Brazil: President Sanctioned Amendments To The Brazilian Arbitration Law

On May 26, 2015, the President in office, Michel Temer, sanctioned the Law 13.129/2015, amending specific provisions of the Brazilian Arbitration Law, Law n. 9.307 of September 1996 ("BAL"), and of the Brazilian Corporations Law, Law n. 6.404 of December 1976 ("BCL").

Instead of establishing a new legislation, the legislator decided it was important to preserve the BAL—which has been regarded by the arbitral community as a huge success—and amended only specific provisions to strengthen and fine-tune the arbitration framework in Brazil.

The main amendments are the following:

1. Participation of the Direct and Indirect Public Administration in Arbitration: The new language of the BAL expressly allows the Direct and Indirect Public Administration to submit its cases to arbitration to solve disputes related to available property rights arising from contracts concluded by them. Besides, the amendments bring provisions to assure such arbitrations should follow specificities of deals involving the Public Administration, namely the limitation for arbitrators to rule with grounds on the law and the respect to the principle of the publicity.

2. Arbitrators' Appointment: The parties, in common agreement, may avoid any institutional arbitral rule that limits the appointment of arbitrators to the institution's roaster. However, arbitral institutions remain with powers to control such appointment by the parties. If the parties do not reach an agreement or in case of multiparty arbitration, the solution provided by the institutional rules must be followed.

3. Limitation Period: The new language of the BAL sets forth the notice of arbitration interrupts the running of the statute of limitations. Such interruption takes place on the date of the notice requesting the institution of the arbitral proceeding, even if the arbitration is dismissed.

4. Partial Award: The BAL expressly recognizes the possibility for arbitrators to issue partial awards.

5. Additional Arbitral Award: If the arbitrators do not decide the whole dispute submitted to arbitration, a party may ask the court for an additional award to supplement the original arbitral award.

6. Provisional Measures: Following the practice already established in Brazil, it is now expressly determined that provisional measures may be granted by the court before the institution of the arbitral tribunal. In that case, the parties have to file the arbitration request within 30 days. If the Arbitral Tribunal has already been constituted, such provisional measures must be requested directly to the arbitrators.

7. Arbitral Letter: The arbitral tribunal may request the assistance of the courts by means of arbitral letter. If necessary, such letter may be confidential.

8. Arbitral Clause in the Company's Bylaws: If the majority of shareholders approve the inclusion of an arbitral clause in the company's bylaws, it must be abided by all shareholders, even those who were against such inclusion. Nevertheless, it is ensured to all the shareholders the right of withdrawal upon reimbursement of the value of their shares in case of inclusion of an arbitral clause through an amendment of the Company's Bylaws. The arbitral clause will only be effective 30 days after the publication of the minutes of the General Meeting that approved its inclusion in the bylaws.

The original text of the new legislation also regulated situations where conflicts related to adhesion (take or leave) contracts, consumer and labor relationships could be submitted to arbitration. After such provisions were vetoed, the BAL keeps its original language that does not mention the possibility of bringing employment disputes to arbitration. Also, the current provisions regarding arbitration in adhesion (take or leave) contracts are usually considered confusing. As a result, the uncertainties of labor and consumer law arbitrations remain.

The new law will become effective on July 26, 2015.

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.

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