Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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International Arbitration in Brazil
Lawrence W. Newman and Michael Burrows
Brazil has the seventh-largest economy in the world and the largest
economy in Latin America. Yet, it has not been able to achieve the
international recognition as a major trading nation to which many observers
believe it is entitled. One of the reasons is the failure of the legal system of
Brazil to provide international businesses with sufficient confidence that
disputes regarding their investments and commercial transactions will be
adjudicated fairly. But this situation may be finally changing with the recent
advent of international arbitration in Brazil.
Negative perceptions of the Brazilian judiciary have been
widespread. For example, The Economist (September 16, 1999) has referred
to Brazil’s having a “corrupt and inefficient judiciary,” one that is
excessively bureaucratic and biased in favor of Brazilian companies in
deciding disputes with foreigners. This problem has been exacerbated by
procedural rules that are said to protect debtors to the detriment of
creditors, allowing debtors to delay proceedings against them through
numerous appeals in courts that are congested.
Although some may regard this picture of Brazil as not wholly
accurate, it is probably fair to say that the international business community
has sufficiently subscribed to it so as to have reservations about doing
business there. Thus, although Brazil has been described by the World
Bank as having achieved significant social and economic progress in the
past decade, many believe that the volume of foreign investment in Brazil
is less than it should have been.
Recent Arbitration Legislation
The situation in Brazil with respect to the adjudication of
international business disputes started to change in late 1995 with the
enactment of various arbitration-related measures. On November 27, 1995,
Brazil acceded to the Inter-American Convention on International
Commercial Arbitration (the Panama Convention). On September 23,
1996, a new arbitration law (Law No. 9307/96) was enacted. Then, on June
7, 2002, Brazil acceded to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 1958 (the New York
Convention).
Both the Panama and New York Conventions provide for the
recognition and enforcement of foreign arbitral awards by and among the
signatory countries. The Panama Convention, substantially similar to the
New York Convention, has been ratified by most of the countries in North,
Central and South America. More than 130 countries have acceded to
the New York Convention, including the most economically developed
countries in the world.
Under both conventions, awards may not be challenged on the
merits but, rather, on such grounds as (1) incapacity of the parties entering
the arbitration agreement; (2) lack of notice or opportunity to be heard; (3)
the arbitrators’ exceeding the scope of the arbitration agreement; (4)
irregularities in the composition of the arbitral panel; (5) lack of finality or
setting aside of the award in the country where it was rendered; (6) the nonarbitrability
of the dispute under local laws; and (7) recognition or
enforcement of the award would be contrary to the public policy of the
enforcing country.
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
