Brazil: Brazilian Court Recognizes An Unreasoned New York Arbitral Award

Last Updated: 14 October 2014
Article by Mateus Aimoré Carreteiro

On September 1, 2014, the Brazilian Superior Court of Justice ("STJ") issued an important decision recognizing, for the first time, an unreasoned arbitral award in Newedge USA, LLC v. Manoel Fernando Garcia. Notwithstanding challenges to the recognition and enforcement on the grounds that the New York arbitral award purported violated Brazilian public policy due to the lack of reasoning, the STJ concluded that the award complied with the legal requirements of the law of the place of arbitration and did not violate Brazilian public policy. The STJ's decision is relevant in the context of actions for recognition and enforcement of foreign awards and demonstrates a pro-enforcement approach toward foreign arbitral awards in Brazil.

Background of the dispute

Claimant Newedge USA, LLC ("Newedge") is a Delaware Limited Liability Company which offers clearing and settlement services to investors in a range of investment instruments, including exchange-traded listed derivatives and equities. Respondent Fluxo-Cane Overseas Ltd. ("Fluxo-Cane") is a British Virgin Islands corporation and Respondent Manoel Fernando Garcia ("Mr. Garcia") is the sole shareholder and president of Fluxo-Cane. Additionally, Newedge is a clearing member of ICE Futures US, Inc. (also known as Board of Trade of the City of New York ("ICE")). Fluxo-Cane is a member firm, and Garcia is a conferring member of ICE.

On February 13, 2008, Newedge filed a Notice of Arbitration with ICE seeking to recover $5,106,889.59, the deficit balance in Fluxo-Cane's account. In a brief summary, such deficit balance arose from a Customer Agreement that Fluxo-Cane and Newedge signed on March 18, 2007. Moreover, Newedge, Newedge Bank, and Fluxo-Cane entered into a Demand Loan Margin Financing Facility on April 24, 2007 ("Financing Agreement"). The Financing Agreement provided for Newedge Bank to loan funds for Fluxo-Cane to use as margin in its account with Newedge. Both the Customer Agreement and the Financing Agreement were supported by a personal guarantee executed by Mr. Garcia in favor of Newedge and Newedge Bank.

On June 13, 2008, Fluxo-Cane and Mr. Garcia attempted to stay the arbitration before the Supreme Court of New York. Justice Richard B. Lowe, III denied the petition in relation to claims under the Customer Agreement and ordered Fluxo-Cane and Mr. Garcia to arbitrate any "allowable claim" under the Customer Agreement. (Fluxo-Cane Overseas Ltd. v Newedge USA, LLC, 2008 NY Slip Op 31669(U) (N.Y. Sup. Ct. June 13, 2008) Accordingly, the arbitration proceeded with Fluxo-Cane and Mr. Garcia participating under protest and ultimately walking out of the hearing.

The arbitration proceeded and on December 21, 2009, the Tribunal issued an award against Fluxo-Cane in the amount of $3,209,472.08, and against Garcia in the amount of $2,924,014.62 ("Award"). Newedge moved to confirm the Award before the Supreme Court of New York, while Fluxo-Cane and Mr. Garcia cross-moved to vacate the same Award. On June 29, 2010, Justice Richard B. Lowe, III confirmed the Award and denied Fluxo-Cane and Mr. Garcia's motion to vacate (See"Judge Lowe's Decision and Order").

On November 16, 2012, Newedge filed a request for recognition and enforcement of the Award before the STJ in Brazil. Initially, the recognition request was brought against both Fluxo-Cane and Mr. Garcia. Because Fluxo-Cane was in liquidation proceedings in the British Virgin Islands, however, Newedge decided to proceed only against Mr. Garcia. Mr. Garcia was duly served and filed his answer in the STJ proceedings.

The STJ ruling on the Award's lack of reasoning

Mr. Garcia presented several challenges to recognition and enforcement of the Award to the STJ. Among these challenges, he argued that the recognition and enforcement of the Award should be refused due to purported violation of Brazilian public policy because the Award was not a reasoned award.

Recognition and enforcement of foreign arbitral awards in Brazil is governed by both the Brazilian Arbitration Act (Law no. 9.307 of 1996) and the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations ("New York Convention"). The Brazilian Arbitration Act basically adopted the most relevant provisions of the New York Convention prior to Brazil ratifying the New York Convention in 2002 (Decreto Legislativo no. 4.311). However, while neither the Brazilian Arbitration Act nor the New York Convention has a specific provision directly regulating unreasoned foreign awards, both procedural rules have provisions whereby recognition and enforcement of foreign arbitral awards may be refused in cases where the award violates the public policy.

By contrast, Article 26 of the Brazilian Arbitration Act sets forth that arbitral awards issued in Brazil must contain (i) a brief summary of the dispute and the name of the parties; (ii) the reasons for the decision, including legal and factual grounds; (iii) the decision itself, where the arbitrators specifically decides on the issues in dispute; (iv) the date and place of signing; and (v) the signature of all the arbitrators. Accordingly, Article 32, III of the Brazilian Arbitration Act establishes that an arbitral award that does not comply with the requirements of the Article 26 are subject of being vacated. Hence, the clear language of Articles 26 and 32 dictates that all arbitral awards issued in Brazil must contain a detailed reasoning and are subject of being vacated in case of no compliance.

In view of such scenario, it was unclear (i) how the STJ would rule when faced with an unreasoned foreign arbitral award, and (ii) whether the STJ would import rules specifically designed to arbitral awards issued in Brazil to the context of foreign awards.

In an unanimous decision, the STJ found that the Award followed the standards applicable in the place of arbitration (i.e., New York) and, therefore, the conciseness of the Award cannot serve as a basis to refuse recognition and enforcement of that Award in Brazil. The STJ was straightforward in affirming that the Award did not violate Brazil's sovereign or public policy.

In the case under analysis, a reasoned award was not required by the Federal Arbitral Act, the New York Arbitration Act or the ICE Arbitration Rules, applicable to the arbitration. Justice Lowe's Decision and Order, in response to the motion to vacate filed by Fluxo-Cane and Mr. Garcia, does not even address any challenge premised on lack of reasoning. Additionally, the STJ was obviously influenced by the fact the Award survived a vacatur attempt before the New York courts and specifically referred to Justice Lowe's Decision and Order in support of some of its findings.


In conclusion, the precedent set by the STJ is extremely important in the context of actions for recognition and enforcement of foreign arbitral awards in Brazil and demonstrates a pro-enforcement approach toward such awards even where the foreign award may violate Brazilian public policy in some way, i.e., unreasoned award. The STJ decision is consistent with the Brazil's increased deference to foreign awards sought to be enforced in Brazil.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.