BRAZIL Law and Practice Contributed by: Cláudio Finkelstein, Maria Isabel Gori Montes and Laura Martini Brevilieri, Finkelstein Advogados
An award set aside at the seat may, as a rule, have recognition refused in Brazil under Article 38, VI of the BAA (mirroring Article V(1)(e) of the New York Conven - tion), on the basis that a decision no longer binding in its country of origin should not produce effects in Brazil. Where set-aside proceedings are still pending at the seat, the SCJ may stay the recognition proceed - ings pending the outcome, and may condition this on the provision of suitable security, consistent with Article VI of the New York Convention. As to sovereign immunity, a distinction must be drawn between immunity from jurisdiction and immunity from execution. Brazilian courts do not recognise immu - nity from jurisdiction in respect of acts of a private or commercial nature (jure gestionis), as opposed to sovereign acts (jure imperii); commercial arbitration typically concerns the former, and a state’s agreement to arbitrate reinforces the position that immunity from jurisdiction does not bar recognition. Immunity from execution is more robust. Enforce - ment may reach only assets that are not earmarked for public or sovereign purposes; assets allocated to diplomatic or consular functions are protected under the 1961 and 1963 Vienna Conventions and cannot be attached. A state may therefore raise immunity more successfully at the enforcement stage (and specifi - cally as regards protected assets) than at the recogni - tion stage. Where enforcement is sought against Brazilian pub - lic entities, public assets are unseizable and payment follows the constitutional court-ordered payment ( precatório ) regime under Article 100 of the Federal Constitution. 12.3 Approach of the Courts Brazilian courts generally adopt a pro-enforcement approach to arbitral awards. Domestic awards are directly enforceable as judicial enforcement titles, while foreign awards must first be recognised by the SCJ before enforcement in Brazil. In recognition proceedings, the SCJ does not review the merits of the award. Its analysis is limited to formal requirements and to the restricted grounds for refusal under the New York Convention and Articles 38 and
39 of the BAA. Public policy operates as an excep - tional ground and is interpreted narrowly: recognition will be refused only where there is a clear incompat - ibility with fundamental principles of the Brazilian legal order. Mere errors of fact or law, or disagreement with the tribunal’s reasoning, are not sufficient. A leading example is the Abengoa case (SEC 9,412/ EX, Corte Especial, 2017), in which the SCJ refused recognition on public policy grounds after finding that the presiding arbitrator’s impartiality and independ - ence were compromised – his law firm had received substantial fees from the requesting group during the arbitration, in breach of the duty of disclosure – the Court holding that the arbitrator’s impartiality is a mat - ter of public policy that it may examine regardless of the position taken by the courts at the seat. As to the applicable standard, Brazilian courts refer in this context to international public policy, which is a narrower standard than domestic public policy. As a result, only values regarded as truly fundamental and incompatible with the Brazilian legal order will bar recognition, rather than every mandatory rule of domestic law. 13. Miscellaneous 13.1 Class Action or Group Arbitration Brazilian law does not provide for class action arbitra - tion comparable to the US model. A distinction should be drawn, however, between class arbitration and mul - tiparty arbitration. Multiparty arbitration is admitted and common in Brazil. A significant example arises in corporate disputes: under Article 136-A of the Corpo - rations Act (Law No 6,404/1976, as amended by Law No 13,129/2015), an arbitration clause inserted into a company’s by-laws binds all shareholders, subject to the dissenting shareholders’ right of withdrawal. This is the closest mechanism to collective arbitration in Brazil, although it operates through multiparty pro - ceedings rather than as class arbitration. 13.2 Ethical Codes There are no rules or ethical codes exclusively gov - erning the conduct of counsel in arbitration in Brazil. Both arbitrators and counsel are, however, subject to
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