Arbitration: A Flourishing Legal Institute
By Sergio Bermudes (in memoriam), translated from Portuguese into English by Caetano Berenguer (partner at Bermudes Advogados, in Brazil; LL.M., Columbia Law School) and Gustavo Favero Vaughn (partner at Cesar Asfor Rocha Advogados, in Brazil; LL.M., Columbia Law School)
It is with profound respect and admiration that we present the English translation of a brief but thoughtful text by Sergio Bermudes – originally published by him in Portuguese on Revista de Arbitragem e Mediação, vol. 50/2016, pp. 387-389 –, one of the most distinguished figures in the Brazilian dispute resolution landscape, who sadly passed away last week. Throughout his extraordinary career, Bermudes was a tireless advocate for the development of arbitration in Brazil and internationally, combining deep legal knowledge with a visionary understanding of dispute resolution. His work not only shaped the practice of arbitration in the country but also inspired generations of lawyers and scholars to pursue excellence and innovation in this field.
Bermudes’ contributions went far beyond individual cases; he played a pivotal role in establishing arbitration as a credible and respected alternative to judicial proceedings, championing its efficiency, fairness, and adaptability. His writings, speeches, and practice exemplify the highest standards of professionalism and intellectual rigor. It is in this spirit that we share his reflections with the wider academic and professional community, honoring a legacy that will continue to influence arbitration in Brazil and around the world.
The text that follows well captures Bermudes’ sharp, provocative style, marked by incisive commentary and elegance—a true reflection of the wit and brilliance that defined his career.
It does not matter how many centuries arbitration has existed within the Romano-Western procedural system — the truth is that, for many reasons, this institution only began to be effectively used in Brazil as an alternative to judicial proceedings starting in the 1960s, perhaps influenced by its use in First World countries, with the United States leading the way. Once established, as Anatole France once wrote, it was as deaf as a sack of coal and as slow as Justice — a complaint repeated throughout the ages, as can be seen, for instance, in a passage from Don Quixote, where Cervantes laments the slow progress of legal proceedings.
It would not be an exaggeration to say that, among several factors, the main reason for the use of arbitration anywhere in the world is the slowness of judicial proceedings. After all, to repeat Tomás Antônio Gonzaga, glory that comes late already comes cold.
Other factors also weigh in favor of resorting to this institution. One may highlight, for instance, the fact that the resolution of disputes through arbitration entrusts the judgment to individuals familiar with the matter at hand — bearing in mind that arbitrators do not necessarily need to have legal training. The choice of persons well-acquainted with the subject of the dispute gives them an advantage over State judges.
Outside of routine cases, those who seek judicial relief often find themselves in the difficult position of having to teach the judge in order to obtain a decision. Another reason for choosing arbitration lies in the non-appealable nature of the decisions rendered by the arbitral tribunal, which prevents the case from unfolding through successive instances due to the filing of appeals (see Article 994 of the Brazilian Code of Civil Procedure), which could well be called alongaderas — the name once given to dilatory exceptions in medieval Spanish procedure.
Arbitration still faces criticism for its high cost, which includes the remuneration of the arbitrators, attorneys’ fees, expenses related to the institution responsible for organizing the proceedings, compensation for the tribunal’s auxiliary staff—such as interpreters, experts, and stenographers—as well as the use of rooms, equipment, and other necessary facilities.
There is also a psychological factor that undermines arbitration, especially in a country like Brazil, where the institution has not yet become fully integrated into the available means of obtaining jurisdiction. Here, as elsewhere, there persists a tendency to subject arbitral decisions to judicial review. “Arbitration,” a lawyer is often heard to say, “is good—until I lose. When that happens, I don’t think twice about going to court.”
It is essential that lawyers and judges grow accustomed to not viewing arbitration as the second half of the judicial process—a game, as Piero Calamandrei famously compared it in one of his well-known essays.
There is still much to be explored and developed in the field of arbitration. For example, the issue of the impartiality of arbitrators appointed by the parties remains unresolved, as does the problem of enforcing coercive measures issued by the arbitral tribunal; the definition of the grounds for nullifying an arbitral award; the admissibility of a rescissory action aimed at rescinding an arbitral award; and the cognitive limits of the proceedings for recognizing and enforcing foreign arbitral awards.
All of this will gradually be resolved, including through the improvement of legislation — as can be seen, for instance, by comparing Laws No. 9,307 of September 23, 1996, and No. 13,129 of May 26, 2015 — the latter being more refined in both technique and language than the former, although both remain quite imperfect.
If one may be allowed a daring prediction, I will shock the scholars by saying that, in the future—no matter how distant—arbitration will be used in criminal proceedings. I leave it, however, to the eloquence of those who master procedural law to imagine how criminal liability could be determined through arbitration. This could happen, for example, if, in a biphasic proceeding similar to that of the formulary period, a private tribunal were to determine authorship, materiality, and typicity, while another would merely fix the sentence, with the arbitral body’s acquittal being final.
What is important, in the year marking two decades since Law No. 9,307/1996, is that we also celebrate the growing use of arbitration in Brazil—and indeed throughout the world—as a means of resolving disputes. It is a social fact that, once subjected to judgment (a legal fact), becomes another social fact, transforming a situation of conflict into one of peace, thereby making man worthy of himself.