Originally from Arbitration Law of Brazil: Practice and Procedure - Second Edition

Preview Page

ARBITRATION AGREEMENT

5.1 ARBITRATION AGREEMENTS

Arbitration is consensual in its essence, and the jurisdiction of the
arbitral tribunal derives from an enforceable contract, hereinafter referred
to as the arbitration agreement, whereby the parties agree to submit the
dispute to arbitration.

The arbitration agreement may be made before the dispute arises, in
an arbitration clause (“cláusula compromissória”), or afterward, through
a submission agreement (“compromisso arbitral”).1

As explained by the Brazilian Superior Tribunal of Justice (STJ), in
the International Cotton Trading Limited Case (ITC),2 the difference
between arbitration clauses and submission agreement is on the fact that
the submission agreement subjects to the arbitral jurisdiction a dispute
that has already arisen between the parties, while the arbitration clause
aims at future issues that might arise after its execution.

5.1.1 Effects of Arbitration Agreements

Arbitration agreements trigger both positive and negative effects.

The negative effect is the obligation of the judge to dismiss without
prejudice any lawsuit filed in connection with subject covered by an
arbitration agreement, except if the other party does not object to the
judicial venue.3 The positive effect, on the other hand, is the possibility
of the claimant initiating directly the arbitration procedure against the
respondent, without the need for court intervention, as long as the
arbitration agreement is complete.4

This chapter will first address the arbitration clause and, afterward,
the submission agreement, discussing which rules apply to both types of
agreements.

5.2 ARBITRATION CLAUSES: NATURE AND VALIDITY

An arbitration clause is a provision whereby the parties to a contract
undertake to submit to arbitration either certain or all disputes that may
arise in relation to the contract.5

5.2.1 Formal Requirements for the Validity of Arbitration Clauses

Considering the contractual nature of the arbitral clause, it is subject
to the requirements for validity of any contract under Brazilian law, to
wit: (i) capacity and power; (ii) valid consent; (iii) lawful and possible
subject matter; and (iv) compliance with the legally prescribed form.6

Under Brazilian conflict of law rules, a person’s capacity must be
ascertained according to the legislation of his or her country of domicile.7

Individuals domiciled in Brazil are deemed to be capable if they are
above the age of eighteen, do not have illness or mental problems that
prevent the understanding of their acts, and are able to express their will.8

The power to represent a Brazilian legal entity is ascertained
according to its bylaws or articles of organization, which are public
documents, a copy of which must be available upon request at the
relevant state commercial registry (junta commercial) for business
companies (sociedades empresariais) or at the relevant civil legal
entities’ registry (cartório civil de pessoas jurídicas) for non-commercial
companies (sociedades não empresariais).

As to valid consent, Brazilian law provides for several hypotheses,
under which consent is deemed defective, such as mistake,9 deceit or
malice (dolo),10 duress (coação),11 state of danger (estado de perigo),12