International Arbitration in Brazil - Part 7 Chapter 11 - The Practice of International Litigation - 2nd Edition
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
Brazil has the seventh-largest economy in the world and the largest economy in Latin America. Yet, it has not been able to achieve the international recognition as a major trading nation to which many observers believe it is entitled. One of the reasons is the failure of the legal system of Brazil to provide international businesses with sufficient confidence that disputes regarding their investments and commercial transactions will be adjudicated fairly. But this situation may be finally changing with the recent advent of international arbitration in Brazil.
Negative perceptions of the Brazilian judiciary have been widespread. For example, The Economist (September 16, 1999) has referred to Brazil’s having a “corrupt and inefficient judiciary,” one that is excessively bureaucratic and biased in favor of Brazilian companies in deciding disputes with foreigners. This problem has been exacerbated by procedural rules that are said to protect debtors to the detriment of creditors, allowing debtors to delay proceedings against them through numerous appeals in courts that are congested.
Although some may regard this picture of Brazil as not wholly accurate, it is probably fair to say that the international business community has sufficiently subscribed to it so as to have reservations about doing business there. Thus, although Brazil has been described by the World Bank as having achieved significant social and economic progress in the past decade, many believe that the volume of foreign investment in Brazil is less than it should have been.