Hot Topics in Brazilian Arbitration
In this, the second of seven podcasts on international arbitration in Latin America from Baker McKenzie and Trench Rossi Watanabe, Luis Borghi and Joaquim Muniz, partners at Trench Rossi Watanabe, which operates a strategic co-operation agreement with Baker McKenzie, highlight some of the crucial issues in current Brazilian arbitration.
Luis Borghi
Hottest Topics for arbitration in Brazil today
Brazil has become one of the main users of arbitration worldwide, ranking between second and fourth in ICC statistics in recent years.
There has been a boom in arbitration, particularly in two areas: those involving state-owned companies and those focused on corporate issues.
This growth in arbitration in Brazil has been accompanied by much criticism of, and many challenges to, arbitral awards, especially on the independence and neutrality if arbitration panels.
Arbitration involving state entities
State entities constitute 35% of Brazilian GPP and all recent administrative laws have provisions authorising arbitration with such entities. The biggest push came in 2015, when a reform of Brazilian arbitration law expressly allowed such arbitration.
Brazil signed a number of bilateral investment treaties in the 1990s but has never ratified a treaty allowing investment arbitration. However, all regulated industries allow arbitration.
During the COVID-19 crisis, as many people stayed at home, the falling value of road and highway concessions triggered dozens of arbitrations involving the re-equilibrium of the economics of these agreements.
Appointment of arbitrators and constitution of the arbitration panel
The issues of independence and impartiality of arbitrators are a side-effect of growth. Arbitration has been growing in Brazil at 10-20% for ten years and the pool of arbitrators is not as large or diverse as it should be.
Arbitrators are also not as careful as they should be in disclosing issues that could raise doubts over their independence and impartiality. Brazilian courts are stricter than New York ones on issues of independence and disclosure.
Trench Rossi Watanabe
