THE AUTHORS:<\/strong> Brazilian law is uncertain as to whether the Brazilian Superior Court of Justice can confirm a foreign <\/span>arbitral award<\/span><\/a> that lacks or needs a more thorough justification. According to Article 26 of the Brazilian Arbitration Act, an arbitration award must contain the following: the statement of facts; the reasoning; the ruling; and the date and location of its issuance. Concerning domestic arbitration, the <\/span>arbitral award<\/span><\/a> must also follow the written form. <\/span><\/p>\n\n\n\n <\/span>Failure to comply with the requirements indicated in Article 26 authorizes the annulment or setting aside the arbitral award under Article 32, III, of the Brazilian Arbitration Law. The domestic arbitration legal framework in <\/span>Brazil<\/span><\/a>, as stated by <\/span>Oct\u00e1vio Fragata Martins de Barros<\/span><\/a>, <\/span> <\/span><\/p>\n\n\n\n “<\/span>does not allow for the waiver of formal requirements by the parties’ discretion. Thus, the formal requirements of the award outlined in Article 26 of the Arbitration Act are mandatory and are beyond the reach of the parties’ autonomy or the arbitrators’ power. The absence of these requirements is grounds for setting aside the arbitral award<\/em>.<\/em>” <\/span><\/p>\n<\/blockquote>\n\n\n\n (<\/span>See<\/span><\/i>, BARROS, Oct\u00e1vio Fragata Martins de. Como julgam os \u00e1rbitros: uma leitura do processo decis\u00f3rio arbitral, 1\u00aa edi\u00e7\u00e3o, S\u00e3o Paulo: Marcial Pons, 2017, p 211).<\/span> <\/span><\/p>\n\n\n\n According to Brazilian law, reasoning is a mandatory requirement for the validity of a domestic arbitral award. The reasoning section of the award enables the parties to understand how the <\/span>arbitrators<\/span><\/a> reached their conclusions and how the evidence was assessed. It allows the parties to confirm whether their arguments were considered or obliviated. Additionally, the reasoning is critical because it helps parties identify any flaws in the award that may justify a request for clarification. As part of the due process of law, the reasoning of arbitral decisions ensures that parties receive fair and impartial treatment (<\/span>See<\/span><\/i>, CARMONA, Carlos Alberto. Arbitragem e Processo: Um coment\u00e1rio \u00e0 Lei n\u00ba 9.307\/96. 3\u00aa ed. S\u00e3o Paulo: Editora Atlas, 2009, p. 370).<\/span> <\/span><\/p>\n\n\n\n It is noteworthy, however, that according to the case law of the Superior Court of Justice:<\/span> <\/span><\/p>\n\n\n\n Nonetheless, the Superior Court of Justice’s caselaw advises that it is vital to be cautious when evaluating the award reasoning requirement. Unlike judicial proceedings, arbitration typically does not allow for appeals, so there is no opportunity for a higher-ranked body to review and correct the decision. Additionally, it is essential to remember that arbitration is a choice made by the parties to solve disputes outside of the court system, based on the belief that an arbitral tribunal, composed of experts, will have greater availability to examine the parties’ arguments and evidence. Due to this, arbitrators have a more stringent requirement for reasoning than judges in the judicial system.<\/span> <\/span><\/p>\n\n\n\n Although it is not a universal principle, we must highlight that the arbitral award’s reasoning is a legal requirement in <\/span>Brazil<\/span><\/a> (Article 26, II of the Brazilian Arbitration Act). <\/span>Article 1482 of the French Code of Civil Procedure<\/span><\/a>, for example, follows the Brazilian pattern providing that the arbitral award must be reasoned.<\/span> <\/span><\/p>\n\n\n\n Nevertheless, foreign legislation is full of examples where the parties can waive the arbitral awards’ reasoning. For instance, the Spanish Arbitration Law (<\/span>Article 37[4]<\/span><\/a>), the Portuguese Voluntary Arbitration Law (<\/span>Article 42[3]<\/span><\/a>), the English Arbitration Act (<\/span>Section 52[1]<\/span><\/a>), the Indian Arbitration and Conciliation Act (<\/span>Section 31[3]<\/span><\/a>), and the <\/span>Singapore<\/span><\/a> Domestic Arbitration Act (<\/span>Section 38[2]<\/span><\/a>) allow for the waiver of the reasoning behind the arbitral award if agreed upon by the parties.<\/span> <\/span><\/p>\n\n\n\n In private disputes concerning property rights, parties are allowed to waive their rights if they are capable, the object is lawful, and the form follows the Law. As a result, if the foreign arbitration Law does not require mandatory award reasoning, the decision will remain valid upon the parties’ agreement. Parties can choose to do so to reduce the costs associated with the proceedings.<\/span> <\/span><\/p>\n\n\n\n In this case, it is necessary to consider whether the Brazilian Superior Court of Justice (\u201cSTJ\u201d) would recognize and enforce a foreign arbitral award without any reasoning. In the 2014 case of <\/span>Newedge v. Manoelo Fernando Garcia<\/a><\/em>, which involved a request for approval of an arbitral award rendered in the <\/span>United States<\/span><\/a> under the law of the State of New York, the STJ held that <\/span> <\/span><\/p>\n\n\n\n “<\/span>the reasoning adopted by the arbitral award<\/a> and its formal aspects follow the standards of the country where it was issued, and its conciseness is not a reason to prevent the decision’s recognition<\/em>” <\/span><\/p>\n<\/blockquote>\n\n\n\n (<\/span>See<\/span><\/i>, STJ, SEC 5692-EX, Corte Especial, Justice Ari Pargendler, DJe 09.01.2014).<\/span> <\/span><\/p>\n\n\n\n The case reported here illustrates that the award was concise, but not wholly lacking in reasoning. However, the underlying theoretical basis of the ruling suggests that the STJ may be willing to recognize a foreign arbitral award even if it lacks reasoning, provided that the <\/span>law of the proceeding<\/span><\/a> seat<\/span><\/a> allows for it.<\/span> <\/span><\/p>\n\n\n\n In the <\/span>Kanematsu case<\/a><\/em>, STJ discussed the possibility of recognizing an unreasoned foreign arbitral award. What stands out, in this case, is that only Justice Massami Uyeda’s dissenting opinion acknowledged the validity of a US arbitral award without reasoning, as long as it followed the rules of the <\/span>American Arbitration Association (\u201cAAA\u201d)<\/span><\/a>: <\/span> <\/span><\/p>\n\n\n\n “<\/span>We must stress that contrary to what the Defendant argued in its response, the absence of reasoning in the Arbitral Award is because the procedure adopted by the American Arbitration Association – AAA<\/a> allows for the issuance of an award without a statement of reasons unless the party objects, as highlighted by the Arbitrator<\/a> in his Award and the AAA<\/a>‘s Commercial Dispute Resolution Procedures. Therefore, as the requirements were complied with, the recognition of the Foreign Arbitral Award is imposed<\/em>” <\/span><\/p>\n<\/blockquote>\n\n\n\n (<\/span>See<\/span><\/i>, STJ, SEC n. 885\/EX, Corte Especial, Justice Francisco Falc\u00e3o, DJe 08.13.2012).<\/span> <\/span><\/p>\n\n\n\n Surprisingly, the panel of justices did not stress this topic any further. Hence, STJ declined to recognize the foreign Award because of the absence of an arbitration agreement (<\/span>See<\/span><\/i>, summary of the majority Opinion: \u201cCONTESTED FOREIGN AWARD. ARBITRAL TRIBUNAL. LACK OF PROOF OF ITS ELECTION. ARTICLE 37, ITEM II, OF LAW N. 9.307\/96. I – Without proof of the arbitration agreement being brought to the record, it is not possible to approve an arbitral award. II – Compliance with the provision contained in item II of article 37 of Law n. 9.307\/96. III – Homologation request denied.\u201d, SEC 885\/EX, Corte Especial, Justice Francisco Falc\u00e3o, DJe 08.13.2012), which did not expressly allow the arbitrators to render an award with no reasoning whatsoever. <\/span><\/p>\n\n\n\n ABOUT<\/strong> THE AUTHORS:<\/strong><\/p>\n\n\n\n Rafael Carvalho Rezende Oliveira<\/strong> is an Attorney of the Municipality of Rio de Janeiro.<\/strong> He is also a visiting Scholar at <\/span>Fordham University School of Law (NY), a Post-Doctor in Law at the State University of Rio de Janeiro (\u201cUERJ\u201d), a Full Professor of Administrative Law at IBMEC, a Professor of the Master and Doctorate at the Veiga de Almeida University, a Professor of the Academic Master in Law at C\u00e2ndido Mendes University, and holds a PhD in Law from Veiga de Almeida University (\u201cUVA\/RJ\u201d). <\/span><\/p>\n\n\n\n Gustavo da Rocha Schmidt<\/strong> is a Partner at <\/span>Schmidt, Louren\u00e7o & Kingston<\/strong>, and Attorney of the Municipality of Rio de Janeiro (on leave). He is also a Professor of Law at FGV Direito Rio, President of the Brazilian Center for Mediation and Arbitration (\u201cCBMA\u201d), President of the Brazilian Journal of Alternative Dispute Resolution \u2013 RBADR, Visiting Scholar at the University of Miami School of Law, and is a PhD candidate in Regulatory Law at FGV Direito Rio. He is the author of books and articles in the fields of arbitration and mediation.<\/span> <\/span><\/p>\n\n\n\n Daniel B. Ferreira<\/strong>, Ph.D, FCIArb is the CEO at the <\/span>Brazilian Center for Mediation and Arbitration – CBMA<\/a><\/strong> and a Fellow of the <\/span>Chartered Institute of Arbitrators – CIArb<\/span><\/a>. He is also Editor-in-Chief of the Brazilian Journal for Alternative Dispute Resolution, Joint Editor-in-Chief of the International Journal of Law in Changing World. He is an arbitrator, mediator, Law professor, researcher and author of books and papers in ADR and Digital Technologies.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" The article discusses the uncertainties and requirements surrounding Brazilian law regarding the confirmation and validity of foreign arbitral awards. 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Rafael Carvalho Rezende Oliveira<\/strong>, Attorney of the Municipality of Rio de Janeiro<\/strong><\/span>
Gustavo da Rocha Schmidt<\/strong>, Partner at <\/span>Schmidt, Louren\u00e7o & Kingston<\/strong>
Daniel B. Ferreira<\/strong>, Ph.D, CEO at the <\/span>Brazilian Center for Mediation and Arbitration – CBMA<\/a><\/strong><\/p>\n\n\n\n
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