Provisional Measures in Aid of Arbitration in Brazil

Authors: Michael Alexander Fernández, Gustavo Favero Vaughn & Fernando Figueiredo Ponzini*

“[I]f arbitration is to work, national courts must stand at the ready.”[1]

National courts—particularly those located at the seat of an arbitration—play an important role in safeguarding arbitration’s legitimacy and efficacy.[2] During the course of an arbitration—from the pre-arbitration stage to the post-award stage— parties may rely on the judiciary for various purposes (e.g., interim relief applications, enforcement of arbitration agreements, set aside proceedings and recognition of foreign arbitration awards). This blog post will provide a general overview of how Brazilian courts assist parties to arbitration proceedings through the issuance of provisional measures.

The Brazilian Arbitration Act of 1996 [3] (“Arbitration Act”) incorporates several key aspects of the UNCITRAL Model Law into Brazil’s arbitration regime.[4] Brazil is generally considered a pro-arbitration jurisdiction because its courts —including most notably the Superior Court of Justice (“STJ”) which is the highest appellate court in Brazil for non-constitutional questions of federal law — support arbitration proceedings while avoiding many of the undue interventions that other courts in Latin America engage in vis-à-vis the arbitral process.[5]

Until 2015, there was no express legislative regulation of provisional measures in aid of arbitration. The STJ stepped in to fill this gap by authorizing lower courts to provide parties such relief.[6] In 2015, the Arbitration Act was amended to expressly allow parties to request provisional measures from a Brazilian court either prior to the constitution of the tribunal or once the arbitral panel is formed and the arbitration itself has begun.[7]

Under Article 22-A of the Arbitration Act, as amended, before the commencement of the arbitration — which occurs, under Brazilian law, once the tribunal is constituted — parties can seek a court’s assistance to obtain provisional relief such as, for example, an attachment of assets, an urgent measure to stay a shareholders’ meeting, or an order granting injunctive relief to preserve the status quo.[8] At the outset of a dispute, the interim relief application may be, and oftentimes is, filed on an ex parte basis.[9] Because due process is one of the cornerstones of the Brazilian procedural regime, it goes without saying that, if a judge grants such relief, the defendant will have an opportunity to challenge the decision, which may happen through an interlocutory appeal addressed to the court of appeals.

Article 22-A of the Arbitration Act, as amended, does not articulate a standard regulating when a Brazilian court may grant a provisional measure in aid of arbitration.[10] In the absence of such a standard, Brazilian courts typically import the standards applicable to requests for provisional relief in ordinary civil actions under the Brazilian Civil Procedure Code (“CPC”).[11] As a result, parties seeking provisional relief are generally required to show likelihood of success on the merits and irreparable harm if relief is not granted. Courts may also consider the balance of equities, comparing the harm to the applicant if the interim relief is denied with the harm to the counter-party if the request is granted. In any event, a Brazilian trial-level court ultimately has discretion to grant or deny interim relief. Decisions issued by courts on interim relief must be properly reasoned, stating the factual and legal grounds that the court relied upon in rendering a decision.

Because the 1988 Brazilian Federal Constitution grants access to justice to all citizens, the  STJ has held that the judiciary must entertain provisional measures while the constitution of the tribunal is pending.[12] In that regard, the ‘access to justice’ argument may even permit parties to circumvent a clause in an arbitration agreement that precludes the parties from seeking judicial assistance before the constitution of the tribunal. Absent an emergency arbitration provision, there would be no available jurisdiction to entertain, for instance, an urgent request. This quite unusual situation of “jurisdictional limbo” may raise an access to justice concern.

Also according to Article 22-A, any provisional relief granted by a Brazilian court will automatically expire if an arbitration is not initiated within 30 days. This provision enjoins parties from obtaining indefinite provisional relief from a court by requiring that they initiate a claim before the forum (arbitration) they selected to settle their disputes.

Under Article 22-B of the Arbitration Act, as amended, Brazilian courts lack authority to issue provisional measures once an arbitral tribunal is constituted.[13] As explained by Abbud, Levy, and Alves, “the complete derogation of State court’s temporary jurisdiction on provisional measures operates automatically and promptly thereupon the constitution of the […] arbitral [tribunal].”[14] This is a natural corollary of Brazil’s embrace of the competence-competence doctrine, which is codified in Article 8, sole paragraph, of the Arbitration Act.[15] If a provisional order was issued by a court prior to the tribunal’s constitution, then the arbitrators will be entitled to maintain, modify, or revoke the court’s ruling. Under such circumstances, arbitrators should be to entertain this sort of application on a de novo basis.

If an arbitration is ongoing and the need for injunctive relief arises, Article 22-B of the Arbitration Act contemplates that parties request interim measures directly to the arbitral tribunal and not the courts.[16] In the event a party defies a tribunal’s order granting provisional relief, the tribunal will need to seek the court’s cooperation in order to give effect to its decision. In Brazil, the ‘arbitration letter’ (similar to a letter rogatory, but between jurisdictional bodies belonging to the same nationality) is the mechanism by which arbitrators can ask for a court’s assistance to enforce one of its orders.[17]

Article 22-C of the Arbitration Act sets out the procedural mechanism by which a tribunal can issue an arbitration letter requesting a court’s cooperation.[18] Under that provision, the competent judge who receives an arbitration letter “shall only proceed with a prima facie analysis of the arbitration letter.” Thus, a court cannot and should not review the merits of the decision issued by the tribunal whose enforcement is sought through the arbitration letter. What a court can and should do is check whether the letter satisfies the formal requirements set forth by the CPC. A court may only decline to comply with the letter if one of the conditions of Article 267 of the CPC is not observed, such as when there are doubts regarding the letter’s authenticity.

Despite the restriction on Brazilian courts to issue interim relief, it is conceivable that, on very rare occasions, courts may nonetheless entertain applications for provisional measures despite the constitution of the tribunal. If, for example, the tribunal is constituted but, for reasons known to the parties, the tribunal will not be able to respond in a timely fashion  (e.g., one of the members of the tribunal is on vacation in a remote area without access to the internet), a Brazilian court may decide to step in. In such a situation, a Brazilian court could grant interim relief with the understanding that the tribunal would have the chance to review the court’s assessment.

In addition to the provisions of the Arbitration Act that authorize parties to seek relief from a court or an arbitral tribunal, parties that have chosen to arbitrate under the arbitration rules of Brazil’s most prominent arbitral institutions will find that most of those institutions have their own rules governing provisional measures.  For example, the Brazil-Canada Chamber of Commerce (“CAM-CCBC”) largely tracks the Arbitration Act’s provisions on the question of provisional measures.[19] Article 22.1 states, in pertinent part, that “[u]nless otherwise agreed between the parties, the arbitral tribunal may issue provisional, coercive, and interlocutory measures that may, at the discretion of the arbitral tribunal, depend on the presentation of guarantees by the claiming party.” This provision suggests that parties can preclude a tribunal from granting provisional measures – an agreement that may have implications on party autonomy – and it also permits the tribunal to ask the requesting party to provide a guarantee as a condition to granting interim relief (e.g., security for costs, use of an escrow account).

The CAM-CCBC rules provide that “[i]n case of urgency, if the arbitral tribunal is not yet constituted, the parties may submit a request for provisional, coercive, and interlocutory measures to the competent judicial authority unless otherwise expressly stipulated by them” (Article 22.2); “[o]nce the arbitration is instituted, it is under the arbitral tribunal’s competence to uphold, amend, or revoke a previously granted measure” (Article 22.3); and a “request submitted to a judicial authority to procure provisional measures, or the enforcement of similar measures granted by an emergency arbitrator or arbitral tribunal, shall not constitute breach or waiver of the arbitration agreement and shall not undermine the arbitral tribunal’s competence” (Article 22.4).

Following the international trend, and certainly encouraged by the 2015 amendment to the Brazilian Arbitration Act, some Brazilian arbitration institutions have amended their rules to provide for emergency arbitration. For example, CAM-CCBC, the Chamber of Arbitration and Mediation of B3 (Brazilian stock exchange) and the Chamber of Commercial Arbitration – Brazil (“CAMARB”) include an emergency arbitration procedure in their regulations and resolutions.[20] These emergency arbitration rules are comprehensive and generally deal with the issues that may arise when discussing this sort of proceeding, such as the (non-binding) effect of the emergency arbitrator decisions and orders on the tribunal to be constituted.

While Brazil’s arbitration practice has matured since the Arbitration Act’s initial enactment, there are a variety of issues that the international arbitration community has already tackled which remain unsettled in Brazil. For example, it is unclear whether a party can seek provisional measures before a court if it agreed to the emergency arbitration rules of an institution. The arbitration rules of leading international institutions have addressed this concern.  Article 29 of the International Chamber of Commerce (“ICC”) rules provides, in relevant part, that the “Emergency Arbitrator Provisions are not intended to prevent any party from seeking urgent interim or conservatory measures from a competent judicial authority at any time prior to making an application for such measures, and in appropriate circumstances even thereafter, pursuant to the Rules.”[21] Similarly, Article 9B, section 9.13, of the London Court of International Arbitration (“LCIA”) rules state that, notwithstanding the emergency arbitration provision, “a party may apply to a competent state court or other legal authority for any interim or conservatory measures before the formation of the Arbitral Tribunal; and Article 9B shall not be treated as an alternative to or substitute for the exercise of such right.” In that respect, the constitutional principle of access to justice may allow a party to choose between a court or emergency arbitrator, despite having contracted the emergency arbitration proceeding. If that is the case, the emergency arbitration would be simply another avenue for parties to seek provisional measures, and not the exclusive one.

The bottom line is that courts in Brazil are ready to cooperate with arbitrators  when dealing with questions of provisional measures. Courts do understand their limited and provisory role in aid of the arbitral process and there is solid case law providing guidance on the standards of granting interim relief in such cases. The emergency arbitrator is still a path to be explored in Brazil, but one that should add value to the practice.

*Michael A. Fernández is a Partner at Rivero Mestre LLP and Adjunct Professor of Law at Fordham University School of Law. He has extensive experience representing foreign and domestic companies and individuals involved in arbitrations, litigations, and with investigations in the U.S., as well as parties to international commercial and investment treaty arbitrations conducted under the major international rules including UNCITRAL, ICSID, ICC and ICDR.

Gustavo Favero Vaughn is an international lawyer at Cleary Gottlieb Steen & Hamilton in New York. He has LLM degrees from Columbia Law School and the University of São Paulo. Gustavo is an Alumni Advisor at ARIA and Co-Chair of R.E.A.L. Academic Council.

Fernando Figueiredo Ponzini is a lawyer at Lefosse Advogados in São Paulo, Brazil. He is a post-graduate candidate at the Fundação Getúlio Vargas (FGV) School of Law and has an LL.B graduate from Mackenzie Presbyterian University Law School. He is also the Coach of Mackenzie Presbyterian University’s arbitration team.

[1]  Donald Francis Donovan, The Allocation of Authority Between Courts and Arbitral Tribunals to Order Interim Measures A Survey of Jurisdictions, the Work of UNCITRAL and a Model Proposal, in Albert Jan Van den Berg, ICCA Congress Series No. 12 (Beijing 2004): New Horizons in International Commercial Arbitration and Beyond 203 (2005).

[2] See, e.g., George A. Bermann, The Role of National Courts At the Threshold of Arbitration, 28 Am. Rev. of Int’l Arb. 291, 291-307 (2017) (arguing that national courts play an important role at the threshold of arbitration by, among other things, ensuring the legitimacy and efficiency of the arbitral process).

[3]  Federal Law No. 9.307, September 23, 1996 (‘Arbitration Act”).

[4] “The Brazilian Arbitration Act was a major turning point for arbitration in Brazil. The Act was ‘inspired’ by some of the UNCITRAL provisions, although it does not actually mirror the Model Law.” Rafael Francisco Alves, Chapter 3: Country Report: Brazil, in Franco Ferrari and Friedrich Rosenfeld, et. al., Due Process as a Limit to Discretion in International Commercial Arbitration 56 (2020).

[5]  Daniel Brantes Ferreira, Gustavo da Rocha Schmidt, Bianca Oliveira de Farias, Brazilian Superior Court of Justice (STJ) Reaffirms Brazil as an Arbitration Friendly Jurisdiction, Kluwer Arbitration Blog (Feb. 23, 2022), http://arbitrationblog.kluwerarbitration.com/2022/02/23/brazilian-superior-court-of-justice-stj-reaffirms-brazil-as-an-arbitration-friendly-jurisdiction/.

[6] See, e.g., S.T.J., Special Appeal No. 1.297.974/RJ, Justice Andrighi, June 12, 2012.

[7]  Federal Law No. 13.129, May 26, 2015.

[8]  A Brazilian judge has jurisdiction, in general, to grant any measures aimed at protecting the relief sought by the parties in future proceedings, either before a State court or before an arbitral tribunal.

[9]  T.J.S.P., Interim Appeal No. 2218044-64.2014.8.26.0000, Appeal Court Judge Enio Zuliani, February 3, 2015; T.J.S.P., Provisional Relief No. 0242417.67.2012.8.26.0000, Appeal Court Judge Enio Zuliani, April 23, 2013; T.J.S.P., Interim Appeal No. 0171478.62.2012.8.26.0000, Appeal Court Judge Maia da Cunha, August 28, 2012.

[10]  Arbitration Act, “Article 22-A.  Before the arbitration is instituted, the parties may recur to the Judiciary for granting a provisional or emergency measure. Sole Paragraph.  A provisional or emergency measure shall cease to be effective if the interested party does not request the institution of arbitration within thirty (30) days as of the effective date of the respective decision.”

[11]  “Thus, if there is a necessity to file an emergency measure of a preventive nature before the Court before the institution of arbitration, the suppliant will prepare a petition limited to the demonstration of fumus boni iuris and periculum in mora.” José Antonio Fichtner & André Luís Monteiro, Tutela provisória na arbitragem e Novo Código de Processo Civil: tutela antecipada e tutela cautelar, tutela de urgência e tutela da evidência, tutela antecedente e tutela incidental, in Carlos A. Carmona, Selma F. Lemes, Pedro B. Martins, 20 Anos da Lei de Arbitragem – Homenagem a Petrônio R. Muniz, 478 (2017). In practice see, e.g., the following cases: T.J.S.P., Civil Appeal No. 1015243.97.2019.8.26.0002, Appeal Court Judge Sérgio Shimura, October 4, 2022; T.J.S.P., Interim Appeal No. 2197666.77.2020.8.26.0000, Appeal Court Judge Grava Brazil, September 29, 2020; T.J.S.P., Interim Appeal No. 2063122.55.2020.8.26.0000, Appeal Court Judge Grava Brazil, September 29, 2020.

[12] See S.T.J., Special Appeal No. 1.698.730/SP, Justice Bellizze, May 8, 2018.

[13] See S.T.J., Special Appeal No. 1.948.327/SP, Justice Ribeiro, September 14, 2021.

[14] Andre Abbud, Daniel Levy, Rafael Alves, The Brazilian Arbitration Act: A Case Law Guide 119 (2019).

[15] “An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. Sole paragraph. The arbitrator has jurisdiction to decide ex officio or at the parties’ request, the issues concerning the existence, validity and effectiveness of the arbitration agreement, as well as the contract containing the arbitration clause.” Arbitration Act, Art. 8.

[16] “The sole arbitrator or the arbitral tribunal, either ex officio or at the parties’ request, may hear parties’ and witnesses’ testimony and may rule on the production of expert evidence, and other evidence deemed necessary. Paragraph 1. Testimony of the parties and witnesses shall be taken at places, dates and hours previously communicated in writing to the parties, and a written record of such testimony shall be signed by the party or witness, or at his request, also by the arbitrators. Paragraph 2. If a party fails, without good cause, to comply with a request to render personal testimony, the arbitrator or the arbitral tribunal shall give due consideration to such behaviour when issuing the award; and if a witness, under the same conditions, is absent, the arbitrator or the chairman of the arbitral tribunal may request the State Court to compel the appearance of the defaulting witness, upon evidence of the existence of an arbitration agreement. Paragraph 3. Default by a party shall not prevent the arbitral award from being made. Paragraph 5. If an arbitrator is replaced during the arbitral procedure, the alternate, at his discretion, may determine what evidence will be repeated.” Arbitration Act, Art. 22.

[17] See T.J.S.P., Interim Appeal No. 2081747.69.2022.8.26.0000, Appeal Court Judge Franco de Godoi, September 29, 2022; T.J.S.P., Civil Appeal No. 1038768.54.2019.8.26.0602, Appeal Court Judge Gilson Delgado Miranda, April 29, 2022.

[18] “An arbitrator or the arbitral tribunal may issue an arbitration letter so that the judicial court offers assistance or imposes compliance, in the area of their territorial jurisdiction, of an act requested by the arbitrator. Sole paragraph. In compliance with the arbitration letter, the respective court proceedings will be under seal, as long as the confidentiality set forth in the arbitration is verified.” Arbitration Act, Art. 22-C.

[19] CAM-CCBC Arbitration Rules – Approved by the Advisory Board on 1^st August 2022. Rules will entry into force on 1^st November 2022, Center for Arbitration and Mediation https://ccbc.org.br/cam-ccbc-centro-arbitragem-mediacao/en/arbitration/arbitration-rules-2022/ (last visited Dec. 8, 2022)

[20]  Arbitration, Camâra Do Mercado https://www.camaradomercado.com.br/en-US/arbitragem.html (last visited Dec. 8, 2022); Augusto Tolentino Pacheco de Medeiros, Arbitration Rules – August 12, 2019 Version, Câmara de Mediação e Arbitragem Empresarial – Brasil (Aug. 5, 2019), https://camarb.com.br/en/wp-content/uploads/2020/11/camarb-arbitration-rules-2019.pdf.