BRAZIL Law and Practice Contributed by: Cláudio Finkelstein, Maria Isabel Gori Montes and Laura Martini Brevilieri, Finkelstein Advogados
reserved for cases of manifest nullity of the arbitration agreement. 5.2 Circumstances for Court Intervention As noted in 5.1 Challenges to Jurisdiction , Article 8 of the BAA establishes the kompetenz - kompetenz prin - ciple, under which the arbitral tribunal has authority to decide on its own jurisdiction, including objections relating to the existence, validity and effectiveness of the arbitration agreement. Brazilian courts generally respect this principle and are reluctant to intervene in jurisdictional matters before or during the arbitral proceedings – the main exception being cases of manifest nullity of the arbitration agreement. Nonetheless, judicial intervention tends to be limit - ed and deferential to arbitration. Negative rulings on jurisdiction may also be brought before the courts, particularly where the arbitral proceedings are termi - nated without a decision on the merits. In such cases, the courts may examine the existence, validity and effectiveness of the arbitration agreement, although the appropriate procedural means to do so remain subject to debate. 5.3 Timing of Challenge Judicial review of the arbitral tribunal’s jurisdiction is generally available only after an arbitral award has been rendered – whether partial or final – through an action to set aside the award under Article 32, I of the BAA, which must be filed within the 90-day time limit of Article 33, paragraph 1. Brazilian courts therefore tend to avoid early intervention, except in exceptional cases where the invalidity of the arbitration agreement is manifest and can be verified prima facie. 5.4 Standard of Judicial Review for Jurisdiction/Admissibility Brazilian courts do not conduct an open review of jurisdictional or admissibility decisions, nor do they reassess the merits of the dispute. Judicial review is confined to the exhaustive grounds for setting aside an award listed in Article 32 of the BAA. These grounds are essentially formal in nature and include: • the nullity of the arbitration agreement (item I); • an award rendered by someone who could not act as arbitrator (item II);
• failure to meet the mandatory requirements of the award (item III); • an award exceeding the limits of the arbitration agreement (item IV); • proof of corruption, extortion or bribery (item VI); • an award rendered outside the applicable time limit (item VII); and • violation of the principles of due process, equal treatment of the parties, impartiality of the arbitra - tor and free evaluation of the evidence (item VIII, referring to Article 21, paragraph 2). 5.5 Breach of Arbitration Agreement Brazilian courts generally respect the kompetenz - kompetenz principle and are reluctant to intervene where a valid and applicable arbitration agreement exists. Court proceedings brought in breach of an arbitration agreement will therefore usually not be allowed to continue. The defendant must invoke the arbitration agreement as a preliminary matter in the defence (Article 337, X of the CCP). Because the court cannot raise the arbitra - tion agreement on its own initiative, failure to invoke it implies acceptance of the state court’s jurisdiction and waiver of arbitration (Article 337, paragraphs 5 and 6 of the CCP). Once the arbitration agreement is properly raised, the court will decline jurisdiction and dismiss the case without ruling on the merits (Arti - cle 485, VII of the CCP), except where the arbitration agreement is manifestly null or inapplicable. 5.6 Jurisdiction Over Third Parties Brazilian arbitration is grounded in party consent, and Brazilian law does not expressly regulate the exten - sion of the arbitration agreement to non-signatories. Nevertheless, case law and legal scholarship recog - nise that this may be admitted in exceptional circum - stances. Arbitral jurisdiction over non-signatories may be accepted where there is a sufficient basis to infer con - sent or otherwise to bind the third party – for example, in cases of succession, assignment, representation, or interconnected or linked contracts, where the third party took part in the negotiation, performance or ter - mination of the relationship. The “group of compa - nies” doctrine and the piercing of the corporate veil
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