Originally from World Arbitration And Mediation Review (WAMR)

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THE DEVELOPMENT OF BRAZILIAN

DECISIONAL LAW FAVORING THE
ARBITRABILITY OF DISPUTES INVOLVING
STATE ENTITIES
By Joaquim de Paiva Muniz

I. GENERAL OVERVIEW ON THE DEVELOPMENT OF DECISIONAL LAW
The possibility of submitting cases to arbitration involving Brazilian
governmental or State-controlled entities has been confirmed in two recent
decisions: AES Uruguaiana v. CEEE1 and TMC Terminal Multimodal de
Coroa Grande v. Federal Government,2 both published in the second
semester of 2006 by the Superior Court of Justice (STJ), the highest court in
Brazil for non-constitutional matters.
In the past, there were precedents favorable to the arbitrability of
disputes involving state organizations, but the aforementioned decisions
were the first ones rendered by the highest court since the enactment of the
Brazilian Arbitration Law of 1996. Previously, the leading case was a
Supreme Court decision of 1973, Espólio Lage v. the Federal Government,3
which confirmed an arbitral award rendered in the arbitration between the
Brazilian Federal Government and the estate of Henrique Lages regarding
indemnification owed by the former for seizure of the latter’s assets during
World War II. The Supreme Court denied the argument that the arbitral
award should be set aside because State entities could not participate in
arbitrations. Another relevant precedent rendered by the former Tribunal
Federal de Recursos (TFR) prior to the enactment of the Arbitration Law of
19964 denied a claim to annul an agreement between the Brazilian Federal
Government and Citibank for restructuring Brazil’s external debt, based on