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

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GENERAL OVERVIEW
 

2.1 HISTORICAL BACKGROUND OF ARBITRATION IN
BRAZIL

Although arbitration has only developed in Brazil during the end of
the twentieth century, after the enactment of the Arbitration Law of
1996, this dispute resolution mechanism has historical roots in the
Brazilian legal system.

2.1.1 Early Legal Framework

Arbitration was a common conflict solution mechanism in Medieval
Portugal’s legal system. This procedure was governed by Portuguese
civil ordinances,1 which later became applicable in Brazil during the
colonial period.

In light of the Portuguese heritage, the first Brazilian Constitution,
enacted in 1824, expressly included the possibility of parties contracting
to submit civil disputes to arbitration, and the judicial courts not being
able to review the decision.2 Following this constitutional provision,
specific laws allowed arbitration in insurance3 and service provision
controversies.4

Inspired by the French Commercial Code of 1807, the Brazilian
Commercial Code of 1850 provided for compulsory arbitration to resolve
certain disputes, such as those between partners in commercial
companies.5 Rule 737 of 25 November 1850 regulated the procedure for
both mandatory and voluntary arbitration.

Law 1.350, of 14 September 1866 revoked these rules on compulsory
arbitration. Afterward, Law 1350/1866 and Decree 3900/1867 were
enacted, carrying out new rules on voluntary arbitration. Decree
3.900/1867 was especially harmful to the development of the arbitration
culture, as it introduced the concept of submission agreement
(compromisso arbitral). The parties had to execute a submission
agreement at the time the dispute arose, to avoid the jurisdiction of the
state courts, despite the existence of an arbitration clause.

After the declaration of the Brazilian Republic in 1889, the National
Congress enacted, in 1891, a new Federal Constitution, which did not
contain any provision on arbitration. This procedure, however, continued
to be usual in Brazil. At that time, the main law on arbitration was
Decree 3.884 of 5 November 1898. Also, between 1891 and 1937, each
Brazilian state had the competence to regulate its procedural rules, and
the local Code of Civil Procedures contained provisions on arbitration.

After the Federal Constitution of 1937, the legislation on procedural
rules became the exclusive competence of the National Congress,6 which
in 1939 enacted a federal Code of Civil Procedure, revoking the state
codes and implementing a new legal framework on arbitration
proceedings. The Code of Civil Procedure of 1939 was afterward
supplanted by the Code of Civil Procedure of 1973.
 

2.1.2. The Civil Code of 1916 and the Code of Civil Procedure of
1973

Prior to the enactment of the Arbitration Law of 1996, the Code of
Civil Procedure of 1973 used to spell out the procedural rules regarding
arbitration,7 while the Civil Code of 1916 governed submission
agreements; that is to say, agreements to submit disputes to arbitration
(compromisso arbitral)