In praise of Brazilian enforcement

The Dutch arbitrator and professor addressed more than 100 people in the auditorium of the STJ in Brasilia - the court with exclusive jurisdiction for the recognition and enforcement of international arbitral awards in Brazil - including nine judges of the court. He also had a meeting with the STJ president, Justice Ari Pargendler.

Brazil was "a late arrival to the arbitration ball", which ratified the 1958 New York Convention as recently as 2002, said van den Berg in his speech, borrowing imagery from a recent GAR article. It quickly became the "belle of the ball", gaining on other countries that had signed the convention decades before.

In particular, van den Berg praised the way Brazil has a single court to handle enforcement requests relating to foreign arbitral awards - resulting in a "one- shot procedure" and standardised judgments issued by 15 STJ judges who are specialists in the area. In other countries, parties have "to climb the steps of jurisdiction to reach a final result," he said.

He added that the Brazilian judiciary has become an international model in terms of its efficient handling of enforcement requests and its transparency. Deliberations of the STJ are held in public, he noted.

Van den Berg said the STJ's judgments would be better still if judges made more explicit reference to the New York Convention rather than to the enforcement provisions of the 1996 Brazilian Arbitration Act - which are "remarkably similar, but not the same, as the core provisions of the [convention]."
Having studied over 1,700 enforcement decisions from more than 65 countries, he said the 40 from Brazil are "striking" because they are all based on articles 34 to 40 of the 1996 act. "The New York Convention is almost never mentioned".

This is despite the fact that article 34 of the 1996 act explicitly states that foreign awards shall be recognised and enforced in Brazil "pursuant to international treaties effective in the national legal system," in preference to domestic law. Van den Berg warned that the lack of reliance on the convention may create uncertainty and impede enforcement of awards in the future.

The bulk of van den Berg's speech was devoted to comparing the provisions of 1996 act and the New York Convention, assisted by tables prepared in both English and Portuguese. During this, he highlighted a few areas where the Brazilian court's reliance on domestic law on enforcement "may prove an impediment".
For example, he said te wording of the 1996 act allows courts to refuse enforcement of an award if it is seen as breaching national public policy. The wording of the New York Convention, in contrast, provides scope for courts to refuse enforcement only if there is a breach of international public policy - a much harder defence to raise successfully.
Van den Berg also noted that the STJ has interpreted the 1996 act to mean that an arbitration agreement must be signed by all parties to be held valid at the enforcement stage. The New York Convention is more flexible in this regard - meaning signatures are not always required.

He went on to raise the question whether Brazilian lawyers' focus on the 1996 act means they have yet to exploit the possibilities offered by article II(3) of the New York Convention. This provides that when a court of a contracting state is seized of a dispute in respect of which the parties have agreed to arbitrate, the court must refer the parties to arbitration if one of them requests such a referral.

Although the use of the article in Brazil has not been fully researched, to van den Berg's knowledge it has only been relied on in one court decision, the judgment of the São Paulo appeal court in the 2008 case of CAOA v Renault - surprising given that 50 per cent of decisions he has researched and reported worldwide deal with this article.
The potential the article offers is still "an unknown area that hopefully will be explored soon by the excellent young Brazilian scholars in international arbitration," van den Berg said. He added that applications under this article, like requests for enforcement, should ideally be submitted direct to the STJ.
One of the STJ's most famous judges, Justice Sydnei Beneti, tells GAR that van den Berg's speech was "excellent", providing practical guidance and legal analysis on the strong relationship between the 1996 act and the New York Convention.

He acknowledges that, while STJ judges always take into consideration the New York Convention when considering enforcement requests, they have tended to base their judgments on the provisions of the 1996 act given the similarity between the two texts. "Decisions in future will be more explicit regarding the convention articles," he says.
Beneti adds that, despite arbitration's relatively short history in Brazil, "it is impossible to imagine" disputes being resolved in the country without it - especially complex conflicts involving large companies.
"The judiciary is very conscious of the importance of arbitration and the need to preserve and protect this precious instrument in order to provide good justice and avoid unnecessary litigation," he says.
Van den Berg's talk marked the launch of the Portuguese version of the International Council for Commercial Arbitration's guide to the interpretation of the New York Convention, which the Brazilians have been the first to translate into their own language. Van den Berg paid tribute to the Brazilian Arbitration Committee, CBAr, for its "heroic accomplishment" in this regard. Hopefully, the guide - which is intended to harmonise national approaches - will make Brazil the eternal "belle" of New York Convention countries, he said.

The event was organised by the Natonal School for Development and Improvement of Magistrates (ENFAM) and was transmitted live on Brazil's Court TV.
Interviewed by GAR, van den Berg says he was impressed by the STJ's president and judges and also by the "quantity and quality" of the enforcement decisions he read in preparation for the event. Reading all 40 judgments was excellent for his Portuguese, he says.

CBAr president Adriana Braghetta called van den Berg's address "historic", paving the way for more open dialogue between the courts and the arbitration community.
ICCA will be launching its guide in Australia, Malaysia, Mauritius and Russia in the coming months. On 7 May, there will be further discussion of Brazilian arbitration and enforcement issues at the first GAR Live conference in Latin America - in Rio de Janeiro.

More information on the New York Convention can be found at van den Berg's website www.newyorkconvention.org and in ICCA's Yearbook on Commercial Arbitration, which he compiles. Van den Berg practises at Hanotiau & van den Berg in Brussels and is a professor at Erasmus University and the University of Miami.

Participants in the dialogue included:
• Justice Cesar Astor Rocha (director-general of ENFAM and STJ justice)
• Justice Ari Pargendler (president of the STJ)
• Justice Sydnei Beneti (STJ justice)
• Justice Nancy Andrighi (STJ justice)
• Justice Napoleão Nunes Maia Filho (STJ justice)
• Justice Castro Meira (STJ justice)
• Justice Massami Uyeda (STJ justice)
• Justice Humberto Martins (STJ justice)
• Justice Paulo de Tarso Sanseverino (STJ justice)
• Justice Adilson Macabu (STJ justice)
• Sarah Cohen (representative of the Dutch embassy in Sao Paulo)
• Adriana Braghetta, president of the Brazilian Arbitration Committee
• Ana Carolina Beneti, practitioner at Pinhero Neto and coordinator of CBAr activities
• Gabriel Wedy, president of the Association of Federal Judges (Ajufe)

_{photograph: Ana Carolina Beneti (coordinator of CBAr activities), Sarah Cohen (Netharlands diplomat), Sidnei Beneti (STJ justice), Albert Jan van den Berg, Cesar Asfor Rocha (ENFAM general director and STJ justice), Gabriel Wedy (Ajufe president), Adriana Braghetta (CBAr president)}

_{Source article: Global Arbitration Review - Alison Ross (Wednesday, 28 March 2012)}