BRAZIL Trends and Developments Contributed by: Karina Goldberg and Bruno Monteiro, Ferro, Castro Neves, Daltro & Gomide Advogados
The Brazilian Approach to Choice of Jurisdiction and Choice of Law in Arbitration Summary and relevance of the issue analysed It is no surprise that the increasingly globalised world, a process that has been further accelerated by growing digitisation of the economy, has led to an ever-growing number of international contracts that regulate economic activities that transcend national borders. In such cases, it is extremely important to precisely define the rules of law to which the obliga - tions under such international contracts are subject. The importance of this point is due not only to the necessity of correctly defining the terms and condi - tions to which the obligations of each party are sub - ject, but also to the accurate assessment and even mitigation of the risks involved in each transaction. After all, it is well known that different laws may have completely different limitations and guarantees with regard to specific types of contract. For this reason, the clauses defining the law applicable to a given transaction are some of the most important elements of an international contract, as these transactions have the particular – and somewhat unusual – char - acteristic that they may be subject to more than one law or legal system. This issue also makes it extremely common for inter - national parties to choose to submit their conflicts to arbitration proceedings based in countries other than those in which the involved parties are located. This provides a potentially neutral jurisdiction, with less tendency to adopt (even unconsciously) the legal logic applicable in the country of one of the parties. Further - more, arbitration proceedings are often thought to be more suitable for resolving complex disputes, such as those arising from large international contracts that involve multiple jurisdictions. Thus, this article seeks to briefly analyse the gener - al conditions, under Brazilian law, for choosing the jurisdiction and the applicable law for international contracts in which the parties choose to submit any disputes between them to arbitration. This analysis is relevant because, although Brazil has a mature arbi - tration market and legislation favourable to the auton - omy of the parties to a contract and the adoption of arbitration as a form of conflict resolution, Brazilian
legislation (and consequently the position of case law) can take a protective approach to the jurisdiction of Brazilian courts, depending on the rights set forth by the contracts (even international ones) and the nature of the parties. Brazilian legislation on the subject In addition to the Federal Constitution, some of the main principles and general rules applicable to Bra - zilian law are set forth in the so-called Introduction to the Rules of Brazilian Law (LINDB - Federal Law 4,657/1942, amended by Federal Law 12,376/2010). Among these rules and principles are those related to the definition of the rules of law applicable to legal relationships. On this subject, with regard to contractual relation - ships, Article 9 of the LINDB provides that, “To qualify and govern obligations, the law of the country in which they are constituted shall apply”. Paragraphs 1 and 2 of that Article, in turn, specify that, “If the obligation is to be performed in Brazil and depends on form in an essential way, that form shall be observed”, and that “The obligation resulting from the contract shall be deemed to have been constituted in the place where the offeror resides”. In other words, according to the LINDB, international contracts shall be governed: • as a rule, by the law of the place where the con - tract was formed, which is considered to be the location of the offeror; and • as an exception, by the law of the place of perfor - mance, when such performance depends on the adoption of specific formalities. In any case, these provisions do not exclude the respect enshrined in Brazilian law for the autonomy of the parties to agree on the applicable rules and the form of resolution of any disputes between them. In this sense, Article 1 of the Brazilian Arbitration Law (Federal Law 9,307/1996) authorises persons capable of entering into legal transactions on their own behalf to choose arbitration as the mechanism for resolving any disputes that deal with available rights (ie, rights that are subject to transaction). In addition, Article 2,
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