Amendments to the Brazilian Arbitration Law

On May 26, 2015, the Brazilian Vice-President in Office, Michel Temer, approved the Law No. 13,129/2015, which amends parts of the Brazilian Arbitration Law (Law No. 9,307/96). After the 60-days waiting period, the changes introduced by Law No. 13,129/2015 entered into force on July 27, 2015.

The approved text consolidates practices already adopted in arbitration and makes clear that arbitration can be used as a means of dispute resolution in the following contexts:

• (i) In administrative contracts related to property rights: the use of arbitration by the direct and indirect public administration is now expressly permitted; and
• (ii) Corporate disputes: a modification is to be implemented in the Brazilian Corporate Law (Law No. 6,404/76) to clarify that arbitration agreements set forth in the bylaws are binding on all shareholders. It also provides the dissenting shareholder’s right to withdraw from the company.

There are also innovations to facilitate the conduction of the proceedings by the arbitrators. For example, partial awards are now expressly allowed – that is, an award which partially decides the dispute, leaving other issues to be decided at the end of the proceedings. In line with the new Civil Procedure Code, an “arbitration letter” was created in order to improve communication between the arbitral tribunal and the courts for enforcement of arbitration tribunal’s orders in precautionary and urgent matters.

Other noteworthy amendments include   provisions expressly setting forth that the filing of an arbitration request interrupts the statute of limitations, and the party’s right to ask the courts for interim measures before the arbitral tribunal is constituted.

There were, however, Presidential vetoes to the Bill approved by the Congress in the beginning of May (Bill No. 404/2013). The original Bill expressly permitted the use of arbitration in consumer contracts in cases where the consumer took the initiative to initiate arbitration or expressly agreed to its initiation. Also, the Bill provided for arbitration in labor contracts, authorizing its use in cases where the employee holds a high office or function as manager or officer appointed pursuant to the bylaws and was the one to start the arbitration or agreed with its initiation.

According to the vetoes’ reasoning[1], they were necessary in order to preserve the principle of consumer protection and to safeguard the principle of equality among employees. However, the changes to the Arbitration Law originally introduced by the Bill aimed exactly at creating safe limits to arbitration related to consumer contracts and labor matters.

Arbitration has experienced intense developments in Brazil, especially because of the legal quality of the Arbitration Law, the Judiciary’s support of arbitration and the specialization and improvement of arbitrators and lawyers. Law No. 13,129/2015, albeit the vetoes, preserves these achievements and provides answers to some important questions raised in the Brazilian arbitration practice.

[1] Message No. 162, May 26, 2015 by the Vice-Presidency.