On April 19, the special chamber of the Brazilian Superior Court of Justice denied recognition of an arbitral award issued in the United States in favor of Abengoa against Adriano Ommeto Agricola et al. (SEC 9.412/US), involving a US$100 Million claim for breach of representations and warranties in the acquisition of a sugarcane mill in Brazil. The ground for the denial was that the law firm of the chairman of the arbitral tribunal had received US$6 Million in fees for work in an unrelated matter in connection with another company of the Abengoa group, which the chairman failed to disclose to the parties during the arbitration.
This is a very relevant precedent, since it establishes a high standard for independence and impartiality of arbitrators. It seems that the chairman was not aware of such other assignment of his law firm, which was completely unrelated to his work, but he was still held not to have the proper independence and impartiality to act as arbitrator in a proceeding involving Abengoa. This was also a departure to the common trend of the Brazilian Superior Court of Justice to grant exequatur to foreign arbitral awards, without deep review of the facts of the procedure, unless there is a prima facie cause of denial.
The full text of the decision, in Portuguese, is yet to be published at the Brazilian Superior Court of Justice’s website.