Arbitration In Brazil

1st Decision Regarding Regognition
Of A Foreign Award After 2004 Judiciary Reform

Mauricio Gomm Ferreira dos Santos*

Under Constitutional Amendment n. 45 to the Brazilian Constitution — the so-called Judiciary Reform — which went into eff ect as of December 2004, jurisdiction to decide upon an application for the recognition of foreign arbitral awards and state-court judgments shifted from Brazilian Supreme Court to Brazilian Superior Court of Justice (STJ). Article 105 of the Brazilian Constitution now provides that the Superior Tribunal of Justice has the power to hear and to decide as a matter of original jurisdiction the recognition (homologation) of foreign judgments1 and the concession granting requests (exequatur) for
letters rogatory.2

In May 2005, the Brazilian STJ issued the first decision regarding a claim for homologation of foreign award since the amendment went into effect.3 The petitioner, a Swiss Company, filed against a Brazilian Party a request for recognition of an English award rendered under the rules of Liverpool Cotton Association Ltd. The Brazilian Party opposed the request
based on the fact that the underlying contract had not been signed which, it argued, pursuant to paragraph 1 of article 44 of Brazilian Arbitration Law5 (“the Act”) together with article II, 26 of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”),7 meant that there was an absence of agreement to arbitrate, and, as a consequence, a lack of arbitral jurisdiction.

Chapter VI of the Act governs the Recognition and Enforcement of Foreign Arbitral Awards. Art 34 establishes that a foreign award shall be recognized and enforced in Brazil in accordance with the international treaties8 with validity in the internal system and, in the absence of that, strictly according to the terms of this law.9

The Court unanimously held that although, in principle the point argued by the opposing party might apply in some cases, the facts and the circumstances of the case clearly demonstrated that it was not only aware of the arbitral proceedings (without presenting a timely challenge), but also that it duly offered its defense in the said proceedings.
Therefore, recognizing that the acceptance of the arbitration agreement was unequivocal due to the unmistaken behavior of the parties during the arbitral proceedings, the Court homologated the English award.

Justice Carlos Alberto Menezes wrote the opinion of the Court. It is worth briefly quoting some part of such opinion:

“It is widely known that the custom in international commercial transactions is to refer to arbitration any dispute arising from the relevant contract. It is also a given that, in cotton purchase and sales transactions, the Liverpool Cotton Association Ltd. has traditionally aced as an arbitration center for this industry.”10


“In conclusion, considering the practice adopted internationally in contracts of this nature, I see no reason to negate the existence of an arbitral clause. The defendant’s participation in the arbitral proceedings, presenting its reasons and expressing its desire to appoint a new

arbitrator proves, beyond any doubt, that an arbitral clause had been provided for.”11

The importance of this decision cannot be seen only based on its particular rationale, but — perhaps more importantly — by the pro-arbitral approach unanimously showed by Brazilian Superior Tribunal of Justice which now has the original authority to grant or reject requests for recognition of foreign awards in Brazil.



1. The expression in Portuguese is “sentencas estrangeiras” which are considered to be not only decisions by state-court judges but also arbitral awards.

2. Unlike most Civil Law Countries, in Brazil the term “exequatur” refers to the order issued by the President of the STJ directing the lower Courts to comply with a request for a letter rogatory whereas “homologation” refers to the order issued by the President of the STJ recognizing that a foreign judgment may be enforced in the country.

3. L’Aiglon S/A v. Textil Uniao S/A, SEC 856-EX (2005/0031430-2). (Th e Term “SEC” means “sentenca estrangeira contestada”).

4. Art. 4 — An arbitration clause is an agreement by which the parties to a contract undertake to submit to arbitration the disputes which may arise with respect to that contract. Paragraph 1 — Th e arbitration clause shall be in writing and it can be inserted in the main contract or in a document to which it refers (Author’s free translation).

5. Law 9307 of September 23, 1996, DOU of September 24, 1996.

6. Th e term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. (Author’s translation).

7. New York Convention was enacted in Brazil by virtue of Decree n. 4311 of July 23, 2002.

8. At the time law 9307/96 was enacted Brazil had not ratified the New York Convention neither the Inter-American Convention on International Commercial Arbitration (Panama Convention). Both International Conventions have now been ratified. The New York Convention was enacted by Decree n. 4311 of July 23, 2002.

9. Due to the fact that when the Act was drafted and — later on — came into force, Brazil still was not a New York Convention Country, articles 38 and 39 of the Act provided similar grounds for refusing recognition and enforcement of foreign awards as those mentioned in article V of New York Convention.

10. pp. 14 and 15. Author’s translation.

11. pp. 15 and 16. Author’s translation.


*Mauricio Gomm is president of the
Arbitration and Mediation Committee of Brazilian Bar Association, Parana State Division (OAB/Pr), a member of the panel of the International Centre for Dispute Resolution, a division of the American Arbitration Association (AAA) and the Brazilian Arbitration Committee He holds an LL.M in International Business Law from Queen Mary and Westfi eld College, London University and is working on an LL.M in International Comparative Law from the University of Miami. Copyright 2005 by the author. Replies to this commentary

are welcome.


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