Brazil

Fernando Eduardo Serec, Antonio Barbuto Neto and Eduardo Rabelo Kent Coes

TozziniFreire Advogados

  1. 1.Which legislation governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings?

    Law No. 9,307/96 (the Brazilian Arbitration Act) defines ‘foreign arbitration awards’ as those rendered outside the Brazilian territory. The Brazilian Arbitration Act establishes that for a foreign arbitration award to be recognised and enforced in Brazil, it shall only be subject to the confirmation proceeding before the Superior Court of Justice (STJ). The award does not have to be recognised by the foreign state’s judicial courts before being submitted to the STJ.

  2. 2.Has the UNCITRAL model arbitration law been adopted in your jurisdiction?

    The Brazilian Arbitration Act reflects the influence of the UNCITRAL Model Law on Commercial Arbitration and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards (the New York Convention), but at the same time contains specific features that harmonise Brazil’s legislation with modern trends in arbitration.

  3. 3.Is your jurisdiction a party to both the New York Convention and the Panama Convention? Is it a party to any other conventions or treaties governing international commercial arbitration agreements, awards or proceedings?

    Brazil has ratified both the New York Convention and the Inter-American Convention on International Commercial Arbitration (the Panama Convention). Brazil is also a party to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (the Montevideo Convention), as well as the Geneva Protocol of 1923 on arbitration clauses. Finally, the confirmation of foreign arbitral awards rendered in member states of MERCOSUR (Brazil, Argentina, Uruguay and Paraguay) is regulated by the Protocol on Jurisdictional Assistance in Civil, Commercial, Labour and Administrative Matters, also known as the Las Leñas Protocol.

  4. 4.Is your jurisdiction a party to the ICSID Convention? Have steps been taken to renounce the Convention or withdraw from ICSID?

    Brazil is not a party to the Washington Convention that established the International Centre for the Settlement of Investment Disputes (ICSID).

  5. 5.Has your jurisdiction refused to honour an international arbitral award issued against it?

    Not applicable, given that no international award against the Federative Republic of Brazil has been issued. Please note that Brazil is not a party to the ICSID Convention.

  6. 6.Is a pre-dispute clause or separate agreement to resolve international commercial disputes by arbitration enforceable?

    Both the pre-dispute arbitral clauses (cláusula compromissória) and the post-dispute submissions to arbitration (compromisso arbitral) are enforceable pursuant to the Brazilian Arbitration Act. It is important to note, however, that under the Brazilian Arbitration Act, compromissos are only required when the parties’ contract contains no arbitral clause at all, or when said clause is open, vague or fails to provide the details referring to applicable arbitral rules, appointment of arbitrators and so on (so-called ‘empty arbitration clauses’). Therefore, the so-called ‘full arbitration clauses’ do not require a compromisso to set aside the jurisdiction of the courts. That is the case, for example, when the parties agree on a self-executing procedure for setting in motion the arbitral process by referring to the rules of any administering organisation, or any ad hoc rules, such as the UNCITRAL Rules. The vast majority of Brazilian legal precedents waive the compromisso if the parties have indeed agreed ahead of time on the form for instituting the arbitral procedures through a full arbitration clause.

  7. 7.Is a pre-dispute clause or separate agreement to resolve disputes by arbitration enforceable in consumer cases? Is there any legislation in your jurisdiction governing the arbitrability of consumer disputes?

    There is a lot of debate over the arbitrability of consumer disputes. The Brazilian Arbitration Act sets forth in its article 4.2, specific rules for consumer cases as follows: ‘The arbitration clause shall not be deemed to have efficacy unless the adherent takes the initiative to initiate arbitration proceedings or agrees expressly to its initiation as long as it is in writing or in an attached document or in bold, with a signature or endorsement made specially for this clause.’ However, the Consumer Protection Act, in its article 51, item VII, establishes that any clauses in a consumer agreement providing for arbitration as a compulsory means of dispute resolution are null and void. There are several court precedents in favour of the arbitrability of consumer disputes, stating that, as long as a pre-dispute clause is conspicuous in the contract or has been expressly agreed to in a separate agreement, it will be considered valid and enforceable.

  8. 8.What are the requirements for an enforceable arbitral agreement?

    Article 10 of the Brazilian Arbitration Act sets forth the (mandatory) requirements for a valid and enforceable arbitral agreement. Thus, an agreement to arbitrate must specify the subject-matter submitted to arbitration, the place where the arbitral award is to be rendered, as well the description and address of the parties and arbitrators (or arbitral institution). Doubts as to whether an arbitral agreement has fulfilled such requirements will usually be interpreted in the most favourable manner to uphold the agreement (in favorem validitatis).

  9. 9.Is there a subject matter that is not legally subject to arbitration in the context of an international business transaction?

    The Arbitration Act allows ‘persons capable of contracting’ to ‘settle through arbitration disputes related to patrimonial rights over which they may dispose.’ The act’s broad scope of arbitrability, however, excludes from the scope of arbitration issues that cannot be contracted away, such as criminal, antitrust and patent matters. Issues arising out of distributorship contracts may be subject to arbitration.

  10. 10.Does the law specify whether an arbitration will be in equity or under law if the parties do not expressly specify the nature of the arbitration in the agreement?

    Although authorised by the Brazilian Arbitration Act, arbitration in equity must be expressly agreed between the parties. The parties may also agree to resolve their dispute pursuant to the ‘general principles of law’, ‘common usage and practices’ and ‘international trade rules’.

  11. 11.How does the law limit party autonomy with respect to the terms of an arbitral agreement?

    Party autonomy is fully endorsed by the Brazilian Arbitration Act with respect to the number of arbitrators, their qualifications and the method of their appointment, although parties often prefer to have a panel of three arbitrators deciding the matter.

  12. 12.Under what circumstances does the law allow a non-signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

    Despite one isolated decision rendered in 2006 by the São Paulo State Court of Appeals, the trend in Brazilian courts is to prevent non-signatories to arbitral agreements from participating in the corresponding arbitration proceedings. In the specific scenario of a merger transaction, a decision rendered by the STJ enforced the arbitration agreement executed by a company that was later merged into another company. The STJ held that an arbitration agreement survives a company’s merger as the surviving company assumes all rights and obligations of the company merged into it, which includes any and all arbitration agreements executed before the merger.

    Overall, there are two standards which Brazilian courts and tribunals have applied in such cases: whether there is an intertwined relationship between the party which arises from jointly held businesses and active participation of the non-signatory party; and whether there is a commonality of issues involved.

  13. 13.Under what circumstances does the law allow a signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

    In broad terms, as long the as the subject matter is arbitrable, and the parties are legally capable and have willingly signed a valid arbitration agreement, they would be allowed to initiate arbitral proceedings against the other party to the arbitral agreement.

  14. 14.Under what circumstances may a non-signatory to an arbitral agreement compel arbitration of a claim asserted against it by a signatory of the arbitral agreement in a court of law?

    There are no specific rules in the Brazilian Arbitration Act which allow a non-signatory party to compel arbitration against a signatory party.

  15. 15.Under what circumstances may a signatory to an arbitral agreement compel arbitration of a claim asserted against it by a non-signatory of the arbitral agreement in a court of law?

    Under article 7 of the Brazilian Arbitration Act, when (i) there is a valid arbitration agreement (ii) one of the parties (signatories) refuses to arbitrate a dispute, the interested party may seek specific performance [of the arbitration agreement] by filing a motion to compel arbitration against the recalcitrant party before a competent court. The same remedy is available against a non-signatory, as long as the interested signatory party can show that the arbitration agreement was transmitted (for example, by substitution of a party to a contract) or extends to the non-signatory party (for instance, by showing a specific de facto contractual relationship with the non-signatory), moreover, that the non-signatory party is actually bound to arbitration agreement.

  16. 16.Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration?

    There are no specific rules pertaining to class action arbitration or group arbitration under Brazilian Law. In practical terms, however, this will ultimately depend on whether the subject matter in dispute is permissible of arbitration or not (objective arbitrability) and if the autonomy of the parties was duly observed as to their intent to arbitrate.

  17. 17.Are foreign arbitral institutions authorised to administer arbitrations in your jurisdiction? Does the law require that a foreign institution be licensed under local law in order to administer an arbitration seated there?

    The Brazilian Arbitration Act grants the parties autonomy to select the legal rules to govern the arbitration proceeding, which may be conducted ad hoc or under the administration of any domestic or international arbitration institution, such as the ICDR, the ICC or the LCIA. Arbitral awards issued within the Brazilian territory (regardless of the nationality of the arbitral institution) are enforceable in Brazil in the same manner as final and non-appealable decisions rendered by a judicial court. Enforcement occurs through the so-called Expedite Collection Procedure, which is designed to attach property to satisfy the money award, in which the judgment-debtor has very limited grounds to challenge the merits of the decision. By contrast, it is important to note that awards issued abroad must be submitted to recognition by the STJ prior to enforcement. Brazilian law does not require that foreign institutions to be licensed in order to administer proceedings seated in Brazil.

  18. 18.Is an arbitral award issued in an arbitration seated in your jurisdiction under the auspices of a foreign institution such as the ICDR, the ICC or the LCIA vulnerable to challenge?

    All awards issued within the Brazilian territory are considered to be domestic awards. Unless parties have provided otherwise in the contract, awards issued in arbitrations seated in Brazil and under the administration of a foreign institution will be treated as domestic awards and therefore only be challenged under very limited circumstances. The grounds for setting aside an arbitral award overall relate to issues of composition and jurisdictional powers of the arbitral tribunal, scope of the decision vis a vis the arbitration agreement and subject matter in dispute, and the validity of the arbitration agreement.

  19. 19.Does the law require that arbitrators in international arbitrations be citizens or residents of your jurisdiction?

    Arbitrators may be ‘any legally capable individual’ and the law does not carry any citizenship or qualification (licensed to practise law in Brazil) requirements. Therefore, arbitrators in both domestic and international proceedings may be foreigners and non-lawyers. It must be noted, however, that the 2004 Public-Private Partnership Law (the PPP Law) and the 2005 Amendment to the Concessions Law (the Concessions Law) authorise arbitration of disputes between public entities and private parties arising from transactions executed with the federal government under both statutes. However, despite the fact that foreign arbitrators could be used in these proceedings, both the PPP Law and the Concessions Law require that the arbitration be conducted in Brazil and in Portuguese.

     

  20. 20.Does your law require that arbitrators in international cases be lawyers?

    Arbitrators may be ‘any legally capable individual’ and the law does not carry any citizenship or qualification (licensed to practice law in Brazil) requirements. Therefore, arbitrators in both domestic and international proceedings may be foreigners and non-lawyers. It must be noted, however, that the 2004 Public-Private Partnership Law (the PPP Law) and the 2005 Amendment to the Concessions Law (the Concessions Law) authorise arbitration of disputes between public entities and private parties arising from transactions executed with the federal government under both statutes. However, despite the fact that foreign arbitrators could be used in these proceedings, both the PPP Law and the Concessions Law require that the arbitration be conducted in Brazil and in Portuguese.

  21. 21.Are the fees of foreign arbitrators serving in an arbitration seated in your jurisdiction subject to taxation?

    The fees of foreign arbitrators serving in a Brazilian-seated arbitration, if paid by a Brazilian company, are subject to a 15 per cent income tax withheld by the company (IRRF) plus 10 per cent in economic intervention tax (CIDE).

  22. 22.Must arbitrators in international arbitrations be independent and impartial? What is the legal standard governing conflicts of interest and disclosure by arbitrators in international arbitrations?

    The UNCITRAL Model Law has significantly influenced the arbitration law in Brazil. To this end, the Brazilian Arbitration Act clearly adopts the test of ‘justifiable doubt’ raised by the circumstances in assessing conflicts of interests.Pursuant to the Act, arbitrators must exercise their functions with impartiality, independence, competence, diligence and discretion and must disclose any facts likely to give rise to justified doubts as to their impartiality and independence. The Arbitration Act does not contain strict standards for what arbitrators must disclose, but the statute makes reference to the impediments or partiality standards contained in the Brazilian Code of Civil Produce. Therefore, an arbitrator (like a judge) is prevented from deciding cases in which: the arbitrator or a spouse or relative is a party; the arbitrator has already acted as advocate, expert or witness for one of the parties; the party’s lawyer is the arbitrator’s spouse or relative; or the arbitrator is a member of the management or directing board of one of the parties. Furthermore, an arbitrator’s impartiality is compromised when: the arbitrator is close friends with or strongly dislikes any of the parties; a party is the arbitrator’s (or his or her spouse or relative’s) debtor or creditor; the arbitrator is an heir or employer of any of the parties; the arbitrator received gifts from any of the parties or provided counselling to the parties regarding the object of the arbitration; or the arbitrator has an interest that a party is favoured by the outcome of the arbitration.

  23. 23.Will courts entertain requests to disqualify an arbitrator during an arbitration?

    Yes. Disregard of the duty to disclose can result in the annulment of a decision rendered by a (challenged) arbitrator, during or following the arbitral proceeding. In one case, an arbitral award was annulled by the State Court of Appeals of Rio Grande do Sul on the basis that the arbitrator had advised one of the parties prior to the commencement of the arbitration but did not recuse himself or disclose this fact to the opposing party.

    An arbitrator’s duty to disclose is therefore generally perceived as an indispensable requirement in Brazil. Furthermore, a Brazilian court, in deciding whether to set aside an award, will also take into consideration the parties’ awareness of the relevant facts and any prior attempts to challenge the arbitrator during the arbitral proceeding.

  24. 24.Does the law require that arbitral proceedings be held in a specific language?

    With the exception of the above-mentioned 2004 Public-Private Partnership Law and the 2005 Amendment to the Concessions Law, which require arbitrations in disputes between public entities and private parties to be conducted in Portuguese, arbitral proceedings may be conducted in any language.

  25. 25.Can foreign lawyers serve as advocates in arbitral proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel?

    Foreign lawyers are allowed to serve as advocates in arbitral proceedings in Brazil. There is no need for a local lawyer to serve as co-counsel.

  26. 26.Are the fees of foreign layers earned for services rendered in connection with an arbitration seated in your jurisdiction subject to local taxation?

    If foreign lawyers are hired and paid by a company located outside Brazil, such fees are not subject to local taxation. However, if foreign lawyers are hired and paid by a Brazilian-based company, the corresponding fees will be subject to a 15 per cent withholding income tax (IR Fonte), and a 2 to 5 per cent tax on services (ISS) which will be withheld by the Brazilian company, as well as a 10 per cent Tax on Royalties and Technical Services (CIDE/Royalties) and a 9.25 per cent Social Contributions on Imports.

  27. 27.In what circumstances, if any, does your law allow the consolidation of multiple arbitral proceedings?

    There is no specific provision in the Brazilian Arbitration Act regarding consolidation of multiple arbitral proceedings, although a few of the existing arbitral institutions in Brazil offer specific rules to this effect.

  28. 28.Please describe common practice and usage in international arbitrations seated in your jurisdiction with respect to a party’s right to require an opposing party to produce documents pertinent to the dispute.

    The Brazilian Code of Civil Procedure sets a ‘catch-all’ rule which allows the presentation of any lawfully obtained evidence throughout the discovery stage of the proceeding. Furthermore, and clearly evincing an inherent approach of Brazilian legal practice to the inquisitorial system, a judge (or arbitrator) may order a party to produce documents or present exhibits in its possession. Nevertheless, in spite of the broad scope of these rules, as an important counterweight, US-style discovery is not typically accepted and a party will not be compelled to produce unfavorable evidence under Brazilian law, unless required by law or court order (for this purpose, an arbitral tribunal as well). The Brazilian Arbitration Act, as well as most Brazilian institutional rules grant arbitrators certain degree of discretion to order the production of evidence deemed relevant to the outcome of the dispute.

    Attorney and non-attorney privilege issues may be at stake as well during the course of litigation. Information deemed confidential is generally protected by law from disclosure and may only be revealed in extremely narrow situations related to criminal investigations.

    In order to avoid a possible judicial annulment of an arbitral award as a matter of violation of public policy, an arbitrator should abide by these rules when addressing production of evidence, particularly if enforcement is to be sought in Brazil.

  29. 29.Is the principle of ‘Kompentenz-Kompetenz’ followed in the courts?

    The Brazilian Arbitration Act incorporates the principle of Kompetenz-Kompetenz by ensuring that the arbitrators are competent to decide disputes relating to ‘the existence, validity and effectiveness of the arbitration agreement, as well as the contract containing the arbitration clause’. Brazilian courts have generally followed these principles and many judicial precedents confirm such practice.

  30. 30.Do the courts follow the principle of the independence and separability of the arbitration clause?

    The Brazilian Arbitration Act expressly recognises the principle of separability of the arbitration clause, under which a challenge to the validity of the main contract will not interfere with that of the arbitration clause, unless the challenge refers specifically to the validity of the arbitration clause itself. This principle has been generally followed by Brazilian courts, particularly in association with the principle of Kompetenz-Kompetenz.

  31. 31.If a party files a lawsuit in violation of an agreement to arbitrate, will a petition by the defendant to remit the lawsuit to arbitration be granted by the courts under normal circumstances? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation such that the defendant will also need to defend the merits of the lawsuit in court?

    Yes. Brazilian civil procedure rules require courts to dismiss any lawsuit brought by a party in violation of an agreement to arbitrate. In fact, the Brazilian Arbitration Act provides for a specific remedy in such cases, by means of a motion to compel arbitration against the recalcitrant party. Normally, courts dismiss the correspondent lawsuit without the other party having to defend the merits of the lawsuit in court. Courts in Brazil, especially those located in São Paulo, have consistently dismissed lawsuits brought in violation of arbitration clauses. Recent disputes involving derivatives agreements containing arbitration clauses reflect this pro-arbitration approach taken by these courts.

  32. 32.Are arbitral tribunals empowered to grant interim relief? If so, how is that relief enforced in the courts?

    Once duly instituted, arbitral tribunals are also empowered to grant interim or provisional relief as requested by the parties. Once the order is granted, arbitrators themselves request the court with original jurisdiction to hear the underlying dispute to enforce the measure. In some situations, however, the party that obtains the interim or provisional relief from the arbitral tribunal may file a petition directly to the court seeking an enforcement order against the recalcitrant party, in order to preserve the effectiveness of the proceeding. If, however, the arbitral tribunal has not yet been formed, the parties may apply for the so-called pre-arbitration injunctive relief before a court of law. In this specific situation, the court will grant the injunction, which will be later upheld or reversed by the arbitral tribunal finally instituted. Failure to initiate arbitration after obtaining the court-awarded injunction will cause the case to be dismissed by the Brazilian court, as decided in a recent precedent by the São Paulo State Court of Appeals. 

  33. 33.Can arbitrators issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court lend its aid in enforcing such an order against a recalcitrant third party?

    Yes. The Brazilian Arbitration Act contains a specific provision authorising the arbitrators to seek the assistance of courts to compel a third-party witness to appear before them. The judicial court, as a rule, will not enter the merits of the arbitral tribunal’s decision, but rather enforce it through the use of police force or any other enforcement mechanism under law to compel compliance.

  34. 34.Can a party to an arbitration seek relief from the court to obtain evidence in aid of an international arbitration? What is the scope of such relief?

    Yes, the parties in an international arbitration may seek and request from the Brazilian courts relief to obtain evidence and to impose the other party or even testimonies to present depositions, production of specific documents and answers to interrogatories.

  35. 35.Can a party in an international commercial arbitration seek interim or provisional relief from a court without first seeking relief from the arbitral tribunal?

    Parties are always allowed to seek interim or provisional relief from a court before the formation of the arbitral tribunal. Once formed, however, the arbitral tribunal has exclusive jurisdiction to grant these measures, which may be enforced through the assistance of judicial courts. Therefore, the Arbitration Act follows the same standard set forth by article 23 of the ICC Rules of Arbitration.

  36. 36.Have the courts issued injunctions enjoining arbitral proceedings from going forward?

    The Copel case appears to be the only relevant anti-arbitration injunction in Brazil. This isolated case ultimately settled, but a recent decision rendered by the STJ in AES v CEEE demonstrates that the highest judicial authority on federal law issues is not amenable to anti-arbitration suits filed by mixed-capital companies that freely execute arbitration agreements. Furthermore, the most recent decision of the São Paulo State Court of Appeals in the CAOA v Renault saga, an attempt by the former distributor of Renault vehicles in Brazil to circumvent an unfavourable foreign arbitration award, clearly demonstrates the hostility of Brazilian courts towards injunctions enjoining arbitral proceedings from going forward. These recent precedents have clearly positioned Brazil as an arbitration-friendly jurisdiction.

  37. 37.Does the law provide that post-award interest accrues on an unpaid arbitral award?

    There is no specific provision in the Brazilian Arbitration Act regarding post-award interest, which is usually stated in the arbitral award itself. Nevertheless, a party in an arbitration may include a claim to this effect in its brief.

  38. 38.Is an arbitral tribunal empowered to award attorneys’ fees to the prevailing party or is that power reserved to the courts?

    Arbitral tribunals are empowered to award attorneys’ fees to the prevailing party as long as the parties expressly agree to it in the agreement to arbitrate. While costs are in effect what operate the entire arbitral proceedings (including the arbitrators fees), legal representation is not an essential requirement under the Arbitration Act. Thus, the lack of attorney’s fee will not hinder the issuance of an award.

  39. 39.What are the grounds for challenging an international award issued in an arbitration seated in your jurisdiction?

    All awards issued within the Brazilian territory are considered to be domestic awards irrespective of whether the underlying dispute has an international flavour. According to the Brazilian Arbitration Act, the domestic arbitration award is enforced irrespective of its judicial recognition by the Brazilian courts. In this sense, an arbitration award represents a judicially executable title and is not subject to review on its merits.

    It is important to note, however, that article 32 of the Arbitration Act provides for the situations in which an award rendered in Brazil may be annulled. That is the case when: the arbitration agreement is null and void; the arbitrators lacked capacity; the award fails to provide the grounds for the decision or comply with certain other formal requirements; the award exceeds the scope of the arbitration agreement; the award fails to decide the whole dispute submitted to arbitration; the award was rendered through unfaithfulness, extortion, or corruption; the award was made after any time limit required by the submission to arbitration; or the arbitrators are biased or there is a failure to guarantee certain minimum procedural protections.

  40. 40.Is ‘lack of reasonableness’, manifest disregard or a mistake in the application of the substantive law to the dispute of an international award grounds to vacate it?

    The grounds for refusal of recognition and enforcement provided in the New York Convention have been essentially reproduced in the last section of the Brazilian Arbitration Act. As such, an international arbitral award will not be vacated on these grounds. As an adhering party to the Convention, Brazil has not made any reservations (neither commercial or reciprocity) as to the recognition and enforcement of foreign arbitral awards, permitting a broader enforcement regime. Additionally, it is important to note that the exequatur procedure for recognition of foreign arbitral awards under Brazilian law, as a rule, is limited to the verification of formalities and will not allow examination on the merits.

  41. 41.To what degree have international awards rendered in your jurisdiction been vacated on the grounds of ‘public policy’?

    The ‘public policy’ defence raised in foreign award recognitions may lead to a grey area of interpretation. Public policy may be viewed as something absolutely essential to the Rule of Law, such as certain constitutional rights (for instance, violation to the attorney-client privilege). However, the STJ (high court detaining exclusive jurisdiction to recognise a foreign judgment or arbitral award has repeatedly refused to allow challenges to the merits based on ‘public policy’ grounds, which is a good sign of embracement of arbitration in Brazil.

    There have only been four cases in which the STJ has denied recognition of an award based on violation to ‘public policy’, although all are related to the absence of arbitration agreements. Review of the merits of arbitration awards by the STJ on these grounds has only occurred once, although in this case the Court upheld the arbitral tribunal’s decision.

  42. 42.What is the period of time a party has to challenge such an award?

    The annulment action must be filed within 90 days after official notification of the arbitration award.

  43. 43.Please describe the standard used by the courts in deciding whether to vacate an international arbitral award rendered in your jurisdiction.

    As mentioned in answer 39 above, if rendered in Brazil an arbitral award will be considered domestic (even if the underlying dispute is international in nature). In this case, the standard to vacate will follow the above-mentioned article 32 of the Brazilian Arbitration Act. If, however, the award is rendered outside the Brazilian territory, we would have a foreign arbitral award. In that case, the decision must be submitted to the exequatur procedure in the STJ before becoming valid and enforceable in Brazil.

    Exequatur essentially consists of examining grounds for refusal of recognition stated in the New York Convention and Resolution No. 9 of the STJ (which regulates the procedure for recognition of foreign judgments – arbitral or judicial).

    The standards for refusal of recognition of a foreign arbitral award under the Brazilian Arbitration Act are consistent with the wording of article V of the New York Convention, in that a foreign award may be vacated on the following grounds:

    • the parties to the arbitration agreement lack capacity;

    • the arbitration agreement is invalid under the law to which the parties agreed or the law of the place where the award was rendered;

    • the respondent was not given proper notice of the appointment of the arbitrator or of the arbitration proceeding or was otherwise unable to present his or her case and was unable to exercise his or her right of defence;

    • the award exceeds the limits of the arbitration agreement;

    • the commencement of the arbitration proceeding was not in accordance with the arbitration agreement;

    • the arbitration award is not yet binding on the parties or has been annulled or suspended by a court of the place of arbitration;

    • the object of the dispute may not be the subject of an arbitration as a matter of Brazilian law; or

    • the award violates Brazilian public policy (see question 3 for details on public policy grounds).

    In addition, an arbitral award must also comply with the procedural requirements set forth in Resolution No. 9 of the STJ, which further determines that an award (judicial or arbitral) will not be enforced if it is contrary to national sovereignty, public policy (repeated in the New York Convention) or good practice.

    Merit-related issues will not be discussed in order to recognise or enforce a foreign award in Brazil

  44. 44.Please describe any recent significant experiences or cases that illustrate the attitude of your courts toward the annulment of international awards rendered in your jurisdiction.

    Awards rendered outside the Brazilian territory are subject to confirmation proceedings by the STJ. Overall, the STJ has granted recognition to most requests. Occasionally, however, recognition is denied if the interested party successfully shows to the Court that the arbitral award falls within one or more cases of annulment under the Arbitration Act (identical to the cases established in the New York Convention) or Resolution No. 9 of the STJ. This was the case, for instance, in the Ssangyong Corporation v Eldorado Industrias Plásticas Ltda decision rendered in late 2010, in which the court denied recognition of an arbitral award issued abroad due to violation of national sovereignty (article 6 of Resolution No. 9 of the STJ), in that plaintiff had already applied and received the amount awarded in a bankruptcy procedure during the course of the arbitration proceeding (and prior to the issuance of the award).

  45. 45.Do the courts consider themselves empowered to vacate an arbitral award rendered in another jurisdiction?

    No. The CAOA v Renault litigation is an interesting example of the São Paulo State Court of Appeals’ refusal to vacate an arbitral award rendered outside Brazil. After an unfavourable arbitral award rendered in New York, CAOA, the former distributor of the Renault vehicles in Brazil, filed a lawsuit before a court in São Paulo seeking to annul the foreign arbitral award prior to its confirmation by the STJ. The Court of Appeals, however, rejected CAOA’s attempt to bypass the confirmation proceedings to annul the New York arbitral award.

  46. 46.May parties waive all court review of an arbitral award rendered in your jurisdiction (or restrict or expand the scope of that court review)?

    Parties may not waive their right to seek vacatur of the arbitral award, nor restrict or expand the scope of court review.

  47. 47.Please describe the process for enforcing an arbitral award rendered in another jurisdiction.

    The Brazilian Arbitration Act establishes that for an arbitration award to be recognised and enforced in Brazil, it shall only be subject to the confirmation proceeding before the STJ. The award does not have to be recognised by the foreign state’s judicial courts before being submitted to the STJ. Therefore, the application for confirmation should contain the original foreign arbitration award or a certified copy thereof, duly notarised by the Brazilian consulate and translated into Portuguese by a sworn translator in Brazil, and the original agreement to arbitrate or a certified copy thereof duly translated into Portuguese by a sworn translator.

    The standards regarding the enforcement of a foreign arbitration award in Brazil are consistent with article V of the New York Convention. According to the Brazilian Arbitration Act, the enforcement of a foreign arbitration award can only be denied if: the parties to the arbitration agreement lack capacity; the arbitration agreement is invalid under the law to which the parties agreed or the law of the place where the award was rendered; the respondent was not given proper notice of the appointment of the arbitrator or of the arbitration proceeding or was otherwise unable to present his or her case and was unable to exercise his or her right of defence; the award exceeds the limits of the arbitration agreement; the commencement of the arbitration proceeding was not in accordance with the arbitration agreement; the arbitration award is not yet binding on the parties or has been annulled or suspended by a court of the place of arbitration; the object of the dispute is not eligible for arbitration as a matter of Brazilian law; or the award violates Brazilian public policy.

    The STJ’s internal rules authorise the court to issue preliminary injunctions during the confirmation proceedings, such as freezing assets while an application for confirmation is pending, and to grant partial recognition of foreign arbitration awards. Once the foreign arbitration award is confirmed by the STJ, the judgment creditor is entitled to enforce the now ‘nationalised’ award in the same way as a domestic award, that is, before a competent first instance judicial court. Although review on the merits continues to be prohibited at this stage, the foreign award may still be challenged on very limited grounds by the judgment debtor during the foreclosure procedure.

  48. 48.Assuming that the award is covered by a convention applicable in your jurisdiction, how long does it take to obtain an order of enforcement in the first instance? How long does it take for the enforcement process to run its full course through to the last instance?

    Foreign arbitral awards are recognised and enforced in accordance to the terms set forth in the New York Convention. As the Convention constitutes the only international treaty in force in Brazil in this respect, which was ratified without any reservations, any foreign arbitral award will be subject to the exequatur procedure before the STJ. Although this is a simple and straightforward process, lasting on average from two to 14 months (see question 49), the party against whom exequatur is sought may challenge the recognition of the award on specific and limited grounds and exceptionally extend this period of time.

    Once the STJ has granted recognition, the ‘domesticated’ award will then be remitted to a lower court, usually where the assets of the debtor are located and in the jurisdiction originally competent to examine the matter. At this stage, although enforcement may vary significantly from jurisdiction to jurisdiction (for instance, depending on the backlog of cases, administration of the court, familiarity of the judge with this kind of procedure, among other considerations), the main step is to attach the debtor’s assets in order to guarantee payment of the amount awarded. This enforcement process (collection) may last on average from six months to one year, to which the period needed for recognition or confirmation against a recalcitrant party must be added, totaling a period of eight to 26 months.

  49. 49.Please compare how long it takes to enforce an arbitral award rendered abroad with how long it takes to domesticate a foreign judgement?

    The procedure set forth for the recognition of foreign awards, irrespective of judicial or arbitral is regulated by the STJ Resolution No. 9. On average, the confirmation (or recognition) procedure of a foreign arbitral award or judgment takes from two to 14 months between the application for confirmation and a final decision issued by the STJ. Additionally, once the foreign award or judgment is recognised by the Brazilian judiciary (STJ), it will be conferred the same legal status as judgments rendered by domestic courts (ie, a judgment debt) and will thereon require enforcement through a collection proceeding, which may vary greatly, depending on the domestic court where enforcement is sought (see considerations in question 48).

    During this last stage (ie, enforcement) attachment of assets occurs in order to satisy the judgment debt. The debtor may still challenge the enforcement, albeit under very limited circumstances. As a rule, the filing of a defence by the debtor does not stay collection of what was awarded. However, the court may enter a stay order if a specific request is made by the debtor and the court understands that the request is justified, especially when irreparable economic harm could be incurred by the debtor if the proceedings were to continue.

  50. 50.Please describe some significant recent experiences with the enforcement of foreign arbitral awards.

    Recent arbitration cases decided by the STJ show significant improvements in both the time frame and quality of the confirmation proceedings, which can be summarised as follows:

    • proceedings usually take from two to 14 months. However, as mentioned above, measures can be taken during this time to safeguard the judgment creditor’s rights until a final decision on the merits of the confirmation is rendered (eg, freezing of assets);

    • most of the STJ justices are committed to the modernisation of arbitration in Brazil and a track record that is clearly favourable to arbitration has already been formed;

    • there has been no merits-review of the arbitration awards as the STJ has repeatedly ruled out a judgment debtor’s attempt to re-litigate the merits of the awards by invoking ‘public policy’ grounds; and

    • the STJ confirmed 18 of the 25 application for recognition, and the vast majority of confirmation denials were based on either the lack of an arbitration agreement duly executed between the parties, or the lack of proper summons to appear before the foreign arbitration tribunal.

  51. 51.To what degree has ‘public policy’ been a ground to refuse enforcement of an international award rendered abroad?

    Fortunately, the STJ has repeatedly ruled out the judgment debtor’s attempt to re-litigate the merits of the awards by invoking ‘public order’ grounds. The cases below clearly demonstrate this trend:

    • in International Cotton Trading Limited v Odil Pereira Campos Filho, the STJ refused to review the merits of a foreign arbitration award issued by the International Cotton Association, holding that confirmation proceedings shall verify only whether formal requirements have been met under the Arbitration Act and the court’s internal regulation;

    • in Bouvery International S/A v Valex Exportadora de Café Ltda, the STJ rejected the merits-review of a foreign arbitration award; and

    • Grain Partners v Coopergrão was another attempt by a judgment-debtor to review the merits of a foreign arbitration award. The STJ again promptly dismissed the claim to interfere with the merits of the award and, at the same time, clarified the limited scope of confirmation proceedings: ‘The homologation of a foreign award shall be limited to the assessment of its formal requirements.’ The STJ also rejected the application of the Brazilian Consumer Protection Code to an agreement executed between a Brazilian importer and a foreign cotton supplier, thereby dismissing the importer’s claim that the arbitration agreement was unconscionable.

  52. 52.Can a foreign arbitral award be enforced if the award has been set aside by the courts at the seat of the arbitration?

    No. The last part of the Brazilian Arbitration Act is specifically dedicated to the recognition and enforcement of foreign arbitral awards (rendered abroad). Article 38 and 39 of the Act basically reproduce the same terms as set forth in article V of the New York Convention regarding the grounds for refusal of recognition and enforcement in a member state. Along these lines, an award that has not yet become binding on the parties or has been set aside or suspended by a court of the country where the arbitral award was rendered will be denied recognition by the STJ.

  53. 53.What is your view of the future of international arbitration and is the trend positive in your jurisdiction? What advice do you have with respect to dispute resolution for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction?

    Much has been said and written about the growing importance of arbitration in Brazil, particularly after the Supreme Court’s decision upholding the 1996 Arbitration Act (2001), the adoption of the New York Convention (2002) and the booming Brazilian economy that paved the way for an unprecedented appetite of foreign companies to invest in our country and even of Brazilian multinational companies for acquisitions abroad, transactions that almost always involve arbitration agreements.

    The analysis of the recent STJ decisions underscores the commitment of one of Brazil’s most important courts to arbitration as an effective means of dispute resolution, particularly in light of the refusal of its justices to allow challenges to the merits of foreign arbitration awards. The enforcement of arbitration agreements executed by mixed-capital companies is another evidence of this (hopefully) irreversible commitment towards arbitration in our country, a trend that is likely to continue in 2011 and in years to come. Despite a few unfortunate incidents, Brazilian courts appear to fully recognise the importance of arbitration in attracting and maintaining foreign investors in this country. This shift from the arcane reluctance in accepting party autonomy to set aside the jurisdiction of the courts has resulted in a significant body of judicial decisions, especially by the STJ, which ensures the enforceability of arbitral clauses inserted in agreements executed with Brazilian parties.

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