at which he or she served.

Mediators are treated as public servants for any criminal effect. There are crimes that only public servants can commit.

There is no mandatory professional liability insurance.

Mediation agreements

Is it required, or customary, for a written mediation agreement to be entered into by the parties and the mediator? What would be the main terms?

In private mediation it is common. The main terms would address the following: scope of the mediator’s work, place where mediation will take place, costs of the procedure and how the payment will be divided between the parties, term and number of sessions contracted, form of contract renewal, parties’ responsibilities and, in some cases, despite the law, an additional fine for breach of confidentiality either by the mediator or by one of the parties.

Appointment

How are mediators appointed?

Article 22 of the Law of Mediation states that in extrajudicial mediation there should be clear contractual criteria regarding the appointment of mediators. In the absence of an express provision in a contract, the law provides that there should be a list with five different professionals, with their names, contact information and references. The invited party shall choose one of the five mediators. If in five days no one has been chosen, the first person on the list will be the mediator. Article 4 of the same law states that courts can appoint mediators, who usually come from court lists.

Conflicts of interest

Must mediators disclose possible conflicts of interest? What would be considered a conflict of interest? What are the consequences of failure to disclose a conflict?

The first principle of the Law of Mediation is the impartiality of the mediator (article 2, I). Furthermore, articles 5, 6 and 7 establish several requirements for mediators regarding possible conflicts of interests. Article 6 states that mediators are under the same norms as judges regarding conflict of interests. This means that the rules in article 144 of the Civil Procedure Code also apply to mediators. For instance, there is conflict of interests for mediators when they have worked before as a lawyer for any of the parties, or if they are related to any of the parties or lawyers or even when they have any interest in the result of the mediation. The mediator cannot work for any of the parties within a year of the last mediation session. Lastly, the mediator cannot work as an arbitrator or serve as witness on the case he or she worked on as mediator.

Fees

Are mediators’ fees regulated, or are they negotiable? What is the usual range of fees?

In private practice, mediators fees are negotiable. Usually there is an hourly rate. According to research by FGV professor Daniela Gabay, the hourly rate for mediations in 2017 ranged from 350 to 2,000 reais according to the value discussed.

Judicial mediations are pro bono. There are discussions occurring on public fees for public mediations that happen at the mediation centres from courts. For more information, see https://www.aasp.org.br/em-pauta/mediacao-empresarial-em-numeros-onde-estamos-e-para-onde-vamos/.

Procedure

Counsel and witnesses

Are the parties typically represented by lawyers in commercial mediation? Are fact- and expert witnesses commonly used?

Yes, lawyers are very common in commercial mediations. Either both parties shall have lawyers or neither of them. If one party attends with a lawyer, the mediator should cease the procedure until both parties have lawyers (article 10, Law 13105/2015). Fact and expert witnesses are quite rare.

Procedural rules

Are there rules governing the mediation procedure? If not, what is the typical procedure before and during the hearing?

Yes. The Law of Mediation provides ground rules in articles 14 to 29. Common rules for both judicial and private mediation are that mediators shall explain to the parties the confidentiality of the procedure at the very beginning. It is possible to have co-mediation. Both plenary and caucus sessions are possible. Judicial deadlines are suspended. The mediation procedure ends with the final agreement or a term that states there is no possible agreement. For extrajudicial mediation, the law states that the invitation for the first meeting should have a clear date and place, there should be a clear minimum deadline for the conclusion of the procedure and the criteria for the choice of the mediator. Parties can always contractually decide differently. In the absence of contractual provisions, article 22 of the Law establishes some rules, such as a minimum of 10 days and maximum of three months for the mediation to be concluded. For judicial mediation, the main differences are that parties cannot freely appoint their mediator (article 25), public defence is granted for those in need and, if the case is resolved by the mediation procedure before hearing the defendant’s case, there are no legal fees for either party.

Tolling effect on limitation periods

Does commencement of mediation interrupt the limitation period for a court or arbitration claim?

Yes. The Mediation Law provides for this in article 16. This article states: ‘Judicial or arbitral proceedings may be suspended at the request of the parties in a mediation procedure.’ This was one of the advantages that the new law brought and that helped boost the use of commercial mediation.

Enforceability of mediation clauses

Is a dispute resolution clause providing for mediation enforceable? What is the legal basis for enforceability?

According to the Mediation Law (article 22, IV), mediation clauses imply the obligation to attend the first mediation session. There can be penalties for non-attendance at the first session. As the mediators clarify the principles and the operation at the first session, it is clear that a mediation clause only establishes the duty for parties to attend and to get to know what mediation is. After the first session parties are completely free to leave, since mediation is a voluntary process.

In addition, according to §2 of the same article, in the absence of express contractual provision, some legal criteria must be observed for the first mediation meeting and establishes a fine of 50 per cent of the costs of the suit for the party who does not attend the first meeting.

Confidentiality of proceedings

Are mediation proceedings strictly private and confidential?

Mediation proceedings are private and confidential. Mediators are not allowed to share information discussed during sessions. For instance, they cannot be enrolled as witnesses. There is one exception: the mediator should inform the authorities of any crime.

Article 30 of the Mediation Law states that any information shared during the mediation session is confidential unless the parties decide otherwise. Confidentiality applies to the mediators, parties, lawyers and any other person who took part in the proceedings. Information shared during caucuses cannot be disclosed publicly. Chambers and courts have codes of ethics that deal with confidentiality. Article 173 of the Civil Procedure Code establishes that mediators who breach confidentiality will be excluded from the list of mediators.

Success rate

What is the likelihood of a commercial mediation being successful?

There is little data on commercial mediation in Brazil. FGV professor and ADR lawyer, Cristiane Carneiro, is completing research on the economic benefits of business mediation here in Brazil and shows as preliminary results that less than 20 per cent of commercial cases in judicial mediation are settled. For extrajudicial mediation, the research was not able to gather much data, since not all chambers responded or have this information owing to confidentiality. The only private chamber that answered had three commercial cases resulting in one agreement; therefore, a 33 per cent rate of success.

Settlement agreements

Formalities

Must a settlement agreement be in writing to be enforceable? Are there other formalities?

Yes, it should be in writing. The settlement agreement resulting from a mediation is an extrajudicial enforcement order (article 20, paragraph 1 of Law 13.140/2015). This means that, in the case of non-compliance, the plaintiff may require judicial coercive measures for the enforcement of the agreement. It requires no other evidence. There is also the possibility to submit the agreement for a judge’s approval, prior to any non-compliance. In this case there is less possibility of any questioning regarding other nullities.

Challenging settlements

In what circumstances can the mediation settlement agreement be challenged in court? Can the mediator be called to give evidence regarding the mediation or the alleged settlement?

There are no specific circumstances for a mediation agreement to be challenged in court. In a systematic interpretation, one can infer that courts might not confirm agreements that have some formal discrepancy, for instance, if only one of the parties has legal assistance or if any of them is not capable. Besides, article 3 of the Law of Mediation states that disputes concerning non-disposable rights cannot be mediated.

Article 7 of the Law of Mediation forbids mediators from being enrolled as witnesses. Article 30, §2º states that any evidence that comes from information related to the mediation procedure shall not be used in a court.

Enforceability of settlements

Are there rules regarding enforcement of mediation settlement agreements? And on what basis is the mediation settlement agreement enforceable?

The settlement agreement resulting from a mediation is an extrajudicial enforcement order (article 20, paragraph 1 of Law 13.140/2015). This means that, in the case of non-compliance, the plaintiff may require judicial coercive measures for the enforcement of the agreement. It requires no other evidence. There is also the possibility of submitting the agreement for court confirmation prior to any non-compliance (article 28). In this case there is less chance of any questioning regarding other nullities.

Stays in favour of mediation

Duty to stay proceedings

Must courts stay their proceedings in favour of mediation?

Yes. Courts must stay their proceedings in favour of mediation. The Law of Mediation, article 16 states that the parties can ask the judge to suspend the case during the mediation procedure. Article 28 establishes that the judicial mediation should finish within 60 days.

The Civil Procedure Code establishes that judicial mediation should take place after receiving the complaint and before the response. Article 334 of the Code states that the judicial mediation should finish in two months. The defendant will present his or her answer 15 days after the last session of mediation or conciliation.

Articles 16 and 23 of the Law of Mediation state that mediation can occur during court proceedings or arbitrations, which will be suspended.

Miscellaneous

Other distinctive features

Are there any distinctive features of commercial mediation in your jurisdiction not covered above?

The Law of Mediation states in article 46 that mediation may occur through the internet or other means of communication that allow the remote transaction, with the agreement of both parties. Article 334, §7º states that the conciliation or mediation session can be done through electronic media. There are several online dispute resolution businesses in the country and they have not been challenged in courts yet.

Update and trends

Opportunities and challenges

What are the key opportunities, challenges and developments which you anticipate relating to mediation in your jurisdiction?

Opportunities and challenges 25 What are the key opportunities, challenges and developments which you anticipate relating to mediation in your jurisdiction?

Online dispute resolution together with the design of the dispute system are the main areas for development. Brazil is a very large country with lots of inequalities in opportunities for good quality legal assistance in areas geographically distant from the economic and political centre. Brazil faces a big challenge regarding the large number of judicial cases in the judicial branch, which is inefficient and expensive. The mediation tools can work as effective alternatives for faster and more efficient ways to resolve disputes.