I. Introduction

International commercial arbitration has become the generally acceptable method of resolving disputes between transnational contracting parties. Business people tend to avoid the perceived uncertainty and unpredictability of foreign courts. Fear of foreign laws, lawyers and language together with loss of confidentiality, considerable expense and lengthy court proceedings have undoubtedly convince foreign traders and international business to utilize an alternative dispute resolution mechanism. Fortified by a modern treaty 1 that enforces international arbitration agreements and awards, as well as modern sets of laws 2 and rules, 3 it’s clear that international commercial arbitration has arrived.

One of the more interesting issues that does remain, however, is whether to arbitrate under the rules of an Arbitral Institution or to use an ad hoc procedure. The choice has been made more difficult since the promulgation in 1976 if the UNCITRAL Arbitration Rules – an ad hoc set of rules. In order to make an intelligent choice of institutional or ad hoc arbitration, one must appreciate the advantages and disadvantages of each. [Page12:]

Over the last ten years, a succession of major events have changed the face of arbitration in Brazil.4 On the one hand, arbitration-friendly legislation has been introduced, and on the other hand a fast-growing body of supportive case law 5 has come into existence.

(1) IMPLEMENTATION OF ARBITRATION-FRIENDLY LEGISLATION

The process of modernization was first triggered by the Brazilian Arbitration Law,6 which entered into force on 23 November 1996 and fundamentally transformed arbitration in Brazil.7 The Law was inspired by various texts, including the UNCITRAL Model Law on International Commercial Arbitration of 1985, the Spanish Arbitration Law of 1988, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 ('New York Convention'), and the Inter-American Convention on International Commercial Arbitration of 1975 ('Panama Convention').8 Unlike some Latin American States that ignored existing local procedural institutions and traditions so as to enact laws based solely on the UNCITRAL Model Law,9 Brazil retained certain features of its former system of arbitration.10

It may nonetheless be said that the Brazilian Arbitration Law endorses the principle of party autonomy underlying modern arbitration, and the restrictions placed on the role of State courts prior to and during arbitration proceedings and after the rendering of an award. The Law also keeps public policy provisions to the necessary minimum.11 In particular, the Law has overcome a number of shortcomings under the former system. First, arbitral awards rendered in Brazil were given the same effect as court decisions, which meant that it was no longer necessary for awards rendered in Brazil to be officially approved before being enforced, to ensure that the law had been properly applied. Secondly, the 1996 Law abandoned the former arrangement whereby a foreign arbitral award had to be officially approved first by the courts in the country where it was rendered 12 and then by the Brazilian Supreme Court 13 prior to its enforcement in Brazil [Page13:] (the so-called 'double homologation'). Thirdly, while maintaining the distinction between an arbitration clause and a submission agreement,14 Article 7 of the Brazilian Arbitration Law gave the Brazilian courts the power to order specific performance of an arbitration clause 15 in the event of a party's refusal to implement the clause.16

Soon after the Law was introduced, a member of the Supreme Court (Supremo Tribunal Federal) questioned the constitutionality of some of its provisions when considering a request for homologation of a foreign arbitral award rendered in Spain between Swiss and Brazilian parties. For five years, the constitutionality issue left doubts hanging over the future of the framework which the 1996 Law sought to establish. However, in 2001 the Supreme Court rendered a majority decision,17 in which the Law was held to be constitutional.18

While the introduction of the 1996 Law and the subsequent confirmation of its constitutionality were clear signs that winds of change were crossing the country, there was another area where Brazil still had to make up ground. This was the ratification of international conventions.19 Brazil would only rank as a truly arbitration-friendly country by adhering to the most important international convention in the field-the New York [Page14:] Convention.20 Under pressure from the business community,21 this was finally achieved in 2002.22

Further progress has been made in the last two years. In 2004, an amendment to the Brazilian Constitution shifted jurisdiction for the recognition of foreign arbitral awards from the Supreme Court to the Superior Court of Justice (Superior Tribunal de Justiça) ('STJ').23 This means that foreign arbitral awards now need only to be 'homologated' by the STJ before being enforced in Brazil.24 The aim of this reform was to speed up the process of recognizing foreign arbitral awards in Brazil.25

There have also been developments on the controversial issue of the validity of arbitration agreements signed by State-controlled companies.26 New case law has been accompanied by legislation expressly recognizing the ability of State entities to submit to arbitration in both public private partnership agreements 27 and public concession agreements.28 A further step in the same direction was made on 17 November 2004 when the Brazilian Congress rejected a bill proposing a change to the Constitution that would have prevented arbitration from being used to resolve disputes involving public entities.29

(2) EMERGENCE OF A GROWING BODY OF CASE LAW

Good laws are of little avail if they are not correctly construed and applied by State courts.30 Hence, the construction of a new and modern system of arbitration in Brazil [Page15:] could not take place without the allegiance of the State courts.31 The Brazilian courts have indeed had to decide on a number of important issues since the introduction of the 1996 Law. Although there is still much to be done to consolidate achievements made so far, and further interpretation of issues remaining open would seem needed,32 a commentator writing in 2003 observed that 'a quick review of recent judgments will lead to the conclusion that arbitration has won and will continue to win its battle for recognition, since the large majority of Brazilian judges have no hesitation or difficulty in interpreting the Law'.<footnotre_33> As we shall see, the truth of this statement has been borne out by the increasing number of decisions favourable to arbitration that have been rendered since then. It is worth mentioning some of these decisions.34

In 2003, the STJ for the first time addressed the issue of the validity of an arbitration clause ousting the jurisdiction of a State court. The STJ held that, since the parties had agreed to refer disputes to arbitration, their choice should be respected and disputes should thus be dealt with directly by the arbitral tribunal.35

In the first case concerning the recognition of a foreign arbitral award dealt with by the STJ after the transfer of jurisdiction from the Supreme Court in 2004, the STJ homologated the award as the challenging party had participated in the arbitration proceedings and did not object to their validity, even though there was no written agreement to arbitrate as required by the New York Convention. Thus, the STJ recognized the enforceability of an implied arbitration agreement due the 'unmistakable behaviour of the parties'.36

The STJ likewise homologated the award in the second case brought before it, dismissing the opposing party's allegation that a provision of the 1916 Civil Code 37 fell within the scope of public policy,38 which can serve as a basis for refusing the recognition of foreign arbitral awards in Brazil.

In 2005, the STJ rendered a decision affirming the retroactive application of the provisions of the 1996 Brazilian Arbitration Law governing the effects of an arbitration agreement,39 notwithstanding a prior ruling by the same court in which it was held that [Page16:] the Law was intended to govern only disputes arising out of agreements executed after its enactment.40

Developments of such force and speed have rarely been seen elsewhere.41 Unlike other countries in Latin America, where the development of arbitration has followed a pendular movement and been affected by external factors such as economics and politics,42 Brazil has advanced with greater consistency.43 The result has been the creation of a modern, stable, predictable and reliable system of arbitration that has already borne concrete results reflected in the increasing use of arbitration in Brazil.

B. Increasing use of ICC arbitration

The changes described above have, understandably, led to greater use of ICC arbitration too, as can be seen from its historical development (1) and the current number of Brazilian parties and arbitrators and cases in which the place of arbitration is located in Brazil (2).

(1) HISTORICAL DEVELOPMENT

Cases involving Brazilian parties were extremely sparse in the early years of ICC. It has been reported that up to the end of 1949 only four cases involving Brazilian parties were submitted to ICC and in only one of these was the procedure conducted from start to finish, while the three others went no further than the initial request.44 Although the situation began to change in the 1950s, it was still far from what could be expected of a country with Brazil's level of economic and trade activity. It is reported that 'from 1950 up to the end of 1992, no less than 44 cases involving Brazilian parties have been brought to the ICC, about half of which show domestic parties as Claimants'.45 During the 1970s and 1980s, there were some large ICC cases relating to public tenders and State contracts in which Brazilian parties were involved, but they remained few in number.46

It is in the last ten years that a dramatic development has been seen. In the space of only five years, between 1995 and 1999, 50 Brazilian parties were involved in ICC proceedings, 17 as claimants and 33 as respondents. In the subsequent five years, from 2000 to 2004, a total of 158 Brazilian parties (55 claimants and 103 respondents) were involved in 56 cases, which is more than the total number of cases involving Brazilian parties filed between 1950 and 1992. These figures show that arbitration in Brazil has gained enormously in popularity and recognition over recent years.[Page17:]

This growth has in turn given rise to an increase in the number of cases in which the place of arbitration is located in Brazil (20 cases during the period 1995-2005, 18 of which between 2000 and 2005 alone) and the number of Brazilian arbitrators (70 appointed or confirmed during the period 1995-2005, 62 of whom were appointed or confirmed after year 2000).

(2) Recent years

If we look in more detail at the figures since 1995, we see that there were four Brazilian parties involved in the cases filed with the International Court of Arbitration in 1995. This figure rose to 12 in 1997, 26 in 1999, 28 in 2001, 30 in 2004 and 35 in 2005.

Thus, as far as Brazilian parties are concerned, in 1995 four Brazilian parties were involved in cases filed with ICC. In 1997 that figure rose to 12 and then to 26 in 1999, 28 in 2001, 30 in 2004 (representing 15.63% of the overall number of Latin American parties involved) and 35 in 2005. In 2006, 67 Brazilian parties were involved in the cases filed with ICC, making Brazil the fourth country in terms of number of parties, after the USA, France and Germany. The number of cases involving only Brazilian parties has likewise increased, from a single case in 2000, to two cases in 2001, four cases in 2003, and six cases in 2004.

As the number of cases involving a Brazilian ingredient rose and the legal framework for arbitration in Brazil took a more favourable turn, Brazil was increasingly considered as a suitable place of arbitration. Between 1995 and 2000, in only two cases was the place of arbitration situated in Brazil, whereas between 2001 and 2005 this figure rose to 18. In 2004 alone, ten cases were seated in Brazil, representing 26% of the total number of cases involving Latin American parties. Although there was a drop in 2005, with only one of the cases filed during that year having its seat in Brazil, the prior trend resumed in 2006 with as many as 14 cases seated in Brazil, making Brazil the sixth most frequently selected country for the place of arbitration.

The number of Brazilian arbitrators appointed or confirmed in ICC proceedings has similarly risen, from nil at the end of the 1990s to eight in 2000 and 16 in 2003. In 2004, the number of Brazilian arbitrators appointed or confirmed reached 22, representing 23% of the total number of arbitrators from Latin America. In 2006, this figure rose further 47 to 31, as a result of which Brazil has become the Latin American country with the largest number of arbitrators acting in ICC proceedings.

As a result of the development described above, Brazil today occupies the second position in ICC arbitration in Latin America, based on the number of Brazilian parties and arbitrators and the number of times the place of arbitration was situated in Brazil.48

II. Definitions

Although recent, ICC's experience of arbitration in Brazil has already proved to be extremely rich. Through interplay between the ICC Rules of Arbitration ('ICC Rules')49 and the Brazilian Arbitration Law, ICC arbitration has contributed to the development of [Page18:] arbitration as a whole in Brazil. Below we shall consider first the nature of this contribution and then the compatibility between the ICC Rules and the Brazilian Arbitration Law, and inquire whether use of the ICC Rules may make arbitrations conducted in Brazil more efficient.

A. Contribution of ICC arbitration to the development of arbitration in Brazil

As the number of ICC cases involving a Brazilian ingredient has increased, Brazilian courts have increasingly been required to decide on important issues in relation to these cases. Thus, cases administered under the ICC Rules have helped shape an important body of Brazilian arbitration case law. These precedents have in turn helped educate both lower courts and arbitration practitioners in Brazil. Some of these decisions will be discussed below.50

(1) RETROACTIVE EFFECT OF THE BRAZILIAN ARBITRATION LAW

In a recent case,51 the STJ upheld the decision of the Court of Appeal of the State of Rio de Janeiro dismissing a lawsuit brought in violation of an ICC arbitration clause set forth in the agreement signed by the parties. The STJ held that although some provisions of the Brazilian Arbitration Law have the characteristics of substantive law, they are fundamentally procedural, and therefore applied to ongoing cases as soon as they entered into force. The STJ further ruled that a court should dismiss a lawsuit, without prejudice to the merits, if an arbitration clause is invoked after the entry into force of the Brazilian Arbitration Law, even though the contract containing the arbitration clause was signed before the Law came into force.

In so deciding, the STJ overruled a prior decision rendered by the same Court that held that the Law applied only to disputes arising out of agreements executed after its enactment.52

(2) SUBMISSION AGREEMENTS NO LONGER NECESSARY IN INSTITUTIONAL ARBITRATIONS

The Brazilian Arbitration Law maintained the distinction between an arbitration clause and a submission agreement (compromisso).53 Scholars and courts soon raised the question of whether a submission agreement was necessary where the arbitration clause referred directly to the method to be used for constituting the arbitral tribunal or did so indirectly by referring to the rules of an arbitration institution like ICC.54[Page19:]

It was an ICC arbitration that gave rise to the first and leading case relating to the effects of an arbitration clause in Brazil after the entry into force of the Brazilian Arbitration Law.55 The parties here had included an ICC arbitration clause in an international agreement. One of them, however, objected to the arbitral tribunal's jurisdiction, on the grounds that no submission agreement had been signed. It also alleged that Article 7 of the Law required the district court to compel arbitration and that the same court should choose the chairman of the arbitral tribunal whenever the parties disagree. The district court held that an arbitration clause existed, and that the parties were required to arbitrate, but added that the ICC clause did not bind the parties since they had not executed a submission agreement.56

The Court of Appeal of the State of São Paulo reversed the district court's decision, holding that an ICC arbitration clause providing for disputes to be referred to arbitration was enforceable without any need for a specific submission agreement.57 The Court of Appeal further held that once an arbitration clause establishes rules for the constitution of the arbitral tribunal or makes reference to institutional arbitration rules that incorporate such a mechanism (cláusula cheia), a submission agreement is not necessary and the State court must cease to intervene. This important precedent was subsequently upheld by the Supreme Court,58 and the issue now appears to have been finally settled.

(3) JURISDICTION OF BRAZILIAN COURTS IN RELATION TO FOREIGN ARBITRATIONS

The case mentioned above, in which the place of arbitration was New York City, gave rise to another important decision 59 relating to a partial award on jurisdiction. Dismissing the objections raised by the respondents, the arbitral tribunal declared in its partial award that it had jurisdiction to decide upon the merits of the case. The respondents challenged this decision in court, seeking a declaration that the partial award on jurisdiction was null and void.60 They also sought an injunction ordering the arbitration to be stayed pending a decision on the partial award, so as to prevent the arbitral tribunal from rendering any additional decision. The district court dismissed the application for a stay of the arbitral proceedings. An interlocutory appeal was lodged with the Court of Appeal of the State of São Paulo, which upheld the district court's [Page20:] decision.61 In particular, the Court of Appeal decided that it had no jurisdiction to determine the stay of arbitral proceedings taking place in a foreign country, and that it lacked jurisdiction to review matters settled by foreign arbitral awards.62 According to the Court, foreign arbitral awards can only be reviewed by the courts that have jurisdiction to recognize such awards 63 and such review is in any case limited to the formal aspects of such awards.

(4) CHOICE OF LAW APPLICABLE TO THE MERITS

In 2002,64 the Court of Appeal of the State of São Paulo was required to decide on the validity of an ICC arbitration clause in an agency agreement that contained a choice-of-law clause providing for the application of French law to the merits. The respondent alleged that the arbitration clause was invalid because it provided that the dispute would be solved in accordance with French law, whereas the obligation had to be executed in Brazil and, according to Brazilian conflict-of-law rules, the merits (i.e. performance of the obligation) should be decided in accordance with Brazilian law alone. The Court of Appeal reversed the district court's decision and decided that, since the parties had clearly agreed to refer their disputes to arbitration, the jurisdiction of the arbitral tribunal should be upheld. The Court of Appeal further recognized that the parties could freely choose the law applicable to the merits, since Article 2(1) of the Brazilian Arbitration Law expressly allows this by providing that '[t]he parties may freely choose the rules of law applicable in the arbitration provided that their choice does not violate good morals and public policy'65 and Brazilian law contains no mandatory rule on this matter.

(5) ARBITRATION AGREEMENTS WITH STATE-CONTROLLED COMPANIES

An ICC case involving a mixed-capital company gave rise to a string of parallel proceedings in the courts of the State of Paraná in Brazil, which held that the arbitration clause at issue was void.66 The legal battle surrounding this case was immortalized in writing by many commentators, who pointed to its negative impact on arbitration in [Page21:] Brazil.67 The case has, however, had the merit of starting a very interesting debate about the issue of the validity of arbitration clauses signed with State-controlled entities, particularly with mixed-capital companies.

A second ICC case concerning the same issue gave rise to an important decision in 2005. After conflicting decisions by courts of appeal in different Brazilian states over the validity of arbitration agreements signed with State-controlled companies under Brazilian law, the STJ 68 issued its first ever decision on the arbitrability of disputes involving State-owned companies, expressly recognizing the possibility for those entities to validly submit to arbitration.69

The case began with a State-controlled company filing a lawsuit relating to a power purchase agreement containing an ICC arbitration clause. The respondent objected to the lawsuit, invoking the existence of the arbitration clause, and in its turn filed a request for arbitration with ICC. The State-controlled company alleged that, as a State-controlled company, it was under no obligation to resort to arbitration, but rather had the option of doing so. It therefore sought an injunction in the Brazilian courts. The district court immediately ordered the stay of the arbitration and decided that the original lawsuit should proceed. This decision was confirmed by the Court of Appeal of the State of Rio Grande do Sul. The respondent then filed an appeal before the STJ, arguing that the State-owned company had illegally disregarded the existence of a valid arbitration clause which the parties had agreed and the effects of which were recognized by the Brazilian Arbitration Law. In a unanimous decision, the STJ confirmed that mixed-capital companies are governed by the same rules as apply to private companies, and are thus fully capable of entering into valid arbitration agreements. Accordingly, the STJ upheld the validity of the arbitration clause and referred the parties to arbitration under the aegis of ICC.

B. Interplay between the ICC Rules and practice and the Brazilian Arbitration Law

Arbitrations held in Brazil are in principle conducted in accordance with the provisions of the Brazilian Arbitration Law.70 However, when the parties have agreed to resort to ad hoc arbitration rules or institutional rules, then these rules apply subject to the mandatory provisions of the Brazilian Arbitration Law. The Brazilian Arbitration Law expressly allows parties to have their arbitration conducted pursuant to institutional rules. Article 5 of the Law provides that '[i]f the parties, in the arbitration clause, select the rules of an arbitral institution or specialized entity, the arbitral proceedings shall be commenced and conducted pursuant to such rules; it being also possible that the parties determine in the arbitration clause itself, or in a separate document, the agreed procedure for instituting the arbitral proceedings'. Further, Article 21 of the Law [Page22:] provides that '[t]he arbitral procedure shall comply with the procedure agreed upon by the parties in the arbitration agreement, which may refer to the rules of an arbitral institution or specialized entity . . .'.71

Such express provision for institutional arbitration, together with the growth of arbitration in Brazil, has encouraged greater use of institutional arbitration.72 It must be said that the choice of institution is very important, for the institution itself and the arbitration system it offers, which is generally structured through a set of rules, must be reliable and well tested through time and experience. In this regard, the ICC system brings a number of benefits that single it out.73

If the parties choose to conduct their arbitration in Brazil under the ICC Rules 74 or, pursuant to Article 14 of the ICC Rules, the International Court of Arbitration fixes the place of arbitration in Brazil, then the conduct of the proceedings and the resolution of the dispute become subject to two different bodies of rules: the ICC Rules chosen by the parties and the mandatory provisions of the Brazilian Arbitration Law or those provisions of the Law that, when the ICC Rules are silent, the parties have agreed upon or the Arbitral Tribunal has deemed to be applicable.75 Although the Brazilian Arbitration Law upholds the principle of party autonomy with respect to both the rules applicable to the proceedings 76 and the rules applicable to the merits of the dispute,77 the mandatory provisions in the Law may not be excluded by agreement of the parties and thus remain applicable.

Given the great freedom accorded to the parties under both the ICC Rules and the Brazilian Arbitration Law, there is, of course, little doubt that the ICC Rules are compatible with the Law.78 However, the interaction between the ICC Rules and the Brazilian Arbitration Law nonetheless gives rise to a number of questions. How does this interaction work in practice? Can it be said that the ICC Rules play a back-up or supportive role, or that they complement the Brazilian Arbitration Law? Lastly, are there any provisions under the Brazilian Arbitration Law that appear to clash with the ICC Rules? And if so, does this clash really pose any insurmountable problems?

From a practical standpoint, the ICC Rules are clearly conducive to greater effectiveness in the conduct of arbitrations in Brazil and in this respect complement the Brazilian Arbitration Law. While there do not appear to be any irreconcilable conflicts between the [Page23:] two, the Brazilian Arbitration Law deals with issues that have not been expressly foreseen in the ICC Rules or that entail a different approach, and this has in turn enriched the application of the ICC Rules. We shall consider both of these aspects below in light of the experience of ICC cases involving Brazilian parties where the place of arbitration was situated in Brazil. For the sake of clarity, we shall look at the impact of the ICC Rules on the Brazilian Arbitration Law in relation to (i) the arbitration agreement, (ii) the arbitral tribunal, (iii) the arbitral proceedings and (iv) the arbitral award.

(1) ARBITRATION AGREEMENT

(a) Arbitration clause and submission agreement

As noted above, the Brazilian Arbitration Law maintained the distinction between an arbitration clause and a submission agreement. Hence, although an arbitration agreement executed by capable parties and relating to patrimonial or disposable rights (see Article 1 of the Brazilian Arbitration Law) obliges the parties to refer disputes to arbitration, there is still, in principle, a need to sign a submission agreement once a dispute has arisen.79

The ICC Rules make no such distinction, but rather refer broadly to the arbitration agreement, regardless of whether it relates to present or future disputes. The 1985 UNCITRAL Model Law on International Commercial Arbitration similarly treats all arbitration agreements alike. One might ask, therefore, whether the different approaches taken by the Brazilian Arbitration Law and the ICC Rules could lead to incompatible results. In our view, the answer appears to be no. Brazilian scholars and judges have clarified the interaction between Articles 6 and 7 of the Brazilian Arbitration Law, which require a submission agreement to be signed, and Article 5 of the same Law, which gives pre-eminence to institutional rules. The prevailing conclusion is that when parties resort to institutional arbitration and the rules of the chosen institution provide for the constitution of the arbitral tribunal without the execution of a submission agreement, then there is no need for a submission agreement.80 In other words, 'a compromisso will only be required both in domestic and international arbitrations if not explicitly or implicitly contracted out by the parties, and thus, its real practical relevance has been substantially reduced'.81 Therefore, if the parties have chosen the ICC Rules for the conduct of an arbitration, then the fact that the ICC Rules do not require a submission agreement to be executed will mean that the parties have 'implicitly contracted out' of this requirement.82

In short, parties wishing to use ICC arbitration in Brazil are no longer required to execute a formal submission, as the ICC Rules provide the means for constituting the [Page24:] arbitral tribunal and setting in motion the proceedings. This therefore removes the risk of parties resorting to Article 7 of the Brazilian Arbitration Law and thus reduces the level of State court intervention. Traditionally, the Terms of Reference defining the nature and scope of the dispute in ICC cases was seen as achieving the same result as the compromisso required by the Brazilian Arbitration Law.83

(b) Prima facie examination of the arbitration agreement

The Brazilian Arbitration Law allows a respondent to raise objections during the course of arbitral proceedings over the existence, validity or effectiveness of the arbitration agreement. An objection of this nature will not normally prevent the proceedings from continuing and it will be for the arbitral tribunal to deal with the objections and decide whether or not to retain jurisdiction.84

Under Article 6(2) of the ICC Rules, when objections are raised over the existence, validity or effectiveness of an arbitration agreement, or when a respondent has not filed an answer, the ICC International Court of Arbitration decides on a prima facie basis whether an agreement to arbitrate under the ICC Rules may exist, allowing the proceedings to go forward. While this is an administrative decision (which means that if the Court rules that the case should not proceed, the parties are free to ask a competent court to rule on whether there is a binding arbitration agreement),85 it stops an arbitration from continuing if the ICC Court is not satisfied that an ICC arbitration agreement may exist. Hence it is a way of filtering frivolous claims made against respondents without any prima facie evidence that an arbitration agreement may exist with respect to them. The purpose of Article 6(2) is therefore to allow flagrant instances of abuse to be excluded at the very outset.86 It is a valuable provision allowing a preliminary control to be made before the arbitral tribunal embarks on the conduct of the arbitral proceedings. No similar provision exists in the Brazilian Arbitration Law for ad hoc arbitrations. This is therefore an example of the added value offered by the ICC Rules.

(2) ARBITRAL TRIBUNAL

(a) Constitution of the arbitral tribunal

The ICC Rules provide that, when the parties are unable to agree on the number of arbitrators, the International Court of Arbitration shall appoint a sole arbitrator, save when it appears to the Court that the dispute is such as to warrant the appointment of [Page25:] three arbitrators.87 When a dispute is referred to a three-member arbitral tribunal, each party nominates an arbitrator-who then must be confirmed by the Secretary General or the Court 88-and the third arbitrator, who acts as chairman, is appointed by the Court, unless the parties have agreed upon another procedure for such appointment.89

Under the Brazilian Arbitration Law, the parties are free to determine both the number of arbitrators (provided it is uneven) and how the arbitral tribunal will be constituted. They may alternatively adopt the rules of an arbitral institution to deal with this matter.90

One could therefore say that the ICC Rules are broadly compatible with the Brazilian Arbitration Law in this respect.

It should be noted, however, that the ICC Rules contain a very important provision that has no equivalent in the Brazilian Arbitration Law. The provision in question is Article 10, which deals with the constitution of arbitral tribunals in multiparty arbitrations. It was introduced following the decision of the French Court of Cassation in the Dutco case.91 According to Article 10, where there are multiple parties, whether as claimants or respondents, and where the dispute is referred to three arbitrators, the multiple claimants, jointly, and the multiple respondents, jointly, shall nominate an arbitrator.92 The purpose of this provision is to respect the rights of multiple parties to participate in the constitution of the arbitral tribunal. If the parties are unable to agree on a joint nomination, the International Court of Arbitration may appoint each member of the tribunal and shall designate one of them to act as chairman.93

(b) Attributes required of arbitrators

According to Article 13(6) of the Brazilian Arbitration Law, arbitrators are required to act impartially, independently,94 competently, diligently and discreetly. Under the ICC Rules a prospective arbitrator must be and remain independent of the parties, and also be able and available to act in a given case.95 Further, the ICC Rules also provide that the arbitrators shall act fairly and impartially.96 Thus, there are no major differences between the Brazilian Arbitration Law and the ICC Rules with respect to the general standards required of arbitrators.

However, there is no provision in the Brazilian Arbitration Law requiring sole arbitrators or chairmen of arbitral tribunals to be of a nationality other than those of the parties. Yet this is a crucial requirement where the parties are of different nationalities, as it ensures [Page26:] the neutrality of the sole arbitrator or the chairman. Even in domestic disputes involving only Brazilian parties, such a requirement might nonetheless be of significance if, for instance, one of the Brazilian parties feels more at ease in having a chairman of a different nationality.97

(c) Disclosure obligations

The Brazilian Arbitration Law provides that, before being appointed, prospective arbitrators are required to disclose any facts likely to give rise to justifiable doubts as to their impartiality and independence.98

Article 7 of the ICC Rules is compatible with the Brazilian Arbitration Law, to the extent that it also requires prospective arbitrators to disclose any facts that, in the eyes of the parties, might give rise to justifiable doubts over the arbitrator's independence. The phrase 'in the eyes of the parties' sets a disclosure standard that is arguably even stricter than under the Brazilian Arbitration Law. Indeed, this standard-the so-called, 'subjective disclosure standard' as opposed to the 'objective disclosure standard'-is arguably the broadest disclosure standard in any set of arbitration rules, since it requires potential arbitrators to stretch their minds to imagine how facts that they may consider innocuous could be viewed by the parties. In this regard, any doubt should be resolved in favour of disclosure.99

Under the ICC system, arbitrators are given the opportunity to disclose facts prior to their confirmation, and equally parties are given an opportunity to comment on those disclosed facts in order for the Court to decide whether or not to confirm the prospective arbitrator. In practice, the Secretariat of the ICC Court requires every prospective arbitrator to fill out two forms: a curriculum vitae and a 'Declaration of Acceptance and Statement of Independence'. Once the nominee has completed and returned both forms, the Secretariat circulates them to the parties and, if a disclosure has been made, invites the parties' comments. If no comments are received, then the nominee may be confirmed by either the Court or the Secretary General. If any party objects to the nominee's confirmation, the Court decides whether or not to confirm the nominee in light of the disclosure and the parties' comments.100 In short, both the ICC disclosure standard and its application in practice ensure that arbitrators have an opportunity (and a duty) to disclose certain facts, and the parties an opportunity to comment on them.

An interesting feature of the Brazilian Arbitration Law is the possibility offered by Article 14 of preventing persons from taking up office as arbitrators for the same reasons that would prevent a judge from hearing a case under Brazilian law. These reasons may concern the parties or the dispute.101 The ICC Rules do not have an equivalent provision, although it is a reason that could fall within the broad requirement of independence mentioned above.[Page27:]

(d) Challenge of arbitrators

A number of interesting issues arise in connection with the challenge of arbitrators.

First, the Brazilian Arbitration Law sets forth that parties who wish to challenge an arbitrator shall do so at the first opportunity after the proceedings have started.102 This leaves some uncertainty over the exact time limit for making a challenge, once a party has become aware of the circumstances that may serve as a ground for a challenge.103

Under the ICC Rules, for a challenge to be admissible, it must be filed by a party within 30 days from receipt by that party of the notification of the appointment or confirmation of the arbitrator, or within 30 days from the date when the party making the challenge became aware of the facts and circumstances on which the challenge is based if such date is subsequent to the receipt of such notification.104 Challenges made after the 30-day deadline are time-barred. The ICC Rules thus offer the advantage of predictability with respect to the time frame for filing challenges, thereby limiting the impact of challenges on the conduct of the proceedings.

A second interesting issue concerns the body empowered to decide upon challenges. The Brazilian Arbitration Law gives this power to the arbitral tribunal itself.105 If the challenge is granted, the arbitrator will be replaced. If not, the proceedings will continue normally, although the challenging party has the possibility of having the decision reviewed in an action for setting aside an award under Article 33 of the Law.106 The Brazilian Arbitration Law differs here from the UNCITRAL Model Law on International Commercial Arbitration, Article 13(3) of which allows for the review of challenges directly by courts.107

Under the ICC Rules, challenges are decided by the International Court of Arbitration 108 and its decision is final.109 Although, therefore, there will be no further recourse before the ICC Court, a party is not deprived of further judicial recourse to which it is entitled as a matter of law.110 Hence, the finality of the ICC Court's decision is perfectly consistent with recourse to the courts, as provided in Article 33 of the Brazilian Arbitration Law.

In practice, when a party files a challenge under the ICC Rules, the Secretariat invites comments from all the arbitrators and the non-challenging party within a specified time [Page28:] frame, which is generally 15 days. Upon receipt of these comments or the expiry of the time limit, the ICC Court decides upon the challenge at its monthly plenary session.111 As a result, challenges in ICC cases are generally decided in less than two months of their being filed, which again adds to the predictability of the process.

(e) Replacement of arbitrators

Article 16 of the Brazilian Arbitration Law deals with the replacement of arbitrators.112 It expressly mentions that parties may adopt the rules of an arbitral institution for this purpose.113 If, however, the parties have not made any provision for the replacement of arbitrators, the procedure described in Article 7 of the Law will apply, unless the parties have ruled out the possibility of an arbitrator being substituted.114 Article 7 requires an application to be made to the courts for the reconstitution of the arbitral tribunal, which could substantially delay the proceedings.

Here, as elsewhere, the ICC Rules aim to provide a solution that causes the least possible disruption. Thus, when an arbitrator is replaced, the ICC Court has discretion to decide whether or not to follow the original nominating process. Although this rule is rarely applied, as the Court generally invites the parties to choose a new arbitrator, it serves a valuable purpose in helping to avoid abuse that would unnecessarily affect the resumption of the arbitration.115 The ICC Rules also allow the arbitral tribunal to determine whether and to what extent prior proceedings shall be repeated before the reconstituted arbitral tribunal. If the proceedings have already been closed,116 the Court may, rather than replace an arbitrator who has died or been removed, decide that the remaining arbitrators will continue the arbitration alone.117 As for the grounds upon which replacements are made, the ICC Rules and the Brazilian Arbitration Law contain very similar provisions. However, the ICC Rules differ from the Brazilian Arbitration Law in providing that an arbitrator's resignation shall take effect only when it has been accepted by the Court. As noted by scholars, this provision is intended to prevent abusive resignations, for possibly partisan reasons;118 and is based on the premise that when arbitrators agree to act in ICC arbitrations they assume a number of obligations vis-à-vis the parties and the institution from which they cannot be discharged without reason. Accordingly, the ICC Court retains the power to decide whether a resignation, for whatever reasons it may be made, should be accepted or not.

The ICC Rules also contain an interesting provision regarding the replacement of an arbitrator who is de jure or de facto prevented from fulfilling his or her functions, or who is not fulfilling his or her functions in accordance with the ICC Rules or within the prescribed time limits. In such situations the Court can decide to replace the arbitrator on its own initiative, so as to ensure that the proceedings continue normally and [Page29:] without disruption. As in the case of challenges, the Court's decisions on replacements are of an administrative nature.119

(f) Exclusion of liability

The ICC Rules contain a general provision excluding the liability of arbitrators acting in ICC proceedings. The provision says that arbitrators shall not be liable to any person for any act or omission in connection with the arbitration.120 As far as the Brazilian Arbitration Law is concerned,121 it is regarded as giving arbitrators the same immunities from civil liability as are given to judges under Brazilian law.122 Judges can be held liable for damages only in a very limited set of circumstances.123

It goes beyond the scope of this article to suggest how the Brazilian Arbitration Law and the ICC Rules will interact in practice, especially if one thinks of the wide variety of possible situations. It will be up to the Brazilian courts to set limits to the application of these rules when deciding on individual issues. It should be noted that when the exclusion of liability clause was drafted for the ICC Rules, the ICC Commission on Arbitration was well aware that arbitrator immunity could differ from one country to another and for this reason broad language was used to enable the clause to be applied as widely as the applicable law might allow.124

(3) ARBITRAL PROCEEDINGS

(a) Commencement of the arbitration

According to the Brazilian Arbitration Law, the arbitration commences when the arbitrators accept their appointment. When parties resort to institutional arbitration, the commencement of the proceedings is determined in accordance with the applicable institutional rules.125 Under the ICC Rules, the date of commencement is the date when the request for arbitration is received by the Secretariat of the International Court of Arbitration.126 The clarity of this provision offers the parties greater certainty in instances where the date of commencement is important, as when a party needs to comply with a particular statute of limitations under the applicable law.127

The date of commencement also has an important bearing on the ensuing proceedings under Brazilian law, as it marks the beginning of the time limit for rendering the award. This is set at six months in the Brazilian Arbitration Law, although the parties may agree otherwise either expressly or implicitly by referring to institutional rules that contain different time limits.128[Page30:]

(b) Consolidation of proceedings

The Brazilian Arbitration Law says nothing about the possibility of consolidating separate arbitral proceedings into a single arbitration. Therefore, unless the parties have specifically agreed to this possibility, it is rather unclear whether cases can be consolidated. Consolidation can offer greater efficiency and cost-effectiveness by avoiding the costs of parallel proceedings and the risk of potentially contradictory or inconsistent decisions. This is why legislators and arbitral institutions have from time to time been called upon to provide mechanisms for the possible consolidation of related arbitrations.129

The ICC Rules expressly provide that, when a party submits a request for arbitration in connection with a legal relationship in respect of which arbitration proceedings between the same parties are already pending under the same Rules, the International Court of Arbitration may, at the request of a party, decide to include the claims contained in the new request in the pending proceedings so long as that the Terms of Reference have not been signed or approved by the Court.130 Provided the conditions set out in Article 4(6) of the ICC Rules are met, the Court may order consolidation notwithstanding a party's objections.131

(c) Consolidation of claims arising out of different agreements

The Brazilian Arbitration Law does not address the situation in which the claims referred to arbitration arise out of different contracts or agreements, in other words multi-contract situations. As far as ICC arbitration is concerned, current practice suggests that it is possible for a single arbitration to proceed on the basis of multiple contracts if three criteria are fulfilled, namely (1) all the contracts have been signed by the same parties,132 (2) all the contracts are related to the same economic transaction, and (3) the dispute resolution clauses contained in the contracts are compatible.133 Given the variety of circumstances found in ICC cases, the Court understandably decides whether or not to consolidate claims arising out of different agreements on a case-by-case basis.134 The possibility of consolidating proceedings shows how the Court's role has evolved in keeping with the growing complexity of international arbitration. Indeed, arbitral proceedings sometimes require solutions that, although not foreseen by the parties, are necessary to allow for the proper administration of justice.

(d) Joinder of third parties

There is no reference in the Brazilian Arbitration Law to the possibility of joining third parties to ongoing arbitral proceedings. It might therefore be assumed that the joinder of third parties is not allowed, save when the parties have expressly agreed on joining a third party or have resorted to institutional arbitration that recognizes such possibility.[Page31:] As with consolidation, the joinder of third parties may sometimes be desirable to avoid the commencement of a new and parallel arbitration against the third party and to ensure efficient and proper administration of justice. As seen above, if parallel proceedings are introduced, this creates a risk of inconsistent results and leads to unnecessary cost and delay in the settlement of disputes involving all the parties concerned.

ICC practice in this area has recently evolved,135 and the International Court of Arbitration may now join new parties to the proceedings, notwithstanding the disagreement of one or more parties involved in the arbitration, provided the following conditions are met: (1) the third party to be joined is a signatory to the agreement containing the arbitration clause on the basis of which the request for arbitration was filed;136 (2) there are specific claims raised against the third party; and (3) no steps have been taken towards the constitution of the arbitral tribunal.137 Again, given the variety of circumstances found in ICC cases, the Court understandably decides whether or not to join a third party to ongoing proceedings on a case-by-case basis.

(e) Interim measures

When faced with a request for interim measures, arbitrators in Brazil traditionally requested the courts to order and enforce such measures.138 The Brazilian Arbitration Law states that an arbitral tribunal may request interim measures from the competent state court.

Discussion, however, continues over such issues as whether a party can apply directly to a court for interim measures,139 and whether arbitrators have the power to order interim measures and, if so, under what circumstances. The respective powers of arbitrators and courts in relation to interim measures and the circumstances in which they may be ordered are indeed 'hotly debated issues'.140 The statute does not provide answers to certain questions, such as whether jurisdiction to make or modify certain decisions pertaining to protective measures during arbitration proceedings lies with the courts or the arbitral tribunal.141 The prevailing trend seems to be towards recognizing the arbitrators' power to order interim measures in Brazil, with the courts' assistance being sought merely for the enforcement of the measures ordered.142

The ICC Rules provide clear and sound answers to both questions. They state that before the file is transmitted to the arbitral tribunal, and in appropriate circumstances [Page32:] even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures and such application shall not be deemed to be an infringement or a waiver of the arbitration agreement.143 This provision cannot fall foul of the Brazilian Arbitration Law, since the latter is silent on the question. Hence, the ICC Rules could be said to complement the Brazilian Arbitration Law on this matter, making it clear that parties may have recourse to State courts in connection with a request for interim or conservatory measures prior to the constitution of the arbitral tribunal.

Further, the ICC Rules provide that, unless the parties have otherwise agreed, the arbitral tribunal may, at the request of a party, order any interim or conservatory measures it deems appropriate.144 As the Brazilian Arbitration Law does not expressly forbid arbitrators to issue interim or conservatory measures and current scholarly thinking is in favour of their having such power, the ICC Rules are in keeping with the prevailing view on the question.145

(f) Conciliation

The Brazilian Arbitration Law requires arbitral tribunals to try to help parties reconcile their differences at the beginning of the proceedings,146 and refers in this regard to Article 28 of the Law, which recognizes the possibility of rendering an award by consent.147 The question remains as to whether it is appropriate, or even feasible, for arbitrators to become conciliators during the same proceedings.148 This would be unthinkable in some legal systems, such as the US, where the two roles are clearly distinct. There are other countries, however, for instance in Asia,149 parts of Latin America 150 and German speaking countries 151 where this is common practice. In Latin American countries it is thought that insofar as arbitrators are considered as judges and judges are often required to try to bring the parties together so as to avoid further litigation, arbitrators too have a conciliatory role.

Given that the ICC Rules adopt a universal approach to the proceedings, they lay down general rules which may apply irrespective of local or cultural circumstances. They therefore do not contain any provision dealing with the arbitrators' power (or lack of power) to use conciliation in a dispute submitted to arbitration.[Page33:]

(g) Language of the arbitral proceedings

In international arbitration, the issue of the language or languages of the proceedings is extremely important as it may have significant practical consequences for the parties. It not only affects the possible need for translation and interpretation (which can be very costly), but may also restrict the parties' choice of arbitrators and counsel.152 If the parties have not made any provision with regard to language, there is a potential risk of dispute, and the Brazilian Arbitration Law, unlike the UNCITRAL Model Law on International Commercial Arbitration,153 is silent on the question. The ICC Rules can come to the rescue here, for they provide a clear solution: 'In the absence of an agreement by the parties, the Arbitral Tribunal shall determine the language or the languages of the arbitration, due regard being given to all relevant circumstances, including the language of the contract.'154 A similar solution is foreseen in many national arbitration laws.

(h) Law applicable to the merits

The Brazilian Arbitration Law is based on the principle of party autonomy and thus allows the parties to freely choose the applicable law, 'provided that their choice does not violate good morals and public policy'.155 However, nothing is said about how the arbitral tribunal should determine the applicable law in the absence of a choice of law by the parties. The ICC Rules, on the other hand, adopt the so-called 'voie directe' method for determining the applicable law.156 Article 17 provides that, in the absence of an agreement by the parties on the rules of law to be applied to the merits of the dispute, the arbitral tribunal shall apply the rules of law which it determines to be appropriate, taking always into account the provisions of the contract and relevant trade usages. Therefore, unless otherwise agreed by the parties or restricted by mandatory provisions, arbitral tribunals acting under the ICC Rules are not bound to follow national conflict-of-law rules.157

(i) Confidentiality of proceedings

Confidentiality is a factor often taken into consideration by parties when deciding to resort to arbitration. The Brazilian Arbitration Law is totally silent in this regard. Although the ICC Rules do not expressly bind the parties to confidentiality,158 they provide that the work of the ICC Court is confidential,159 and that '[t]he Arbitral Tribunal may take measures for protecting trade secrets and confidential information'.160 In any event, the parties can enter into a confidentiality agreement at any time before or during the arbitration. In practice, a confidentiality provision is sometimes included in the Terms of Reference in ICC cases.161[Page34:]

(j) Waiver

The ICC Rules contain a general waiver provision162 expressing the widely accepted principle, known as estoppel or venire contra factum proprium, that a party should not be permitted to complain long after the occurrence of an irregularity to which it did not object when it originally could have done so.163 The purpose of this provision is to prevent late objections made in bad faith.164 Although a similar provision is found in other arbitration rules and in certain national laws that follow Article 4 of the UNCITRAL Model Law on International Commercial Arbitration, the Brazilian Arbitration Law does not contain such a provision. In this respect, the ICC Rules offer a powerful deterrent against untimely allegations made by parties in connection with a failure or problem in the arbitral proceedings.165

(4) ARBITRAL AWARD

(a) Final or partial award

As arbitration has become increasingly complex, there has been a growing tendency for arbitrators to decide issues during the course of the arbitration by means of separate awards in advance of a final award.166 In ICC arbitrations in Brazil, a number of awards have been rendered prior to the final award dealing with such matters as jurisdictional objections before the merits of the case or liability prior to the assessment of the damages.

Unlike the ICC Rules, the Brazilian Arbitration Law makes no reference whatsoever to the possibility of rendering awards prior to the final award. It was perhaps this silence that prompted some commentators to argue that partial and interim awards were not permitted by the Law.167 However, practice has shown that more than one award is sometimes made in proceedings in Brazil, when parties expressly agree on the bifurcation of the proceedings or the rules of the chosen arbitral institution allow more than one award in the same arbitration.168 Besides, the silence of the Brazilian Arbitration Law should not necessarily be construed as forbidding partial and interim awards, and the ICC Rules may help to resolve disagreement over something that generally does not cause controversy elsewhere.

(b) Content of the arbitral award

Article 26 of the Brazilian Arbitration Law describes the required ingredients of an arbitral award. These include a summary of the dispute and a description of the facts, the decision (dispositif) and the time allowed to the party or parties for complying with the award.169 The Law requires the grounds for the decision to be specified. In this respect it differs from many other national laws,170 which do not lay down such a [Page35:] requirement or allow the parties to dispense with it.171 Some commentators have expressed the view that the requirement to give reasons for the decision stems from the Brazilian Constitution.172 In any event, if the reasons are lacking, this is a ground for setting aside the award under Brazilian law.173

Article 26 is entirely consistent with the ICC Rules. First, when scrutinizing awards pursuant to Article 27 of the ICC Rules, the International Court of Arbitration checks that the award contains a reference to the parties, their counsel and their respective addresses, reasons for all decisions taken by the arbitral tribunal, an operative section stating the decisions to be enforced, and a reference to the date and place of the award.174 Second, insofar as the requirements laid down in Article 26 of the Brazilian Arbitration Law are regarded as mandatory, they are taken into account by the ICC Court during the scrutiny process pursuant to Article 6 of Appendix II of the ICC Rules.175 Finally, even if, for the sake of argument, these requirements are not regarded as mandatory, they will be taken into consideration pursuant to Article 35 of the ICC Rules, which requires the ICC Court generally to make every effort to make sure that the award is enforceable at law. Given that an award lacking the required content could be held to be null, the general rule expressed in Article 35 of the ICC Rules can also serve as a basis for compliance with Article 26 of the Brazilian Arbitration Law.

Finally, both the Brazilian Arbitration Law 176 and the ICC Rules 177 require the arbitral tribunal to fix the costs of the arbitration. Of course, in an ICC arbitration the relevant ICC rules regarding the fixing of the fees and expenses of the arbitrators and the ICC administrative expenses will apply.178

(c) Making of the arbitral award

The Brazilian Arbitration Law states that in three-member arbitral tribunals the arbitral award shall be rendered by a majority decision and, if no majority decision is reached, the opinion of the chairman of the arbitral tribunal shall prevail.179 This provision is, therefore, fully consistent with Article 25(1) of the ICC Rules, which states that if there is no majority the award is rendered by the chairman alone.

The Brazilian Arbitration Law expressly mentions the possibility of an arbitrator issuing a dissenting opinion. Although there is no provision expressly dealing with dissenting opinions in the ICC Rules, dissenting opinions are sometimes issued in ICC cases and the Court has an established practice for dealing with them. When a dissenting opinion is submitted, the dissenting arbitrator is normally invited to confirm whether his or her [Page36:] document constitutes a dissenting opinion. The other members of the tribunal are then invited to consider whether they wish to modify their award in light of the dissenting opinion. The arbitral tribunal is informed that the dissenting opinion will be communicated to the parties with the signed award. If the arbitrators ask the Secretariat not to communicate the dissenting opinion to the parties, they will be asked to state good reasons why the communication could endanger the validity and enforcement of the majority award. All comments will be submitted to the plenary session of the ICC Court at which the award is submitted for approval. The dissenting opinion will be communicated to the parties if there are no valid reasons for not doing so.180

(d) Time limit for rendering the arbitral award

The Brazilian Arbitration Law sets forth a time limit of six months from the commencement of the arbitral proceedings for the rendering of the award.181 This provision can be modified by the parties agreeing on a different time limit or through the application of institutional rules setting special time limits.182

Under the ICC Rules, the time limit for rendering the final award is six months from the last signature by the arbitral tribunal or by the parties of the Terms of Reference or, in the case of the application of Article 18(3) of the ICC Rules, the date of the notification to the arbitral tribunal by the Secretariat of the approval of the Terms of Reference by the Court.183 The ICC Rules allow parties to agree on shorter time limits than those mentioned in the Rules. However, if the agreement is made after the tribunal has been constituted, the tribunal's approval will be required.184 It should be borne in mind, however, that the ICC Court may extend time limits modified by the parties, whenever this is necessary for the arbitral tribunal or the Court to fulfil their responsibilities in accordance with the ICC Rules. Needless to say, this will not be done lightly and efforts will be first be made to comply with the time limit agreed by the parties.185 However, if the deadlines agreed on by parties are too short, this could undermine the enforceability of the award by exposing it to a challenge on grounds of due process.186

In the case of fast-track proceedings shortened deadlines will require the agreement and cooperation of all parties. If this is not the case, it will be impossible to comply with the [Page37:] fast-track provision and the ICC Court may be required to extend the time limits set forth in the arbitration clause.187

(e) Awards by consent

The Brazilian Arbitration Law allows arbitral tribunals to render awards by consent recording the parties' settlement agreement. Awards by consent are also recognized by Article 26 of the ICC Rules. However, unlike the Arbitration Law, the ICC Rules gives the arbitrators the power to decide whether or not to accept the rendering of an award by consent. Although it would be rare for arbitrators not to accept, the reserve acts as a safety value to ensure that the consent award mechanism is not used fraudulently by the parties.188

Awards by consent must contain the reasons upon which they are based, under both the Brazilian Arbitration Law 189 and the ICC Rules.190

(f) Correction and interpretation of arbitral awards

The Brazilian Arbitration Law allows the parties five days from receipt or delivery of the award in which to ask the arbitral tribunal to correct any material error in the award or clarify any obscurity, doubt or contradiction it may contain, or decide on an issue that may have been overlooked.191 The ICC Rules require applications for the correction of errors in awards and for the interpretation of awards to be made within 30 days of receipt of the award by the parties. This provision was introduced in the 1998 version of the ICC Rules, although prior to that some requests for correction and interpretation of awards were accepted in practice.192

In light of the above, two questions arise regarding the interrelationship between the Brazilian Arbitration Law and the ICC Rules. The first concerns the different time limits found in the two texts. The second concerns the scope of the application, for the Brazilian Arbitration Law expressly allows the parties to request the arbitral tribunal to decide on an issue that may have been omitted, but not the ICC Rules.

According to scholarly opinion, the time limits mentioned in the rules of arbitral institutions prevail over the five-day time limit mentioned in the Brazilian Arbitration Law.193 Nothing in the Law would appear to prevent parties from modifying the five-day time limit. Therefore, the ICC Rules are not incompatible with this provision. Moreover, there is no danger of restricting the parties' rights, as would have been the case if the ICC Rules had provided for a shorter time limit. It should be said that in international arbitration a five-day time limit would appear to be too short for bringing a request of this kind. Hence, it is preferable that the 30-day time limit of the ICC Rules prevails over the five-day time limit of the Arbitration Law.[Page38:]

With respect to the correction of omissions, it should be said that the risk of omissions in an ICC arbitral award is reduced by the scrutiny process, in which the International Court of Arbitration will aim to make sure, amongst other things, that all of the claims and counterclaims filed by the parties have been covered.194 Were an omission nonetheless to occur in an arbitral award, there would not appear to be any incompatibility between the Brazilian Arbitration Law and the ICC Rules. First, the ICC Rules do not seem to rule out the possibility of an arbitral tribunal issuing a decision on an issue that may have been overlooked in its award. Secondly, the provision of the Brazilian Arbitration Law allowing parties to request arbitral tribunals to decide on issues that have been omitted could be regarded as mandatory since it is intended to ensure the full enforceability of the award. This is confirmed by the fact that under the Brazilian Arbitration Law an arbitral award is null and void if it does not decide the whole dispute submitted to arbitration.195 Under the ICC Rules any decision amending an award will be scrutinized by the ICC Court pursuant to Article 27 of the ICC Rules and, as part of this process, the Court takes into account the requirements of mandatory law at the place of arbitration. Nor would there appear to be any risk of incompatibility with the Note of the Secretariat of the International Court of Arbitration of the International Chamber of Commerce regarding Correction and Interpretation of Arbitral Awards, dated 1 October 1999,196 which is sent to all arbitral tribunals by the Secretariat when the latter notifies any ICC award.197

The Brazilian Arbitration Law requires that when awards are set aside for not having ruled on all issues, the dispute shall be remanded to the same arbitral tribunal to deal with the omitted point.198 Hence, even if the provision of Article 30 of the Law is not mandatory in nature, an arbitral tribunal will sooner or later be required to rule on the omitted point. Moreover, there would once again appear to be no risk of inconsistency with the ICC Rules for Article 35, as noted earlier, requires the International Court of Arbitration and the arbitral tribunal to make every effort to make sure that the award is enforceable at law in case of silence of the ICC Rules.199

In short, the Brazilian Arbitration Law and the ICC Rules appear to be compatible as far as the remedy for curing omissions in awards is concerned. It may be noted that a Brazilian commentator and former Vice-Chairman of the International Court of Arbitration recently came forward in favour of the possibility of arbitral tribunals issuing decisions dealing with omissions in awards under Brazilian law.200[Page39:]

III. Advantages of ad hoc arbitration

Arbitration in Brazil has undergone a dramatic change over the last ten years. A new arbitration-friendly legal framework has been implemented, followed by an increasing body of case law which is in line with the way modern arbitration laws have been interpreted and applied elsewhere. ICC has been a privileged witness of this impressive process and, through the cases administered under its aegis, has contributed to the strengthening of arbitration practice in Brazil. However, progress still remains to be made, particularly within the courts of first instance across the country.

These changes have led to a great increase in the number of arbitrations submitted to the ICC International Court of Arbitration containing one or more Brazilian ingredients and particularly with the place of arbitration in Brazil. The interplay between the ICC Rules and the Brazilian Arbitration Law has been tested many times in practice, and these two sets of rules have proven to be mutually enriching. It is fair to say that, by and large, the ICC Rules help to make arbitrations conducted in Brazil more efficient by addressing issues not specifically foreseen in the Brazilian Arbitration Law and thereby filling gaps that could otherwise cause unnecessary disruptions and delay in arbitral proceedings. Although the ICC Rules may differ from the Brazilian Arbitration Law on certain points, they seem nonetheless to be broadly compatible and clear solutions to harmonize both texts have been encountered in the context of ICC arbitrations.

ICC has played a key role in securing worldwide acceptance of arbitration as the most effective way of resolving international commercial disputes. It has shown great interest in and support for the extraordinary development and transformation of arbitration in Brazil. As a result, international arbitration in Brazil has come of age and can look forward to a positive future, with the continuing support of ICC.

IV. Advantages of Institutional Arbitration

Drafting the Arbitration Agreement

Arbitrator Selection

Professional Administration

Judicial Deference to Institutional Arbitration

Default Award

V. Special Features of ICC Arbitration

Venue of Arbitration

Choice of Applicable Law

Terms of Reference

Institutional Review of Award

Conclusion

1
United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S No. 6997, 330 U.N.T.S. 38.

2
See e.g., Australia – International Arbitration Amendment Act 1989 (No. 75 of 1989); Belgium – Judicial Code, Sixth Part : Arbitration (as amended 1985); Canada – Commercial Arbitration Act, S.C. 1986, c. 22; England – Arbitration Act, 1979; France – Decree Law No. 81-500 (1981); Hong Kong – Arbitration (Amendment No. 2) Ordinance 1989; The Netherlands – Code of Civil Procedure, Book IV : Arbitration (1986); Nigeria – Arbitration and Conciliation Decree 1988 (Decree No. 11); Spain – Law 36/1988; Switzerland – Private International Law Act, Chapter 12 : International Arbitration (1987).

3
See e.g., American Arbitration Association, International Arbitration Rules (1991); ICC Rules of Conciliation and Arbitration (Jan. 1, 1988); Rules of Arbitration Institute of the Stockholm Chamber of Commerce (1988); London Court of International Arbitration, International Arbitration Rules(1985); UNCITRAL Arbitration Rules (1976).

4
Other leading organisations that administer international arbitrations include the American Arbitration Association (AAA), the London Court of International Arbitration (LCIA), the Stockholm Chamber of Commerce (SCC), the Arbitral Centre of the Federal Economic Chamber in Vienna, the Vancouver (British Columbia) Centre for Commercial Disputes, the Quebec Arbitration Centre, the Korean Commercial Arbitration Board, the Japan Commercial Arbitration Association and the Hong Kong International Arbitration Centre.

5
D.A. Redfern. Why arbitrate transnational disputes ? Should institutional or ad hoc arbitration be provided? The Institute of Transnational Arbitration (unpublished remarks).

6
Id.

7
J.J. Ryan & Sons. Inc. V. Rhone Poulenc Textile, S.A., 863 F.2d 315, 321 (4th Cir. 1988).

8
Wolcott v. Ginsburg, 746 F. Supp. 113 (D.D.C. 1990).

9
Norjarl A/S v. Hyundai Heavy Industries Co., Ltd., The Independent, Feb. 22, 1991

10
Arab African Energy Corp. Ltd. V. Olieprodukten Nederland B.V., (1983) 2 Lloyd’s Rep. 419.

11
Mitsubishi Motors Corp. V. Soler Chrysler-Plymouth, Inc., 469 U.S. 1102 (1985).

12
Mitsubishi Motors Corp. V. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 634 n. 18, 637 n. 19 (1985).

13
Carte Blance (Singapore) Pte., Ltd. V. Carte Blanche International, Ltd., 888 F.2d 260, (2d Cir. 1989(quoting 683 F.Supp. 945, 957, (S.D.N.Y. 1988)).

14
Apollo Computer, Inc. C. Berg, 886 F.2d 469, 473 (1st Cir. 1989)(citations omitted). See also the Daiei, Inc. V. United States Shoe Corp., 755 F. Supp. 299, 303 (D. Haw. 1991)(Party’s claim concerning ICC selection of sole arbitrator is itself arbitrable pursuant to party’s arbitration agreement incorporating ICC Rules).

15
See American Construction Machinery & Equipment Corporation Ltd. (ACME) v. Mechanised Construction of Pakistan Ltd. (MCP), 659 F. Supp. 426 (S.D.N.Y.), aff’d, 828 F.2d 117 (2d Cir. 1987), cert. Denied, 108 S. Ct. 1024 (1988)(U.S. courts enforced ICC default award against Pakistani state instrumentality).

16
Stephen R. Bond. How to Draft an Arbitration Clause (Revisited). The ICC International Court of Arbitration Bulletin (Dec. 1990)

17
ACME v. MCP, 659 F. Supp. 426, 428, 429 (S.D.N.Y. 1987).