The proposal to amend the Brazilian Arbitration Act

Article published by LexLatin, available at https://br.lexlatin.com/opiniao/proposta-mudanca-lei-brasileira-arbitragemtin

Amendments focus on two aspects: arbitrator and process confidentiality.

Proposed by deputy Margarete Coelho (PP-PI) in September 2021 and under reporting by deputy Bia Kicis (PSL-DF), Bill No. 3293/21 is intended to amend Law 9307, dated September 23, 1996, to “govern arbitrators’ performance, improve the duty of disclosure, establish the disclosure of information upon the end of an arbitration procedure, and ensure transparency of actions for annulment, in addition to other provisions.”

With regard to the processing of the bill, it was proposed on September 23, 2021, having been forwarded on December 8, 2021, to the Constitution, Justice, and Citizenship Commission. Recently, on July 6, 2022, an Interlocutory Relief (REQ No. 1166/2022) was filed, claiming immediate entertaining and voting by the court sitting en banc.

Subsequently, on August 1, 2022, and August 4, 2022, petitions were submitted (REQ No. 32/2022 and 33/2022) for a Public Hearing to discuss the project, also appointing the names of those invited to participate in the hearing.

In the Bill’s reasoning text, the author recognizes the importance of arbitration in Brazil’s current scenario as an alternative method of resolving disputes outside the Judiciary, and notes that there has been an exponential growth in the number of arbitrations in Brazil, especially after the express confirmation of the possibility of direct and indirect Public Administration participation in arbitration procedures, with the enactment of Law No. 13129/2015.

Nonetheless, despite the relevance of the doctrine, the author understands that there is a need for changes in some aspects of the current Brazilian arbitration law, with a view to ensuring the continuity and improvement of the successful arbitration experience.

The changes proposed revolve around two aspects of arbitration. Firstly, most of them are directed at an extremely relevant figure: the arbitrator. Another aspect of arbitration that is the main object of the changes proposed is the confidentiality of the procedure, one of the most valued characteristics of arbitration by its users.

In specific terms, among the changes proposed by Bill No. 3293/21 and addressed to arbitrators is the restriction on the number of arbitrations in which the same arbitrator acts concurrently. The current laws do not impose a maximum limit of cases in which an arbitrator can act, and the suggestion set out in the bill is that this number be limited to ten arbitrations, whether acting as sole arbitrator, joint arbitrator, or as president of the arbitral tribunal.

Furthermore, and still targeting the figure of the arbitrator, one of the main changes proposed by the bill — and one of the most criticized — implies changing the criterion of the appointed arbitrator’s duty to disclose, transforming the current criterion of “reasonable doubt” to “little doubt,” without such phrase being expressly defined or delimited.

In this regard, it is noted that, although the current wording of the Brazilian Arbitration Act does not establish an absolute definition regarding the phrase “reasonable doubt,” this concept has been perfected through practice, the caselaw of the Brazilian courts, and especially through international guidelines, as is the case with the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration.

As concerns the second aspect, confidentiality, the bill proposes that once arbitration has been instituted, the arbitration institution responsible for managing the procedure should publish on its website the court’s composition and the amount in dispute.

Furthermore, by the end of the procedure, the institution should also be expected to publish the full text of the arbitration award on its website, and the parties may reasonably request that any excerpts or information from the award remain confidential. It is worth pointing out that confidentiality is not mandatory in arbitrations, but it is adopted voluntarily in most cases by the parties that consider this one of the main incentives for using this means of dispute resolution.

Among the reasons raised by the Bill’s author for the need to implement the changes proposed to the wording of the Brazilian Arbitration Act is the search to reduce the filing of actions for annulment based on the arbitrator’s bias and how the procedure was executed.

In a Technical Note issued by CIArb Brazil on January 5, 2022, on Bill No. 3293/2021, representatives of CIArb Brazil Branch note that one reason why the bill is an inappropriate solution is because the project “imposes restrictions on the freedom of the parties that are inconsistent with the legal model on which the arbitration is based,” transferring to the legal level aspects that should be regulated by consensus by the Parties or governed within the scope of arbitral institutions.

Despite the need for improvements to be implemented within the doctrine and its practice in Brazil, caution is needed so that interventions do not end up changing the essence of arbitration as an alternative method of dispute settlement.

Despite the Bill reasoning mentioning that its alleged goal is to provide greater legal certainty for those resorting to arbitration, in practice, the changes proposed seem to go against the legal certainty, since they propose to change some of the distinctive characteristics of the very reason for arbitrations to exist, namely: the autonomy of the parties’ will when choosing their arbitrator and the option for process confidentiality.

*By Livia Sanches Sancio and Munique Mendes, member and lawyer of Salomão Advogados, respectively.