Arbitrating in Brazil

Under Article 1 of the Arbitration Act, arbitration is available for disputes involving patrimonial rights that the parties are legally free to dispose of by contract. This covers the vast majority of commercial disputes: contract claims, corporate disputes, construction, M&A, financial transactions, IP licensing and international trade.

An arbitration clause (cláusula compromissória) must be in writing, in the main contract or expressly incorporated. For adhesion contracts, the clause must be initialled separately or it is void.

The scope must be clearly defined. Brazilian courts interpret scope narrowly when the clause is ambiguous: doubts are resolved in favour of judicial jurisdiction.

A clause must specify whether the arbitration will be institutional or ad hoc. Institutional arbitration is strongly preferred: the institution’s rules fill procedural gaps and provide appointment mechanisms.

Ad hoc arbitration is permitted but requires detailed procedural rules; poorly drafted ad hoc clauses frequently generate disputes requiring court intervention.

The seat determines which country’s law governs procedure, which courts supervise, and whether the award is domestic or foreign for enforcement. A Brazilian seat produces a directly enforceable domestic award; a foreign seat requires STJ homologation.

The seat need not be the physical hearing location: it is a legal concept, not a venue.

Always specify: the governing law of the contract; the number of arbitrators (one or three; three is standard for complex disputes); and the language, which defaults to Portuguese if unspecified.

Useful additions: an expedited procedure for lower-value claims, a consolidation provision for related agreements, and pre-arbitration steps that don’t become a delay tactic.

A domestic award is a título executivo judicial under Article 515, VII of the CPC, directly enforceable without court ratification. The court’s role is limited to enforcement; it will not review the merits.

Enforcement is initiated via cumprimento de sentença; the debtor has 15 days to comply voluntarily before penhora online asset freezes can follow.

A foreign award must be recognised by the STJ (homologação de sentença arbitral estrangeira) before enforcement, applying the Article V grounds of the New York Convention.

The STJ does not review the merits. Homologation typically takes 12 to 18 months. Brazil applies the Convention without the reciprocity reservation.

The exclusive grounds under Article 32 of the Arbitration Act: incapacity, invalid agreement, award issued outside the fixed period, excess of jurisdiction, failure to decide all matters, corruption or fraud, and form violations.

Errors of fact or law are not grounds for annulment. The action must be filed within 90 days of receiving the award; annulment actions rarely succeed.

Brazilian tribunals have broad discretion over costs, typically following the losing-party-pays principle but with discretion to apportion differently, unlike the fixed sucumbência formula in court litigation.

Interest commonly follows the taxa Selic where Brazilian law governs; monetary correction may also be awarded to account for inflation.

Brazilian court proceedings are constitutionally public; arbitral proceedings are private: hearings, pleadings, evidence and awards are confidential unless the parties agree otherwise or disclosure is legally required.

Enforcing an award in the courts will expose limited information through the court record. Parties needing full confidentiality should address this expressly.

A Brazilian-seat award is a foreign award elsewhere and enforceable under the New York Convention in any of the 172 signatory states, subject to Article V grounds.

The quality of the award’s drafting materially affects the speed and ease of foreign enforcement.

The 2015 amendments expressly authorised arbitration of commercial contracts entered into by public entities, extending the Act’s benefits to infrastructure, energy, PPP and procurement disputes.

Public sector arbitration requires Portuguese-language proceedings, public awards, and institutions meeting standards set by applicable legislation. The CCAF provides an administrative arbitration mechanism within the federal executive.

The Consumer Defence Code prohibits pre-dispute arbitration clauses imposed on consumers in standard form contracts; such a clause is void. A consumer may agree to arbitrate after a dispute has arisen.

Companies in B2C sectors, including digital platforms, financial services, insurance, retail and telecoms, cannot use standard-terms arbitration clauses to exclude consumer disputes from the courts.

The 2017 Labour Reform introduced a narrow exception: employees earning at least twice the social security ceiling (~BRL 14,000/month) may agree to arbitrate, with genuine consent and not as a condition of employment.

This exception’s limits are still being defined by the Superior Labour Court (TST); arbitration of employment disputes remains uncommon outside senior executive arrangements.

Brazil has not ratified BITs with investor-state dispute settlement. Since 2015 it has used Cooperation and Facilitation Investment Agreements (CFIAs), which favour state-to-state settlement over investor-state arbitration.

Foreign investors generally lack treaty-based investor-state arbitration access; recourse is through domestic courts or a valid contractual arbitration clause.