The arbitration consists in a private and alternative method for solving disputes, without involving the Judiciary, which is regulated in Brazil by Law 9.307/96 (“Arbitration Law”). It is a more agile and technical process, in which an arbitrator who is usually a specialist in the matter, issues a sentence that is not subject to appeal or ratification of the Judiciary, forming, this way, a judicial enforcement instrument.
The parties interested in using arbitration shall spontaneously agree to use this type of process, what means that they automatically refuse discussing the matter in Court. The choice to opt for arbitration may be set forth in contract (i.e. before the litigation occurs) or by agreement after the discussion arises.
The main advantage of choosing the arbitration method is that it is quick to reach to the arbitrator’s final decision on the dispute comparing to the traditional judicial process. The Arbitration Law establishes that the parties may set the deadline for the arbitrator to render the sentence. If there is no previously definition in this sense, the maximum limit of six months is established for a decision making. In addition, there is no possibility of appealing against an arbitration award, due to its definitive character and the fact it can only be questioned in a few cases indicated in the law.
The confidentiality is also one of the advantages of arbitration. Nothing discussed in an arbitration process can be disclosed to third parties. Both the parties and the arbitrators must keep confidential and in strict secrecy the subjects addressed in the arbitration process, avoiding the embarrassment of public exposure of conflicts involving individuals or companies, as well as to possible damages of image and any other loss. The judicial process, for example, is public, and do not preserve the confidentiality of the parties involved in the suit.
Another important feature is the arbitrator specialty on the discussed matter. Thereby the analysis of an expert may be dispensed, because the arbitrator has the professional ability to understand and decide the matter, making the process more efficient.
Furthermore, the arbitration process is a less formal procedure then the judicial one,once the parties have the flexibility to define the rules, from the place of arbitration to the applicable law.
The arbitration award causes the same effects of the sentence issued by the Judiciary between the parties and their successors. It also constitutes a executive instrument but only if it is condemnatory sentence, as provided in Article 31 of the Arbitration Law.
One of the main novelties brought by Law 13.129/15 was that it allowed the use of arbitration as an alternative methodology of conflict resolution for private contracts entered into by the direct and indirect Public Administration. These contracts entered into with the Public Administration must relate to public services of an industrial nature or economic activity of production or commercialization of goods, capable of producing income and profit, in other words, economic activity in the strict sense. In this type of contract, the rights and obligations arising therefrom are negotiable and subject to arbitration.
Besides that, although the doctrine and many arbitral tribunals already understood that the arbitration law did not preclude the possibility of partial arbitral awards, Law 13,129/15 made it clear that the arbitral tribunal has express powers to render such judgments, what was already happening in complex arbitration proceedings.
With the reform brought by Law 13,129/15, the arbitrators are now requesting to the Judiciary to grant precautionary, emergency and coercive measures in cases of necessity, being the competent court responsible for granting such decisions or not.
Now the Arbitration Law foresees a new mechanism for act’s communication between judges and arbitrators: the arbitration letter. This is the possibility in which the arbitral tribunal requests the court to practice or determine the compliance of a judicial act, in the area of its territorial jurisdiction.
With the arbitration letter the parties in a litigation have the guarantee that the judge is obligated to comply with the act requested by the arbitrator, but also has the assurance that the measure granted by the arbitral tribunal will not be rejected by the magistrate without a specific reason. Therefore, it is not for the judge to evaluate the merits of the decisions taken by the arbitrators, except in some cases highlighted in the Brazilian Civil Procedure Code, which are:
• The letter is not covered by legal requirements;
• Lack of judge’s jurisdiction over subject or hierarchy;
• The judge has doubts about its authenticity.
The purpose of this instrument is not of subordination, but to enable better ways fornational cooperation between judicial bodies and arbitral tribunals, clearing the way for the solution of the dispute within a reasonable time and with a fair and effective decision.
The law 13,129/15 strengthens a pro-arbitration position that has been adopted by Brazil since the promulgation of the Arbitration Law, and it is in full compliance with the most modern norms in other countries where this alternative form of dispute resolution has been successfully in use for many decades.