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20Mar2015Mar20,2015

​Challenging times for Brazil

​​GAR Live made its third visit to Brazil yesterday, at a time when millions have taken to the streets in protest at a corruption scandal engulfing the country’s ruling party.​

Over 90 delegates attended the event at the Hotel Unique in São Paulo, which was co-chaired by Eduardo Damião Gonçalves of Mattos Filho Veiga Filho Marrey Jr e Quiroga and Adriana Braghetta of LO Baptista Schmidt Valois Miranda Ferreira & Agel.

Braghetta introduced the day by observing that Brazilian parties are now the third most frequent users of ICC arbitration, according to that institution’s latest statistics – which she said showed that Brazil is becoming one of the “main players” in arbitration, not just in Latin America but globally.

M&A musings

A session chaired by John Fellas of Hughes Hubbard & Reed in New York, explored ways to improve arbitration of M&A-related disputes. The unpredictability and lack of specialist expertise in the Brazilian court system have made arbitration a more attractive option for privately held companies in M&A disputes, it was observed.

But the confidentiality of arbitration means there is little published case law in this area, contributing to uncertainty for clients, noted Daniel Miranda, a corporate and M&A partner at Mattos Filho. There is also a “gaping hole” in the jurisdictional arrangements for corporate disputes involving publicly listed companies, he said. Initiatives like the Market Arbitration Chamber of the São Paulo Stock Exchange have yet to attract significant numbers of cases.

Practitioners highlighted the need for procedures to deal with disputes involving large numbers of minority shareholders – with some calling for “class action” arbitration as has been allowed by the US courts. However, Francisco Müssnich of Barbosa Müssnich & Aragão said reform of Brazil’s Civil Procedure Code would likely be necessary for this to happen.

The panel also considered circumstances in which non-signatories to an M&A agreement can be joined to an arbitration. Meanwhile, Christophe von Krause of White & Case stressed the importance of making sure the various contracts that comprise a complex M&A transaction contain compatible arbitration agreements.

Users’ grumbles

The second session, chaired by Gonçalves, brought together in-house counsel from Brazilian companies Camargo Corrêa and Odebrecht TransPort and multinationals Zurich Insurance, Sanofi and Telecom Italia to give users’ experiences of the arbitral process.

Panellists highlighted the costs of proceedings as an area of concern and said institutions should be better at recommending the use of sole arbitrators to resolve smaller disputes more efficiently. The lack of availability of the best arbitrators was also a problem, observed Cinthia Ambrogi of Sanofi, who noted that the arbitrator community in Brazil was still relatively small.

The speakers said they were closely involved in the appointment of arbitrators though they were often reliant on recommendations from external counsel. Ligia Menezes Santos Neves of Camargo Corrêa said her company did not use institutions that only allowed parties to choose from a fixed list of arbitrators.

But there was resistance to the idea of a “TripAdvisor.com”-style resource for parties to provide feedback on arbitrators’ performance. It was doubtful whether the feedback provided by a losing party would be fair, and there was also a risk that public criticism would influence an arbitrator’s behaviour towards that party in future cases.

Unique?

A session chaired by José I Astigarraga, of Astigarraga Davis in Miami, considered whether there is a uniquely Brazilian style of advocacy and how successfully it translates to the international arena.

The panel included Fernando Eduardo Serec, head of litigation and arbitration at TozziniFreire Advogados in Sao Paulo, and Gustavo Fernandes de Andrade of Tauil & Chequer in Rio de Janeiro. Two New York-based practitioners, David Lindsey of Chaffetz Lindsey and Julie Bédard of Skadden Arps Slate Meagher & Flom gave an international perspective.

Among other things, the panel considered the International Bar Association’s 2013 guidelines on party representation and their compatibility with Brazilian arbitration culture – particularly the recommendation that external counsel should inform a client of the need to preserve potentially relevant documents for discovery requests.

Being a good arbitrator

Braghetta chaired a final session on “how to be a good arbitrator”. Two leading lights of Brazilian arbitration, José Emilio Nunes Pinto and Carlos Alberto Carmona, exchanged insights with Massimo Benedettelli of Italian disputes boutique ArbLit and John Fellas on how to meet parties’ expectations while fulfilling an arbitrator’s duties.

The panellists addressed the need to give sufficiently reasoned awards so that a party understands why it has lost a case. They also debated the propriety of raising issues of law not pleaded by the parties; and of issuing dissenting or concurring opinions.

Institutions under attack

Wrapping up the day, Gonçalves said it was important not to “underestimate the power that arbitration has and will have in this country”, particularly at a “challenging” time when Brazil’s public institutions are “under attack”.

He was alluding to the corruption scandal involving officials in the ruling Workers’ Party in Brazil and state oil company Petrobras, which has seen millions of protesters in São Paulo and other cities take to the streets to call for the impeachment of President Dilma Rousseff.

While arbitration is not a solution for all Brazil’s problems, Gonçalves said the resolution of commercial disputes in a civilised manner would be one of the elements that helped the country succeed.

GAR Live São Paulo took place in association with the AmCham Brasil Arbitration and Mediation Centre. It was sponsored by TozziniFreire Advogados and Tauil & Chequer. The speakers’ dinner at the Dalvo e Dita restaurant was sponsoered by LO Baptista Schmidt Valois Miranda Ferreira & Agel.

The supporting organisations for the event were the Brazilian Arbitration Committee (CBar), the American Bar Association’s section of international law, the New York branch of the Chartered Institute of Arbitrators, and the Brazilian law firm association CESA.

The next GAR Live will take place in Washington, DC on 27 April, focusing on bilateral investment treaties, followed by events in London on 6 and 7 May. The first of the London events will focus on energy-related arbitration. Subsequent GAR Lives will take place in Frankfurt, Singapore and Istanbul (in June), New York (in September), Hong Kong (in October) and Dubai and Paris (in November). ​

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