Brazil rules arbitration valid for dispute over pre-'96 contract

Souto, Correa, Cesa, Lummertz & Amaral Advogados

Latin Lawyer

Brazil’s Superior Court of Justice has ruled that a dispute between three businessmen can be resolved using arbitration – even though the contract binding the three parties was agreed before Brazil passed its arbitration law in 1996.

Haakon and Erling Lorentzen successfully sought to overturn a lower court decision that ruled they could not use arbitration to resolve a dispute between them and the former CEO of a shipping company they own. Souto, Correa, Cesa, Lummertz & Amaral Advogados and Nunes Ferreira, Vianna Araújo, Cramer & Duarte Advogados advised the Lorentzens. The Superior Court of Justice’s ruling overturns an earlier lower court ruling made in 2012.

In a decision published on 20 May, the Rio de Janeiro-based Superior Court of Justice upheld the Lorentzens’ argument, because both parties had previously agreed to delegate the settlement of disputes between them to a third party. Though neither party explicitly refers to arbitration in the contract, which was written before Brazil passed arbitration legislation two decades ago, the court interpreted a reference to third-party evaluators as advocating arbitration. Fux Advogados and Veirano Advogados represented Hugo Pedro de Figueiredo, the former CEO of Norsul.

The dispute arose after de Figueiredo stepped down as CEO of Norsul. According to an agreement between the Lorentzens and de Figueiredo, the Lorentzens would acquire de Figueiredo’s stake in Norsul should he wish to withdraw from the company. The agreement also established that, in the event of a disagreement over the value of de Figueiredo’s stake, third-party evaluators would be appointed to ascertain the value of his shares.

After both sides failed to agree on the value of the former CEO’s stake, in April 2011 de Figueiredo filed a lawsuit requesting the value of his shares in Norsul be calculated by a judicial expert. The Lorentzens argued that the contract contained a form of arbitration clause and the evaluation should not be done by the judiciary. However, the State Court of Rio de Janeiro held that there was no evidence that de Figueiredo had expressly agreed to arbitration. The Court of Appeal of Rio de Janeiro upheld this decision a year later, prompting the Lorentzens to file an appeal to the Superior Court of Justice in October 2012.

Counsel to Haakon and Earling Lorentzen

Souto, Correa, Cesa, Lummertz & Amaral Advogados

Partners Marcelo Gandelman and Guilherme Rizzo Amaral and associate Rômulo Mariani

Nunes Ferreira, Vianna Araújo, Cramer & Duarte Advogados

Partners Ivan Nunes Ferreira and Luciano Vianna Araújo

Counsel to Hugo Pedro de Figueiredo

Veirano Advogados

Partner Luiz Guilherme Migliora and associates Felipe Bastos, Ewerton Oliveira and Mauro Teixeira de Faria

Fux Advogados

Partner Rodrigo Fux

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