INTERNATIONAL ARBITRATION 1/3LY
TECHNICAL 35
Arbitration in Brazil has come a long way since the passing of the Brazilian Arbitration Act in 1996. The BAA has its origins in the UNCITRAL Model Law and even though it preceded Brazil’s ratification of the New York Convention by six years, the BAA is consistent with the New York Convention, at least partly because of its UNCITRAL origins. In the two decades since the passing of the BAA and the ratification of the New York Convention, Brazil has been slowly garnering the perception of being an arbitration- friendly jurisdiction. Despite – or maybe because of – the success of arbitration in Brazil, the Brazilian Congress recently enacted an amendment to the BAA (Law No. 13129/2015) with a view to making punctual modifications to domestic aspects of the law. For example, the amendment confirms the ability of governmental entities to participate in arbitrations, the ability of companies and their shareholders to opt for arbitration in their bylaws, and expressly grants powers to arbitrators to issue interim relief. The amendment does not materially modify any aspect of proceedings to confirm foreign arbitral awards. With the renewed interest in Brazilian arbitration that the new amendment has brought, it is timely to review the Brazilian jurisprudence on confirmation of foreign arbitral awards over the past 10 years. Foreign arbitral awards 1 are subject only to a summary confirmation proceeding in the Brazilian Superior Tribunal of Justice (STJ). Merit inquiries (with the exception of sovereignty, public order and human dignity) are not permitted. See, e.g., Paladin PM Holmes Brazil Investors LLC v. Molnar Construtora e Incorporadora Ltda. 2 STJ’s role is limited to the determination of whether STJ’s requirements are met (STJ’S Internal Regulations), and whether any grounds for refusal to enforce exist (BAA, Articles 38 and 39). Articles 216-C and 216-D of STJ’s Amendment to its Internal Rules No.18/2014 lay out the procedural requirements for confirmation proceedings. The confirmation petition must establish: (1) tribunal’s competence to hear the dispute; (2) valid service or validly obtained default award/ judgment; (3) res judicata; and (4) sworn translation or consularization of the foreign arbitral award and of other necessary documents. In the event the petition lacks these requirements or is otherwise defective, the petitioner has an opportunity to cure the defect within a time period. If it fails to do so, the petition is archived (equivalent to a dismissal without res judicata effect). Pursuant to Article 216-F, the STJ will not enforce a foreign arbitral award that violates Brazil’s sovereignty, Brazil’s public policy or human dignity.
Pursuant to Articles 38 and 39 of the BAA, the following are grounds for non- confirmation: (1) minors or incapacitated parties; (2) invalid arbitral agreement under the chosen law or under the laws of the seat; (3) resisting party was not notified of the arbitral appointment, proceeding or due process is otherwise violated; (4) the arbitral award issued beyond the scope of the arbitral clause and it is impossible to separate that part of the decision from the rest of the award; (5) arbitral institution not chosen by the parties; (6) arbitral award did not have res judicata effect or the award had been suspended or annulled at a court of the seat; and (7) subject matter of the arbitration cannot be arbitrated under Brazilian law or the arbitral award violates Brazilian public order. We reviewed approximately 40 confirmation decisions by the STJ since 2005. In only seven cases the STJ refused to enforce the foreign arbitral award or at least part of the foreign arbitral award. Five of these seven cases were decided in 2005, the first year in which the STJ became responsible for confirmation proceedings. The last time confirmation was denied completely was in 2007. Since 2005 the STJ has had a chance to reconsider most of the issues that were once grounds for refusal and it has expressly rejected most of them in recent cases. Below is a brief account of how the jurisprudence has evolved in these 10 or so years. L ACK OF S TANDING Gottwald Port Technology GMBH v. Rodrimar S/A Transportes Equipamentos Industriais e Armazéns Gerais 3 . In Gottwald, the STJ refused to confirm the foreign arbitral award by reason of petitioner’s lack of standing. The Petitioner had acquired the right to collect the proceeds of an arbitral award through assignment between it and the original claimant in the arbitration. The STJ’s decision was without res judicata effect and the Petitioner was ultimately successful in ATECS Mannesmann GMBH v. Rodrimar S/A 4 (confirming the foreign arbitral award and finding standing where the rights under the arbitration agreement had been succeeded by virtue of succession by merger).
A ROAD WORTH TAK ING : BRAZ IL’ S TORTUOUS YE T ENCOURAGING PATH TOWARDS THE
IMPLEMENTAT ION OF THE NEW YORK CONVENT ION
BY I RENE GEE , SENI OR C OUNSEL AT C LY DE & C O
1 Unlike US law, Brazilian lawdoes not look into the nationality of the parties to the arbitration to define whether an arbitration is domestic or international. Brazilian law looks only at the situs of the arbitration. BAA, Article 34, sole paragraph. As a result, an arbitration between two foreign parties sited in Brazil will be considered a domestic arbitration by the Brazilian judiciary, subject to broader judicial review (Article 32 of the Brazilian Arbitration Act). STJ REsp 1231554/RJ (2011/0006426-8)(June 1, 2011). By contrast, an arbitration between two Brazilian parties in a foreign situs will be considered a foreign arbitration, subject to the New York Convention grounds only. 2 SEC 8847 (2012/0244916-3)
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