Corporate discussions are leading the matters submitted to arbitration in Brazil1. Neglecting to draft the arbitration clause – the one that establishes arbitration as the method of resolving conflicts in a given contract – can generate unnecessary headaches. Best to avoid them.
It is not uncommon to see corporate disputes spill over into the shareholder versus company relationship, involving people who did not participate in the effective execution of the arbitration clause. This is the case, for example, of administrators (directors and members of the board of directors) and members of the audit committee of the Company.
After all, is it possible to bind administrators to an arbitration commitment that was negotiated by shareholders? Is it possible to extend arbitration to third parties? Here are our two cents on this discussion – which has been going on for ever.
The Arbitration Law emphasizes consent as a fundamental basis. Without consent, there is no arbitration.
The arbitration clause must be written, either in the contract or in the bylaws of the Company, or in a separate document. In adhesion contracts, it is only valid if the adhering party expressly agrees – with a specific signature or visa to this clause.
When the clause is in a contract or in the Company`s bylaws, the wording needs to be clear and precise. It is essential (a) to identify who the contracting parties want to cover and (b) to obtain the specific consent of those people intended for that clause.
If there are doubts about consent, there will be problems with the arbitration procedure itself.
One way to avoid these questions about the effective scope of the arbitration clause is to follow the guidelines of the Novo Mercado Regulations: the clause must clearly mention “administrators”, both incumbents and alternates. Furthermore, the investiture of these administrators must be conditioned upon the execution of a term of investiture that confirms they are subject to the arbitration clause.
This way, everyone is on the same page: administrators know that they are subject to arbitration and have given their express consent, which reduces the chances of future questions being raised.
On the other hand, generic clauses such as “partners/shareholders undertake to resolve disputes by arbitration”, without specific investiture terms signed by the administrators, do not guarantee the necessary consent. Administrators can consider themselves no subject to arbitration since there is no mention to them.
Here, the rule provided for in the Civil Code must be applied: waivers of rights must be strictly interpreted. Choosing arbitration is a waiver of submitting disputes to judicial courts. This choice, therefore, must be effective and consented to – and not simply assumed.
These precautions are not empty formalisms. They are fundamental. Poorly drafted clauses and flawed consents can have major practical repercussions. They can generate questions, prolong litigation, hinder solutions and even cause the entire arbitration procedure to be annulled, bringing uncertainty and insecurity to everyone.
Caution when drafting the arbitration clause follows the same logic as the popular saying that prescribes chicken soup: it doesn’t cause any damage to anyone.
Arthur de Paula Lopes Almeida is part of the Arbitration and Corporate Disputes team at Candido Martins Advogados.
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- LEMES, Selma (Coord.). Arbitragem em Números: Pesquisa 2021 /2022. Canal Arbitragem. São Paulo, 2023. ↩︎