On May 26, 2015, Brazil amended its arbitration law (nº 9,307/96) to expressly permit the “public administration” (i.e., companies owned by the state, government agencies) to be bound by arbitration agreements. The new law (nº 13,129/15) states that the public administration, as well as private parties, may use arbitration to settle disputes related to economic rights in which they might be involved.
The new law also makes arbitration with both public administration and private parties more flexible. For example:
- It allows the parties, by agreement, to choose arbitrators outside the list provided by Brazilian arbitration institutions, a practice not previously permitted.
- It creates a new instrument called an “arbitral letter” which permits more efficient enforcement of an arbitral tribunal’s interim orders. Through this mechanism, the arbitral tribunal itself (rather than a party) is able to request enforcement of its orders (e.g., interim relief, orders compelling a witness to testify) directly from the courts.
- It modifies the previous Brazilian law which permitted a party to nullify an award that did not address all the issues submitted for resolution. The new law does not permit nullification of an award on those grounds, but instead permits the parties to request a supplementary arbitral award that covers solely the previously unaddressed issues.
- It amends the Brazilian Corporate Law (nº 6,404/76) by permitting arbitration clauses to be included in corporate bylaws and making the arbitration provision binding on all shareholders. The new law also allows shareholders who object to the insertion of the arbitration clause to exit the company by, for example, selling their shares.
- It consolidates the existing practice that allows the parties to seek interim measures from the courts before the arbitral tribunal is constituted. Once the arbitral tribunal is constituted, the arbitrators can maintain, modify, or revoke those measures granted by the courts.
- It corrects the remnants of the law (nº 9,307/96) that still referenced the Brazilian Federal Supreme Court (STF) as the appropriate forum to obtain the recognition of foreign arbitral awards. The new statute now makes it clear that the Brazilian Superior Court of Justice (STJ) has sole jurisdiction for determining the recognition of foreign arbitral awards.
Law nº 13,129/15 went into force on July 27, 2015.
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