by Rodrigo de Assis Torres e Felliphe Pereira dos Santos
August 23, 2017
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The new Brazilian Civil Procedure Code has brought various innovations and tools with the primary purpose of increasing the effectiveness, speed and reliability of litigation.
One of the most important changes is the consolidation of the authority given to judicial precedents, thereby creating mechanisms that bind the judge to rulings issued by the State Courts of Appeals and Superior Courts (Section 927 of the Code).
The subject has been generating intense discussion amongst commentators. Some of them understand that such innovations, in an ultimate analysis, unduly afford the courts legislative and normative powers. Others, on the other hand, assert that the changes in fact bring greater reliability and predictability to judicial decisions.
Without entering into the merits of the procedural discussion on the several consequences brought by the New Code, this article examines the impact of this innovation in arbitral proceedings held in Brazil.
In summary, the question is whether the case law built by the courts creates binding precedent over arbitrators and their decisions.
The discussion certainly affects relations involving industrial property, franchise and distribution operations, and other contractual relationships of this nature. After all, in Brazil, the adoption of arbitration is increasingly chosen as a faster and more effective means of resolving these conflicts, which are often extremely complex and commercially sensitive.
The Brazilian Arbitration Statute (Law no.9,307/1996) sets forth in Article 2 that “arbitration may be decided by law or equity, at the discretion of the parties”. In other words, the parties may decide whether the arbitrator will decide in accordance with his or her sense of justice or whether he or she shall follow the limits of legislation and other sources of law.
The controversy arises precisely when the parties opt to use Brazilian Law to govern a particular arbitration.
This is because the Arbitration Statute and the Civil Procedure Code provide that decisions on the merits emanating from an arbitration chamber are equated with judicial decisions and, therefore, according to one doctrinal movement, all the requirements set forth in Article 489 of the CPC apply¹, including the obligation to follow binding precedents invoked by the parties and applicable to the particular case, under penalty of the decision being null for violating § 1, VI of said Article.
This is coherent and logical reasoning, especially when considering that Brazilian laws equate the arbitrators to judges, so that, in theory, their decisions must follow the same requirements of decisions issued in regular lawsuits.
However, there is another relevant – and apparently major – line of thought, which asserts that, although arbitrators must consider the precedents applicable to the case, as well as all arguments of fact and law raised by the parties, as determined by Article 26, II, of the Arbitration Law, their non-application would not necessarily be capable of invalidating the arbitral award.
In other words, the legal obligation of the arbitrator would strictly be to substantiate the arbitral award adequately, in terms of the aforementioned Article 26, II of the Arbitration Law², justifying its interpretation with respect to the precedent and the legal reasons that led to its possible non-application.
Thus, if the arbitrator does not follow the precedent, but adequately substantiate the ruling, even in terms that are technically and legally debatable, the defenders of this approach advocate that the ruling cannot be invalidated.
For these commentators, allowing the judicial review of an arbitral award for the nonapplication of a precedent would in practice create an appeal over the merits to the Judiciary, thereby violating the highly important arbitral autonomy provided in Brazilian laws.
Thus, under this second approach, any legal or technical error in the analysis of the merits does not authorise a judicial review of the arbitral award by means of a lawsuit, without prejudice to the restricted situations in which the ruling can be invalidated, as provided in 32 of the Brazilian Arbitration Statute.
This is a controversial issue, which will certainly create a strong debate in our courts, so it is worth following closely which approach will be adopted by the case law in the forthcoming years.
1 José Rogério Cruz e Tucci captained the discussion in https://www.conjur.com.br/2016-nov-01/paradoxo-corte-arbitro-observancia-precedente-judicial.
2 Andre Vasconcelos Roque and Fernando Gajardoni in https://jota.info/colunas/novo-cpc/sentenca-arbitral-deve-seguir-o-precedente-judicial-novo-cpc-07112016 and Marcela Kohlbach de Faria in https://processualistas.jusbrasil.com.br/artigos/412259718/vinculacao-do-arbitro-aos-precedentes-judiciais-apos-a-vigencia-do-cpc-2015
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