Arbitration

Arbitration: An Efficient and Secure Conflict Resolution Procedure

Regina Helena Abbud*

Arbitration is a highly reliable and efficient form of settling differences, and it is being growingly resorted to in Brazil.

Arbitration is a conflict resolution procedure provided in law and which can be used for overcoming impasses as an alternative to submitting the matter in dispute to the Courts.

In order to resort to arbitration, the most practical course is the parties choosing, by mutual agreement, an Arbitration Chamber, whereupon the proceedings will comply with the rules and regulations of the institution chosen for bringing and pursuing arbitration.

Although there are currently several Arbitration Chambers in Brazil, affording a free choice by the parties, in the absence of a prior agreement concerning the Chamber to be resorted to and the form whereby arbitration proceedings will be instituted, the concerned party shall give written notice to the other party, return receipt requested, of its intent to initiate arbitration proceedings, and calling a meeting for a specified day, hour and place at which the parties will execute and deliver an arbitration agreement.

Once the Chamber and the arbitrators have been chosen, there is a standard procedure for verifying whether there are any disabilities affecting such arbitrators, which must be as impartial as magistrates. Each Chamber has a list of arbitrators, including experts in a number of specialty fields, many of them with a background in International Arbitration Tribunals.

The Arbitrators review the claims of the parties, the evidence submitted, and issue their award.

The concerned parties may subject the solution of their conflicts to the arbitration court by means of an arbitration covenant, which can take the form of (i) an arbitration clause and (ii) an arbitration covenant.

An arbitration clause is a provision related to an agreement whereby the parties agree to submit to arbitration any conflicts which may arise from such agreement. Such provision must be set forth in writing, and may be either included in the agreement itself or in a separate document which refers to the agreement itself.

An arbitration covenant is a specific agreement whereby the parties submit a given conflict to arbitration, and such agreement may be set up in or out of Court. The arbitration covenant will be set forth in a court award if and when, despite the existence of an arbitration clause, one of the parties refuses to submit itself to arbitration. In this case, the concerned party will resort to a specific judicial action, requesting the magistrate to serve process on the other party, summoning it to appear in a hearing specifically appointed for setting up the arbitration which, in such case, will become a judicial arbitration covenant. If the opposing party does not appear at the hearing, the actual award accepting the request shall apply as an arbitration covenant. This is a speedy and simple procedure and, even if an appeal is filed, such appeal will not stay the proceedings, i.e., the relevant arbitration proceedings can be initiated forthwith.

An extrajudicial arbitration covenant, on the other hand, requires the assent of the parties as to submitting the conflict to arbitration. The respective instrument may be set up privately, bearing the signature of two witnesses, or may be drawn up as a public instrument.

An arbitration proceeding affords a number of advantes, the main such advantages being:

1) a faster settlement of the dispute (setting of a term for the award which, according to its complexity, may vary from 1 to 6 months);

2) greater expertise of the arbitrators, which can be specialists in the subject matter of the dispute;

3) lower costs related to attorney fees, as a result of the shorter time involved and of the simplification of the procedures;

4) prior specification of the liability for payment of arbitration costs and expenses; and

5) confidentiality of the proceedings.

There is no scope for appeal against an arbitration award, except for clarification of decision, in the event of any contradiction, omission or obscurity.

Arbitration can result in an enormous saving in funs and in time in the settling of your company's disputes.

The technical sectors of MMAA are qualified to provide all and any advice in this matter.

The Legal Business Support section is charged with instructing clients, according to their activities and the features of each contract, as to the best applicable arbitration clause, including submittal to domestic and international Arbitration Chambers.

The General Civil Litigation section, in turn, is staffed with specialists trained in conducting all types of cases before Arbitration Tribunals. Even in the absence of an arbitration clause, these professionals will exert their very best efforts to convince the opponents of the MMAA client to accept arbitration.

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* Attorney at Manhães Moreira Advogados Associados

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