In Brazil, the use of arbitration as an alternative method of dispute resolution has been gaining prominence, especially due to the modernization of laws that encourage its use. But what exactly is arbitration, and what is the role of an arbitrator in this process?
What is arbitration?
Arbitration is a method of conflict resolution in which the parties involved choose one or more arbitrators to decide on the matter. This process is regulated by the Arbitration Law (Law No. 9.307/1996), which allows for the resolution of disputes in a more agile and less bureaucratic manner than the traditional judicial system. Furthermore, arbitration is especially effective in business and contractual disputes, particularly those involving available patrimonial rights.
Advantages of Arbitration in Brazilian Law
Arbitration offers a number of advantages over conventional litigation. Among the main ones are:
- Speed: Because it is a simpler procedure, arbitration tends to be faster than litigation.
- Confidentiality: Unlike court proceedings, which are generally public, arbitration allows the parties to keep the case confidential.
- Specialization: The referee usually possesses in-depth knowledge in the area of the dispute, which guarantees a technical and specialized analysis.
The Role of the Arbitration Law (Law No. 9.307/1996)
The Arbitration Law, enacted in 1996, was a landmark in the Brazilian legal system, modernizing and facilitating the use of arbitration for dispute resolution. Before that, the use of arbitration in Brazil was limited and surrounded by bureaucratic obstacles.
With this change, the law introduced a more direct and effective approach, allowing interested parties to resolve disputes privately, but with the same effectiveness as a court judgment.
Context and Importance of the Law
The creation of Law No. 9.307/1996 occurred at a time of growing demand for alternative dispute resolution methods, mainly due to the overload of the Brazilian judicial system. Thus, arbitration emerged as an efficient, safe, and agile alternative, especially attractive to companies and public administration in conflicts involving available property rights.
In addition to Law 9.307/96, the Code of Civil Procedure (CPC) also plays a relevant role in establishing general rules that reinforce the legitimacy of arbitration in Brazil. The CPC recognizes arbitration as a legitimate means of dispute resolution and introduces provisions that reinforce the autonomy of the arbitral procedure and the validity of the arbitrators' decisions.
Article 337, item X, of the Brazilian Code of Civil Procedure allows the defendant to present, as a preliminary matter in their defense, the existence of an arbitration agreement. This provision prevents the dispute from being taken to court, respecting the arbitration agreement previously signed between the parties.
Furthermore, the CPC adopts the principle of competence, which grants the arbitrator the power to decide on their own jurisdiction. This principle is especially relevant in cases where the validity of the arbitration agreement is questioned, reinforcing the autonomy of the arbitration process.
In this way, the CPC complements the Arbitration Law, promoting the effectiveness and legal certainty of arbitration proceedings in Brazil.
Limits of application: cases in which arbitration can be used.
It is important to highlight that arbitration is only applicable to disputes involving available property rights, that is, rights that can be negotiated between the parties, such as contractual and commercial disputes. On the other hand, issues related to unavailable rights, such as family, criminal, and tax cases, are outside its scope.
Furthermore, the law allows public entities to resort to arbitration, provided that the subject of the dispute is patrimonial and disposable. Thus, this method becomes a valuable tool in resolving business and corporate disputes, and even in litigation with the public administration, always respecting legal provisions.
Who can use arbitration?
Arbitration is accessible to a wide range of individuals and entities, including natural persons, legal entities and, more recently, public administration, when involved in matters of a patrimonial nature.
This method of conflict resolution efficiently serves both individuals seeking a quick and private solution to their disputes, and companies and public entities looking for a less bureaucratic and more specialized process.
Dispute profiles suitable for arbitration
Arbitration is ideal for disputes involving business and commercial matters, especially those requiring confidentiality and speed. Common examples include conflicts between partners, disputes over contracts for the purchase and sale of goods and services, and issues related to the provision of consulting services.
Use of Arbitration by Public Administration
Arbitration in public administration became possible with Law 13.129/2015, which amended the Arbitration Law to allow its use by public entities in cases involving available patrimonial rights. This change brought agility and specialization to the resolution of disputes involving infrastructure contracts and concessions, facilitating public management in strategic areas.
The new Public Procurement Law (Law 14.133/2021) reinforces the importance of alternative dispute resolution methods, such as arbitration, in cases of economic imbalances, contractual defaults, and compensation calculations, provided they are related to available rights. To better understand the implications of this law on public procurement and dispute resolution procedures, we recommend reading the article " New Public Procurement Law: everything you need to know ," available on the IDP Blog.
In this sense, the Code of Civil Procedure also supports arbitration in public administration, validating its use and providing legal certainty to the processes. Thus, arbitration is consolidated as an effective tool for resolving complex disputes involving public authorities, without overburdening the judicial system.
Role of the Referee
The arbitrator is responsible for conducting the arbitration proceedings and making a final decision on the case. In Brazil, the arbitrator has powers similar to those of a state judge, with the difference that he or she is chosen by the parties themselves. Furthermore, the arbitrator's decision, called an arbitral award, has the force of an enforceable title and can be judicially enforced if necessary.
The arbitration clause and the arbitration agreement.
For a case to be referred to arbitration, there is usually a pre-established arbitration clause in the contract where the parties agree to submit any disputes to arbitration. In cases where this clause does not exist, the parties can enter into an arbitration agreement after the dispute arises.
Arbitration process: stages and procedures
- Start of the arbitration: Arbitration begins with the selection and acceptance of arbitrators. The procedure to be followed may be determined by the contract itself or by the parties.
- Conducting the process: During the process, the arbitrator listens to both parties, analyzes documents and evidence, and in some cases, may rely on witnesses and experts.
- Arbitral award: After the analysis, the arbitrator issues the arbitral award, which is binding and has the same effects as a court judgment.
Types of arbitration and practical applications
There are two main types of arbitration: institutional and ad hoc . In institutional arbitration, a specialized entity is chosen to administer the procedure, which provides structure and administrative support to the parties. In ad hoc arbitration , the process is organized directly by the parties and the arbitrator, without the support of an institution, offering greater flexibility but requiring more organization from the parties involved.
The closing thought
Given this context, arbitration is consolidating itself as an effective and secure alternative for conflict resolution, enabling a technical and swift judgment. For lawyers and legal professionals, understanding this mechanism is fundamental, both for a more strategic approach and for advising clients seeking an alternative solution to the judicial system.
Want to deepen your knowledge of arbitration and dispute resolution? Check out our Postgraduate Program in Administrative Law at IDP and learn from experienced professionals and experts in Public Law.
Author: Matheus Carvalho
References
GUILHERME, Luiz Fernando do Vale de Almeida. Arbitration and Mediation Manual: Conciliation and Negotiation. 6th ed. São Paulo: Saraiva Jur, 2022. E-book. (1 online resource). ISBN 9786553620568. Available at: https://integrada.minhabiblioteca.com.br/books/9786553620568.
City Hall of São Paulo. Arbitration: learn more about the PGM's role in arbitration. Available at: https://capital.sp.gov.br/web/procuradoria_geral/w/cejusc/315494.
THEODORO JÚNIOR, Humberto. Course of Civil Procedural Law, v. 2: Special Procedures. 58th ed. rev., updated, expanded. Rio de Janeiro: Forense, 2024. E-book. (1 online resource). ISBN 9786559649402. Available at: https://integrada.minhabiblioteca.com.br/books/9786559649402.
COURT OF JUSTICE OF THE FEDERAL DISTRICT AND TERRITORIES. Exercise of Law. Available at: https://www.tjdft.jus.br/informacoes/perguntas-mais-frequentes/exercicio-do-direito.
