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Arbitration and Mediation 10/03/2021
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Dispute regarding trademark registration in Brazil is the first one submitted to the new Supreme Court Mediation and Conciliation Center and will be mediated by Minister Ellen Gracie

The Mediation and Conciliation Center of the Brazilian Supreme Court has been established by Resolution 697/2020 in order to promote the consensual resolution of disputes waiting to be heard by the STF through the application of alternative dispute resolution mechanisms such as mediation or conciliation. Among other professionals, retired ministers can act as mediators and conciliators on a voluntary basis.

In a decision published on December 4th, 2020, regarding case No. 0490011-84.2013.4.02.5101, pending before the Supreme Court, Minister Dias Toffoli submitted to the Mediation Center and Conciliation of the STF the dispute relating to a famous cell phone trademark.

This is the first dispute submitted to the Mediation and Conciliation Center and Justice Ellen Gracie Northfleet, retired Justice and former President of the Brazilian Supreme Court was appointed as mediator. The procedure will be carried out by videoconference due to the Covid-19 pandemic.

For further information on the matter, click here.

Brazilian Securities Commission initiates a public hearing on modifications to Instruction 480 that seek to promote transparency regarding corporate litigation involving publicly held companies

The Brazilian Securities Commission (CVM) is currently analyzing whether to amend Instruction No. 480 in order to allow for more transparency on litigation involving publicly held companies that can potentially affect minority shareholders. In this sense, the CVM published a notice calling for a public hearing on the modifications to Instruction No. 480.

The proposed modifications are amenable to introducing item XLIV to Article 30 of Instruction No. 480, which lists the information that emissaries of securities registered under Category A must make available. Item XLIV will oblige these emissaries to publish information regarding corporate litigation in which the emissary (in this case the publicly held company), its majority shareholders or its officers and (i) that involve natural rights or general public interests, collective or homogeneous individual rights; or (ii) whose award may interfere in the companies’ sphere of legal influence or that of any other holder of securities emitted by the Company that are not a party to the dispute (e.g. annulment of resolutions passed by the General Meetings, civil liability suits against officers or majority shareholders).

Regarding disputes submitted to arbitration, each Company will be liable to disclosing, within 3 business days:

– The commencement of the dispute, indicating: the parties involved, amounts, goods and rights under discussion, the relevant facts, the prayer for relief or requests made;

– Any provisional decisions (if granted or denied);

– Decisions regarding the arbitrators’ jurisdiction (if positive or negative);

– Decisions on challenges to the arbitrators;

– The result of the award; and

– Any settlement proposals received, or agreements executed during the dispute.

The obligation to communicate those pieces of information cannot be derogated by confidentiality provisions stipulated by arbitration agreements, arbitration rules established by chambers or by any other agreement between the parties. The only exception to the obligation to communicate these events are confidentiality requirements provided by statutes.

The public hearing is already open for comments, critiques, or suggestions, which must be submitted by e-mail until April 12, 2021 to the Financial Market Development Superintendency – SDM (audpublicaSDM0121@cvm.gov.br).

For further information on the public hearing and the contents of the proposed alterations, click here.

The International Chamber of Commerce announced amendments to their Arbitration Rules

On January 1st, 2021, the new Arbitration Rules of the International Court of Arbitration of the International Chamber of Commerce (ICC) entered into force.

The changes apply regardless of the moment in which the underlying arbitration agreement was executed, unless the parties agree to submit the procedure to the Rules that were in force on the date of their arbitration agreement, pursuant to Article 6.2 of the 2021 rules. Further, the 2017 Arbitration Rules, the previous version, will still apply to ICC arbitrations registered before 2021.

The main changes are the following:

– The express authorization to hold virtual hearings, which shall take place at the parties’ request, or if the arbitral tribunal deems them necessary (art. 26.1);

– The parties’ duty to disclose any third-party financing agreements that they have entered into (art. 11.7);

– The possibility of joining additional parties even after the choice of arbitrators and the execution of the terms of reference (art. 7.5);

– The possibility of consolidating several arbitration proceedings that have a common legal basis (art. 10.b);

– The ICC’s power to appoint arbitrators notwithstanding any agreement between the parties as to the method of constitution of the arbitral tribunal (art. 12.9);

– The expansion of the maximum amounts for expedite arbitration is now of US$ 3 million, or R$ 9.6 million (Appendix VI, art. 1.2);

– Rendering optional the submission of hard copies of the communications and, consequently, providing for the filing of communications by e-mail (art. 3.2);

– Authorizing the parties to request a supplementary award when it deems that the Arbitral Tribunal omitted information and/or requests in the award (art. 36.6); and

– The election of the French Law and courts for the settlement of disputes arising out of or in connection with the administration of arbitration proceedings by the ICC (art. 43).

The changes introduced in the 2021 Arbitration Rules aim at promoting efficiency, flexibility, transparency and legal certainty to arbitrations under the ICC and do not establish any increase in arbitration costs.

Click here to access the 2021 Arbitration Rules .

STJ estops a party from relying on an arbitration agreement due to its having previously filed a lawsuit before State courts (equitable estoppel)

When judging Special Appeal No. 1894715/MS, on November 17, 2020, Minister Paulo de Tarso Sanseverino ruled that a contractor was estopped from invoking an arbitration agreement in order to have a lawsuit dismissed without prejudice after having previously filed lawsuits before State courts. This decision was based on the theory of objective good faith in its “venire contra factum proprium” configuration (akin to equitable estoppel). Under this rule, the parties are bound to a duty of behaving consistently, which prevents them from later contradicting their previous behavior whenever that contradictory behavior prejudices another party.

In the appeal decision, the dispute related to the validity and effectiveness of the arbitration agreement included in a contract for the provision of chartering services for the inland transport of bulk iron ore.

The plaintiff, then appellant, filed a collection lawsuit in order to seek the amount of R$ 18,324,366.15. The defendant, on the other hand, requested the termination without prejudice of the lawsuit filed by the counterparty, on the grounds that the judge was not competent to resolve the merits due to the presence of an arbitration clause and the fact that the arbitral tribunal recognized its jurisdiction (Art. 485, VII, CPC/2015).

However, the defendant had previously filed for a restraining order and a lawsuit seeking the declaration, by the State courts that the debt was non-existing. By doing so, the plaintiff was deemed to have opted for the State courts to resolve the disputes related to the contract. These acts were considered, by the court, as a tacit waiver of the arbitration clause which prevented this party from resorting to arbitration in its claim for termination of that lawsuit.

The reporting Justice emphasized that “the fact that there was no express waiver is irrelevant, because the laws bars the defendant from contradicting himself (nemo potest venire contra factum proprium) in a clear violation of the principle of good faith.”

Click here for access to the court decision of Special Appeal No. 1894715/MS.

VII Souto Correa Pre-Moot: virtual edition welcomed international teams and arbitrators

On February 20 and 21, 2021, our firm held the seventh edition Souto Correa Pre-Moot, a preparatory competition for Willem C. Vis International Commercial Arbitration Moot, in an action to encourage the in-depth study of arbitration, contracts and international trade.

The competition, promoted by the Association for the Organization and Promotion of the International Arbitration Simulation Competition Willem C. Vis, revolves around a fictional case involving a conflict arising from an international contract for the purchase and sale of goods and which provides for arbitration as conflict resolution method. This year, the procedural and merit discussions are:

– The joinder of a third-party to the arbitral proceeding;

– The possibility of holding virtual hearings;

– The application of the United Nations Convention on Contracts for the Purchase and Sale of International Goods – CISG to the “Purchase, Collaboration and License Agreement”; and

– An alleged breach of a contractual obligations to deliver goods in accordance with Article 42 of the CISG.

In this edition, 8 Brazilian universities (FGV-SP, IBMEC-SP, PUC-PR, PUC-RS, PUC-SP, UFBA, UFPR and UNB) and 2 Indian universities (Government Law College, Mumbai and Sastra Deemed University) participated in the Pre-Moot, and had the opportunity to present their arguments, in a 100% virtual event, to a select group of over 50 arbitrators who assessed the development and quality of the teams.

We congratulate all participating teams for the excellent level of the debates, the coaches, who prepared the competitors and the arbitrators, in particular, the four teams who classified for the semifinals: FGV-SP, UFBA, UNB and PUC-SP.

The semifinals were arbitrated by Ana Carolina Weber, Pacôme Ziegler, Rodrigo Moreira, Adriana Regina Sarra de Deus, Luís Peretti and Raphael Jadão.

UFBA won the final panel against PUC-SP, which was arbitrated by Ana Gerdau de Borja, Duncan Speller and Guilherme Rizzo Amaral.

New Expedite Arbitration Rules are launched by São Paulo’s major arbitration centers

The Covid-19 pandemic forced much of our relations to adapt and matters of time and cost-efficiency have become of even increased relevance in dispute resolution. In light of this, two of São Paulo’s major arbitration centers have recently announced the launch of expedite arbitration rules.

The Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (“CAM-CCBC”), foresees in its new regulation, in force since February 1st, 2021, that the expedite procedure will be automatically applicable to all arbitral clauses signed after the publication of Administrative Resolution 46/2021, and, in that sense, to all disputes that amount up to R$ 3 million. Parties that do not fit into these requirements may still opt-in to the expedite rules.

The main benefits in the new procedure are cost and time reduction, since the arbitral proceeding will be: (i) exclusively electronic; (ii) cannot exceed a ten-month deadline; (iii) conducted by one arbitrator (unless agreed otherwise); (iv) establish shorter deadlines than those foreseen in the regular arbitration rules; as well as (v) will have lower administrative costs.

The CIESP/FIESP Chamber of Conciliation, Mediation and Arbitration (“CIESP/FIESP”) recently announced the launch of their own Expedite Arbitration Rules. The launch and further details on the new provisions will be explored on the official launch that will happen on March 17, 2021.

Click here for access to CAM-CCBC’s Administrative Resolution 46/2021 and here to gain access to CIESP/FIESP’s official launch.

Brazilian Audit Court limits the usage of Dispute Boards in a decision that differs from the upcoming New Public Bidding Act

On December 9th, 2020, through the decision that authorized the concession of BR projects that connect Anápolis (GO) to Aliança do Tocantins (TO), and Sinop (MI) to Itaituba (PA), the Federal Court of Audit (TCU) adopted a restrictive view on the usage of dispute boards in public contracts.

According to the TCU, there is no legal provision that allows the use of dispute boards in concession contracts. This absence of statutory authorization could generate disagreements between the parties, and even call into question the validity of the decisions rendered by the dispute board. The TCU also questioned the mechanism’s agility and efficiency, since the composition of the dispute board would only happen after a conflict arises, and, hence, could delay its solution.

Despite TCU’s arguments, it is worth remembering that the Brazilian legislature has endeavored to promote alternative mechanisms for resolving disputes. Article 23-A of Federal Law 8.987/1995, which provides for the regime for the concession and permission to provide public services, expressly provides for the possibility of “using private mechanisms to resolve disputes arising from or related to the contract”.

This decision appears anachronic in comparison with the legislative bills currently been debated by the Brazilian Congress, such as the Senate Bill No 306 of 2018, which “regulates the usage of dispute boards in contracts executed by the Federal Union”, or the House of Representatives Bill No. 9883/2018, which provides for “the usage of dispute boards in administrative contracts”.

Further, it should also be remembered that the Senate Bill No. 4,253 of 2020, which enacts a new public biddings law to replace current Law 8,666 of 1993 (which currently awaits presidential approval) provides in its Article 150 that “the contracts regulated by this law may refer to alternative dispute prevention and resolution mechanisms, especially conciliation, mediation, dispute boards and arbitration.” Hence, there is currently an expectation that dispute boards shall be expressly authorized in administrative contracts as soon as the bill is enacted into a new statute.

Click here to read the TCU ruling in full (in Portuguese).

Federal Court of Audit’s decision: private arbitration centers are valid choices for disputes involving concession contracts

Despite the great advances in the use of arbitration as a method for dispute resolution in the scope of Public Administration, the debate regarding arbitration chambers still persists.

On November 25, 2020, through Judgment No. 3.160 / 2020, the Federal Court of Audit (“TCU”) decided on the legality of arbitration clauses in administrative contracts that refer disputes for resolution before private arbitration centers, especially in regard to the port sector. The motion requested, among other issues, the suspension of arbitration clauses that provided for private arbitration centers, of procedures in process in the latter and of the effectiveness of arbitration awards already rendered, since said awards “when taken without considering the diversity of situations existing in the sector and removed from the inspection of Regulatory Agencies, would be harmful to the public interest.”

In its decision, the TCU reinforced the understanding, spoused both by the Attorney General’s Office (AGU) and by the National Waterway Transport Agency (ANTAQ), that arbitration is a fast and efficient mechanism in relation to issues involving the Public Administration and which allows for a more in-depth discussion of the case’s matters. The relevance of arbitration as an attraction of investments for infrastructure projects was also emphasized and the discussion on the creation of public arbitration centers for the resolution of conflicts involving the Public Power was raised.

The TCU concluded that none of the rules dealing with arbitration and Public Administration limits the use of private chambers, whether it be the Brazilian Arbitration Act itself (Law 9.307/1996), Law 8.987/1995, which allows arbitration in concession contracts, or Law 12.815/2013 and Decree No. 10,025/2019, which allow arbitration in relation to port issues. Hence, it is not for the TCU to establish a new rule in this regard.

There would also be no violation to public control, since there is an express provision for publicizing procedures involving public administration, which has already been observed by the country’s private arbitration centers.

Click here to read the TCU ruling in full.