As 2023 draws to a close, Tavernard Advogados presents a review of some of the major arbitration-related events in Brazil over the past 11 months.
1) The CAM-CCBC Corporate Arbitration Rules
It is necessary to begin this remembrance with Complementary Rule 02/2023 published by the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (CAM-CCBC) on April 16 of this year, "which provides for arbitrations concerning uniform multi-individual interests in corporate arbitration ("Corporate Arbitration Rules") administered by CAM-CCBC."
The text sets out the requirements for the application of the Complementary Rule:
1. The provisions of these Corporate Arbitration Rules will be applied whenever all the following requirements are met:
a) the arbitral award possibly affects not only the claimants of the arbitration or those who have been included as respondents in the Request for Arbitration, but also the legal level of a corporation, limited liability company or association (“Legal Entity”) and, concurrently, partners, associates or shareholders holding securities of a class or type directly subject to the effects of the arbitration award, and/or the administrators also subject to it (“Affected Third Parties”);
b) the nature of the disputed legal relationship submitted to arbitration requires a uniform decision for all Affected Third Parties; and
c) the bylaws or articles of incorporation of the Legal Entity contain a clause according to which the parties agree that the arbitration will be administered by the CAM-CCBC and governed by the CAM-CCBC Rules, pursuant to Article 1 of the CAM-CCBC Arbitration Rules.
2. In addition to others, as far as they correspond with the hypothesis provided for in Article 1 and its subparagraphs, arbitrations addressing the following matters shall be governed by these Corporate Arbitration Rules:
a) invalidity of meetings held among partners, shareholders, associates, or their respective administrative bodies, as well as invalidity of any resolution taken at such meetings; or
b) total or partial dissolution, withdrawal or exclusion of partners, shareholders or associates, asset assessment; or
c) the controlling shareholders’, managers’, or members of the tax councils’ liability before the Legal Entity, its shareholders, partners, or associates; or
d) shareholders’, partners’, or associates’ liability for the abusive exercise of voting rights.
Innovatively, when an arbitration meets these requirements, the Chair of the CAM-CCBC will decide whether the Corporate Arbitration Rules apply. At the same time, they may notify all Affected Third Parties ("Notification of Affected Third Parties") to participate in the arbitration.
In addition, in line with a path already established by the CVM, with the publication of Resolution 80 of 2022, the new CAM-CCBC Regulatory Standard provides that, in the case of listed companies that are required to publish a notice of corporate proceedings, the notices of affected third parties must be disclosed in the manner provided for such publication, in accordance with the provisions of the CVM.
2) Superior Court of Justice decision on legal fees and arbitration
Furthermore, in May of this year, in a decision on an interlocutory appeal, in which the aggravating parties sought the annulment of the arbitral award in relation to the arbitration of success fees, because they were set according to the criterion of isonomy in the arbitration of success fees, the third panel of the Superior Court of Justice decided to dismiss the appeal. For the judges, in cases where the arbitration agreement deals with the possibility of awarding attorney's fees, it is up to the arbitral tribunal and the arbitral tribunal alone to award attorney's fees in the proceedings.
The decision recalled that, according to the Arbitration Law, it is not up to the Judiciary to intervene in the arbitration procedure, except to reconduct the procedure in absolutely narrow cases, where there is an irreparable nullity.
Thus, in cases where the arbitration agreement deals with the possibility of arbitrating success fees, the STJ has established that: "Judicial control over the validity of arbitration awards is related to strictly formal aspects, and it is not permissible for the magistrate to examine the merits of what was decided by the arbitrator." - Read the full judgment here.
3) Decision by the São Paulo Court of Justice prohibiting arbitrators from abstaining from judging
That same month, in the judgment of Appeal 1094661-81.2019.8.26.0100, the 1st Chamber of Business Law of the São Paulo Court of Justice, in an action to annul an arbitration award, held that the Arbitrator cannot abstain from voting in arbitration proceedings. In this case, one of the co-arbitrators abstained from voting because, having been defeated in a partial award in the discovery phase, he failed to rule on the merits of the settlement.
For the court, the co-arbitrator's abstention constitutes a denial of judicial service. In the case in question, each arbitrator of the Arbitral Tribunal had a different opinion from his colleagues. Therefore, on the basis of article 24, paragraph 1, of the Arbitration Law, which states: "When there are several arbitrators, the decision shall be taken by majority. If there is no majority agreement, the vote of the chairman of the arbitral tribunal shall prevail.", the dispute was defined by the Arbitrator Chairman.
Finally, he also based his decision in the judgment on the doctrine of arbitrator Carlos Carmona himself - the presiding arbitrator in the aforementioned procedure - in which he states that: "In the same way as the court-appointed judge, it is up to the arbitrator to express his opinion on the entire controversy submitted to him, and he cannot fail to decide on all the issues which, taken as a whole, form the merits of the arbitration proceedings." (Click here to read the judgment).
4) Guidelines of the Brazilian Arbitration Committee on the Arbitrator's Duty of Disclosure
In mid-August and September, the Brazilian Arbitration Committee (CBAr) published a soft law document for the Brazilian arbitration environment: Guidelines of the Brazilian Arbitration Committee (CBAr) on the arbitrator's duty of disclosure.
Basically, they are non-binding recommendations drawn up in line with Brazilian legislation and international guidelines on the duty of disclosure of arbitrators, with the aim of helping parties, arbitrators, arbitrators, lawyers, arbitral institutions, challenge committees and judges, before, during or after the or after the arbitration, in dealing with issues relating to the subject.
Although the year is about to end, 2024 brings expectations of more changes in the field of arbitration in Brazil and new discussions on various topics.