1 Legal framework
1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
Arbitration in Brazil is essentially governed by the Brazilian Arbitration Act (Law 9.307/1996, as amended by Law 13.129/2015). Brazil is also a party to the New York Convention and to the Inter-American Panama Convention. The Arbitration Act covers a wide range of issues, including:
- the enforcement of arbitration agreements;
- general features of the proceedings;
- the powers of the arbitrators;
- the effects of the award; and
- the basis for setting-aside actions.
Arbitration is allowed for the settlement of any disputes relating to patrimonial and disposable rights of parties that are capable of entering into valid contracts. Arbitration agreements must be in writing, although not necessarily signed (eg, an exchange of emails may be enforceable).
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
The Arbitration Act is a monist statute, as it does not distinguish between domestic and international arbitration. There is one single legal regime for all arbitration proceedings. However, the Arbitration Act does make a relevant distinction between domestic and foreign arbitral awards, in relation to the seat of the arbitration. A ‘domestic award' is an award issued in Brazil; whereas a ‘foreign award' is an award issued outside of the Brazilian territory (see Article 34 of the Arbitration Act). Domestic awards are not subject to appeal and may be enforced directly before the Brazilian courts of first instance, as the equivalent of a local judgment (Article 31 of the Arbitration Act). Foreign awards must go through a homologation proceeding before the Superior Court of Justice so that they become enforceable in Brazil, as per Article 35 of the Arbitration Act. In limited circumstances, domestic awards may be challenged through a setting-aside action in Brazil. Foreign awards may be challenged during the homologation proceedings on the grounds set out in the New York Convention.
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
The Arbitration Act, originally enacted in 1996, was mostly inspired by the UNCITRAL Model Law, but there are some relevant differences. For instance, it applies across the board to all kinds of arbitrations and there is no definition of ‘international arbitration'.
1.4 Are all provisions of the legislation in your jurisdiction mandatory?
Some provisions of the Arbitration Act are mandatory and cannot be waived by the parties, such as:
- those relating to the nature of disputes that can be submitted to arbitration (arbitrability);
- the requirement that the arbitration agreement be in writing; and
- principles such as:
- the adversarial principle;
- the equality of parties; and
- the independence and impartiality of arbitrators (see Article 21, paragraph 2 of the Arbitration Act).
However, this does not mean that the principle of party autonomy, as a touchstone of arbitration, does not play a relevant role in Brazilian law. To the contrary, this principle is expressly established in the Arbitration Act, affording flexibility to the proceedings and a wide spectrum of possibilities to the parties. To this end, the parties can agree on issues such as:
- how the arbitrators should be appointed;
- how the proceedings should be handled;
- the applicable law;
- timeframes; and
- how notifications will be carried out.
The parties may also incorporate institutional rules by reference, which is most often the case in Brazil.
1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?
There are no reports of current projects aimed at significantly modifying the Arbitration Act. The most recent and relevant changes were introduced in 2015. However, a bill is pending in Congress that would create a special regime for the arbitration of tax disputes (ie, Law Project 4.257/2019).
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Yes, since 2002; and no reservations have been made.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Yes – these include:
- the Panama Inter-American Convention on International Commercial Arbitration of 1975;
- the Montevideo Inter-American Convention on the Extraterritorial Enforcement of Foreign Court Decisions and Arbitral Awards of 1979; and
- the Mercosur International Commercial Arbitration Agreement of 1998.
2 Arbitrability and restrictions on arbitration
2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?
Pursuant to Article 1 of the Arbitration Act, disputes based on disposable and pecuniary or patrimonial rights are considered to be arbitrable. These include claims relating to rights that may be assigned, transmitted, waived or settled (eg, contractual matters in general, including damages). The Arbitration Act expressly recognises the arbitrability of disputes involving state entities, as long as they relate to disposable and patrimonial rights. There are specific and more limited rules on the arbitrability of certain kinds of claims, such as those relating to consumer or labour disputes.
2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?
3 Arbitration agreement
3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?
Pursuant to Article 4, paragraph 1 of the Arbitration Act, the arbitration agreement must be in writing, and can be inserted in the contract or be part of a separate document. In addition, ordinary rules and principles of formation and interpretation of contracts in general apply to the arbitration agreement.
3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Yes. Article 8 of the Arbitration Act expressly provides for the separability of arbitration agreements. This norm specifies that the nullity of the main contract shall not necessarily entail the invalidity of the arbitration agreement that refers to it.
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
If there is no agreement of the parties in relation to the seat or the language of the proceedings, the arbitral tribunal shall have the power to decide on those matters, considering the specific circumstances of each case. Sometimes the rules of arbitral institutions may have directions on how to define the seat or the language of the arbitration in the absence of express agreement of the parties.
4 Objections to jurisdiction
4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
Pursuant to Article 20 of the Arbitration Act, a party that wishes to raise issues or objections relating to jurisdiction must do so at the first pleading once the arbitration has been initiated.
4.2 Can a tribunal rule on its own jurisdiction?
The competence-competence principle applies under Brazilian law and is expressly provided for in Article 8 of the Arbitration Act. The arbitral tribunal has jurisdiction to decide on its own jurisdiction and has the first word on this matter. As is well established in the case law of the Superior Court of Justice, the state courts can decide on the matter only after the arbitral tribunal has issued it award, in a setting-aside proceeding, except in extraordinary circumstances where it is abundantly clear and beyond reasonable doubt that there is no arbitration agreement or that the agreement is flagrantly null and void.
4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
No, as a general rule. As mentioned in question 4.2, under the competence-competence rule, the arbitral tribunal has the primary jurisdiction to rule on its own jurisdiction. The existence of an arbitration agreement is a defence that may be raised to dismiss a court case according to both the Arbitration Act and the Code of Civil Procedure. However, the courts may proceed to hear a case if they find that it is clear beyond any doubt that there is no arbitration agreement. If there are concurrent cases pending at the same time, in court and before an arbitral tribunal, the parties may resort directly to the Superior Court of Justice under a conflict of competences proceeding, in which the court will decide whether the court case can proceed or must be stayed until the arbitral tribunal has ruled on its own jurisdiction. The court most often defers to the jurisdiction of the arbitral tribunal, applying a favor arbitratis standard (ie, where there is at least minimal doubt, the jurisdiction of the arbitral tribunal to decide on its jurisdiction shall prevail).
5 The parties
5.1 Are there any restrictions on who can be a party to an arbitration agreement?
Article 1 of the Arbitration Act provides that anyone that is capable of entering into binding agreements may enter into an arbitration agreement. Therefore, under Brazilian law, any natural person or legal entity with legal capacity to contract can be a party to an arbitration agreement. State entities are expressly allowed to enter into arbitration agreements, as long as these relate to disputes about pecuniary and disposable rights.
5.2 Are the parties under any duties in relation to the arbitration?
Once the parties have entered into an arbitration agreement, they are obliged to pay the costs of the arbitration, including the fees of the arbitrators, if a dispute arises. They also have a general duty to litigate in good faith. The parties are free to specify in the arbitration agreement any other duties or rules in order to conduct the proceedings, which will usually include specific sets of rules provided for by arbitral institutions.
5.3 Are there any provisions of law which deal with multi-party disputes?
There are no specific legal provisions on multi-party arbitrations, with the exception of a reference in Article 13, paragraph 4 of the Arbitration Act, which states that the choice of arbitrators in multi-party cases shall follow institutional rules, where applicable. Multi-party disputes are very common in Brazilian arbitration and some institutions have specific rules for these kinds of cases.
6 Applicable law issues
6.1 How is the law of the arbitration agreement determined in your jurisdiction?
According to Article 2, paragraph 1 of the Arbitration Act, the parties may freely choose the law that will govern the arbitration (whether that be the law applicable to the arbitration agreement or to the merits of the dispute), as long as their choice of law does not violate the good morals and public policy of Brazil. In this sense, the principle of party autonomy is essential in determining not only the substantive law of the contract, but also the law that will govern the arbitration agreement. However, if the parties fail to make an explicit choice of law, the law that governs the contract as a whole will usually be deemed applicable to the arbitration agreement. In case of doubt, general rules on conflicts of laws will apply, as provided for in the Law of Introduction to the Norms of Brazilian Law.
6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
>Yes. The principle of party autonomy plays a central role in relation to the choice of law that will govern the arbitration. Therefore, as a rule, the tribunal will uphold the agreement of the parties as to the substantive law of the dispute, as per Article 2, paragraphs 1 and 2 of the Arbitration Act. The only exception is if that choice of law for some reason violates Brazilian public policy or good morals. If the applicable law is unclear, the tribunal will resort to:
- the general rules on contract interpretation, as per the Civil Code, to determine the will of the parties; and
- the rules on conflicts of laws provided for in the Law of Introduction to the Norms of Brazilian Law.
7 Consolidation and third parties
7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
The Arbitration Act contains no provisions on consolidation of proceedings. Therefore, the rules and conditions on consolidation will be governed by the provisions of the arbitration agreement, if any, and those of the institutional rules that may apply in each case. Institutional rules vary and often address this matter.
7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
The Arbitration Act contains no provisions on the joinder of additional parties to an arbitration proceeding that has already commenced. Therefore, the rules and conditions on joinder will be governed by the provisions of the arbitration agreement, if any, and those of the institutional rules that may apply in each case. Institutional rules vary and often address this matter.
7.3 Does an arbitration agreement bind assignees or other third parties?
The Arbitration Act is silent on the binding of assignees or other third parties to the arbitration agreement. However, the case law of the Superior Court of Justice has precedents recognising that an arbitration agreement is usually binding on assignees or successors. As regards other third parties, the rules applicable to contracts in general will apply, and a third party will be bound only if it has agreed to it (either explicitly or implicitly, through its conduct).
8 The tribunal
8.1 How is the tribunal appointed?
Pursuant to Article 13, paragraph 3 of the Arbitration Act, the parties are free to agree on how the arbitrators will be appointed. The parties may also incorporate the rules of an arbitral institution regarding the appointment of arbitrators.
8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
The Arbitration Act does not mandate a specific number of arbitrators, provided that this is an odd number. There are no specific requirements on the qualifications of arbitrators, as long as they have legal capacity and are trusted by the parties.
8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
Pursuant to Articles 14 and 15 of the Arbitration Act, an arbitrator can be challenged on the grounds of impediment or suspicion, if there are any circumstances that may affect his or her independence or impartiality. The party that wishes to present a challenge must file a motion presented directly to the arbitrator or to the chair of the arbitral tribunal, or according to the applicable institutional rules. Pursuant to Article 14, paragraph 2 of the Arbitration Act, in principle, the parties are not allowed to challenge the arbitrator if they became aware of the reasons for the challenge prior to his or her appointment.
8.4 If a challenge is successful, how is the arbitrator replaced?
If the parties have already identified a substitute or alternate arbitrator, he or she will replace the challenged arbitrator. Otherwise, the same rules as applied to the appointment of the initial arbitrator will apply – that is, the party or the institution that appointed him or her will appoint another arbitrator to replace him or her.
8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?
The most relevant duties imposed by the Arbitration Act are those relating to independence and impartiality. Moreover, arbitrators must proceed in a competent, diligent and discreet manner in conducting the arbitration (see Article 13, paragraph 6 of the Arbitration Act). Arbitrators must also abide by the duty to disclose any relevant information and circumstances likely to give rise to justifiable doubts as to their independence and impartiality. Arbitral institutions often have their own codes or rules of ethics that will also apply to arbitrators in proceedings before such institutions.
8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
(a) Procedure, including evidence?
In the absence of specific provisions on the procedure, established either by the parties or by the rules of the arbitral institution, the arbitrators have wide powers to decide on such matters (Article 21, paragraph 1 of the Arbitration Act). As regards evidence, the arbitrators have ample powers to freely decide on the production of evidence and the order and manner in which it shall be presented by the parties.
(b) Interim relief?
The Arbitration Act provides that the arbitral tribunal has the power to grant interim relief (Article 22). Prior to the commencement of the arbitration, interim relief may be requested directly from a state court. Once the arbitral tribunal has been confirmed, any request for interim relief must be addressed directly to the arbitrators, and they may also review and re-decide any applications previously granted or denied by a state court.
(c) Parties which do not comply with its orders?
In principle, arbitrators do not have coercive powers, unlike judicial authorities. However, an order of the arbitral tribunal may be enforced in court through a request to a judge. Arbitrators also have powers to impose penalties and procedural sanctions on parties that fail to comply with their orders.
(d) Issuing partial final awards?
The Arbitration Act expressly allows arbitrators to render partial awards, pursuant to Article 23, paragraph 1.
(e) The remedies it can grant in a final award?
The Arbitration Act does not specify the kinds of remedies that can be granted in an award. According to the general principles of civil procedure, an award can be of a declaratory, constitutive or condemnatory nature, just like any court judgment.
As arbitrators act as judges in fact and in law, pursuant to Article 18 of the Arbitration Act, they have the power to rule on anything relating to the interest applicable in each case.
8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
As per Article 23, paragraph 3 of the Arbitration Act, the absence of a party will not prevent the arbitral tribunal from proceeding with the case and rendering an award.
8.8 Are arbitrators immune from liability?
There are no specific rules on the immunity of arbitrators. The Arbitration Act states that arbitrators are subject to criminal law as if they were public servants (Article 17). The doctrine usually holds that arbitrators should not be liable unless they act with gross negligence or wilful misconduct.
9 The role of the court during an arbitration
9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
In the case of an existing and valid arbitration agreement, the court must dismiss any proceedings and refer the parties to arbitration.
9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
Prior to the commencement of arbitration, the courts may grant interim relief. The courts may also refer parties to arbitration or even establish the rules and appoint the arbitrators if the arbitration agreement is silent in this regard, as per Article 7 of the Arbitration Act. During the arbitration, the courts may enforce orders of the arbitral tribunal by means of a request. Once the award has been issued, the courts will have the power to enforce it or set it aside if they find that it is null and void under the Arbitration Act. These powers relate to arbitrations seated in Brazil. As a rule, Brazilian courts have no powers relating to arbitrations seated abroad. Any requests for judicial cooperation by an arbitral tribunal seated abroad must go through the Superior Court of Justice. Enforcement of a foreign award will also depend upon its prior homologation before the Superior Court of Justice.
9.3 Can the parties exclude the court's powers by agreement?
No. The parties may limit the powers of the arbitrators (eg, the power to grant interim relief), but they may not limit the powers of the courts that derive from the law and are considered of public policy. However, as per the Code of Civil Procedure, the parties may enter into forum choice agreements or into a procedural transaction and may therefore define some features of the proceedings before the courts (see Article 190 of the Code of Civil Procedure).
10.1 How will the tribunal approach the issue of costs?
The Arbitration Act provides that the costs and expenses of the arbitration must be addressed and decided in the award, establishing each party's portion of responsibility to that effect (Article 27). Usually, arbitral tribunals will apply the rule that costs follow the result and the winning party will be entitled to proportionally recover its reasonable expenses.
10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
The principle of private autonomy allows the parties to decide not only on most aspects of the proceedings, but also on the allocation of costs and expenses. As a rule, the parties are free to enter into agreements relating to the costs of the arbitration.
11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?
Yes. The Arbitration Act does not address third-party funding and thus this is not prohibited. Some institutional rules provide that a party to an arbitration must disclose whether it is being funded by a third-party.
12.1 What procedural and substantive requirements must be met by an award?
The arbitral award must be in writing, according to Article 24 of the Arbitration Act. Pursuant to Article 26 of the act, it must contain:
- a report including the names of the parties and a summary of the dispute;
- the grounds of the decision, with due analysis of the facts and the relevant legal issues;
- a dispositive section in which the arbitrators address the claims and resolve the questions presented before them; and
- the date and place where it was rendered.
The arbitral award must also specify the parties' responsibilities regarding costs and expenses for the arbitration.
12.2 Must the award be produced within a certain timeframe?
According to Article 23 of the Arbitration Act, unless the parties have agreed otherwise, the arbitrators must deliver the award within six months of the date of the arbitration's initiation. Institutional rules usually set different timeframes – typically 90 to 120 days after the final summations are filed. Failure to deliver the award within the specified timeframe affects its validity, as it constitutes grounds to declare the award void, and thus to challenge the award, under Article 32 of the Arbitration Act.
13 Enforcement of awards
13.1 Are awards enforced in your jurisdiction? Under what procedure?
Pursuant to Article 31 of the Arbitration Act, an arbitral award has the same legal force as a judgment rendered by the judicial authorities. Therefore, if the award is not complied with voluntarily, the party seeking enforcement may file an executive motion before the court at the seat of the arbitration, at the place of domicile of the defendant or at the chosen forum, if any. The judicial court will examine only the formal requirements of the award and will not review its merits. If the award was rendered abroad, it must be brought to Brazil through a homologation procedure at the Superior Court of Justice. Once the foreign award has been homologated by the Superior Court of Justice, it will be enforceable in a court of first instance.
14 Grounds for challenging an award
14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
In general terms, an award can be challenged exceptionally for formal or procedural reasons, and the merits will not be reviewed in court. Pursuant to Article 32 of the Arbitration Act, an award can be set aside if:
- it was rendered based on an arbitration agreement that was null or void;
- it was rendered by an individual who could not serve as an arbitrator;
- it did not comply with its legal requirements;
- it fell beyond the scope of the arbitration agreement;
- it was rendered through extortion or corruption;
- it was rendered after the applicable timeframe; or
- it violated certain legal principles (due process of law, equal treatment of the parties, impartiality of the arbitrator or freedom of decision).
14.2 Are there are any time limits and/or other requirements to bring a challenge?
Yes, pursuant to Article 33, paragraph 1 of the Arbitration Act, a lawsuit to challenge an award (request for declaratory nullity of an arbitral award) must be filed within 90 days of receipt of notification of the respective award.
14.3 Are parties permitted to exclude any rights of challenge or appeal?
15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
No. The Arbitration Act imposes an obligation of discretion on the arbitrators, but it does not address the confidentiality of the arbitration proceedings. Confidentiality is frequently provided for in institutional rules and sometimes in the arbitration agreement. The Code of Civil Procedure provides that if the arbitration is subject to a confidentiality agreement, then any legal proceeding relating thereto must also be kept confidential.
15.2 Are there any exceptions to confidentiality?
Yes, arbitrations that involve the public administration must be public, as they must obey the constitutional principle of publicity (see Article 37 of the Constitution of the Federative Republic of Brazil). The Arbitration Act expressly states, in Article 2, paragraph 3, that procedures in which certain state entities are parties are public. Certain facts relating to arbitration may also need to be disclosed, such as the existence of a claim, its value or the grant of interim relief – for example, if they are material and if the arbitration involves a public-traded company, as per rules governing the capital markets; even if the proceedings themselves may be kept confidential.
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.