The respondent, a Brazilian company, undertook to construct an industrial facility for a Brazilian manufacturer not a party to the arbitration. It subcontracted part of the construction to the claimant, also a Brazilian company. A number of additional agreements were subsequently made between the respondent and the claimant in connection with the work to be performed. Dissatisfied with the claimant's performance, the respondent sought to remove the claimant from the project by terminating their agreements. The claimant objected and initiated arbitration proceedings to obtain damages for the financial distress it claimed it had suffered as a result of delays and defective material supplied to it. The proceedings were brought pursuant to a dispute resolution clause that specified Brazilian law as the applicable substantive law. In its award, the arbitral tribunal referred to Brazilian law when deciding whether the claimant was entitled to receive payment for services that had not been approved in writing and when ruling on price adjustment.

La défenderesse, une société brésilienne, s'était engagée à construire une usine pour un fabricant brésilien, qui n'était pas partie à l'arbitrage, et avait sous-traité une partie de la construction auprès de la demanderesse, une autre société brésilienne. Un certain nombre de contrats complémentaires avaient été conclus entre la défenderesse et la demanderesse relativement aux travaux à exécuter. Mécontente des prestations de la demanderesse, la défenderesse a cherché à l'écarter du projet en résiliant leurs contrats. La demanderesse a élevé des objections et engagé une procédure d'arbitrage afin d'obtenir des dommages-intérêts du fait des difficultés financières dont elle prétendait avoir souffert en raison de retards et de la livraison de matériel défectueux. La procédure a été engagée conformément à une clause de règlement des différends stipulant que la loi brésilienne s'appliquerait au fond du litige. Dans sa sentence, le tribunal arbitral s'est référé à cette loi dans sa décision sur le droit de la demanderesse au paiement de services n'ayant pas été approuvés par écrit, ainsi que sur la révision de prix.

El demandado, una empresa brasileña, se comprometió a construir una instalación industrial para un fabricante brasileño que no era parte en el arbitraje. El primero subcontrató al demandante, una empresa también brasileña, para realizar una parte de la construcción. Posteriormente, se celebró una serie de acuerdos adicionales entre el demandado y el demandante relacionados con las obras pendientes. El demandado, descontento con el desempeño del demandante, intentó excluir al demandante del proyecto dando término a sus acuerdos. El demandante formuló objeciones e inició procedimientos de arbitraje para obtener daños y perjuicios por las dificultades financieras que alegó haber sufrido como consecuencia de los retrasos y los materiales defectuosos que se le habían proporcionado. Los procedimientos se entablaron de conformidad con una cláusula de solución de controversias que designaba la ley brasileña como la ley aplicable al fondo. En su laudo, el tribunal arbitral se refirió a la ley brasileña para decidir si el demandante tenía derecho o no a recibir un pago por servicios que no habían recibido aprobación por escrito y para fallar sobre el ajuste de precios.

'e) Additional Services based on a price proposal

380. Claimant argues that Respondent requested several out-of-scope services, quotations for each service were provided by Claimant and verbally authorized by Respondent. Although the execution of these services was only verbally authorized, failure to pay would constitute Respondent's unjust enrichment.

381. As evidence of these allegations, Claimant presented the quotations for the out-of-scope services presented to Respondent during the execution of the erection services.

382. Respondent does not deny that the quotations were presented to it and that the services were rendered. It merely alleges that the out-of-scope services were not approved by it in the manner provided for in the Contracts.

383. With respect to this issue, Article 1.246 of the 1916 Civil Code establishes the following:

Art. 1246, 1916 Civil Code. The architect or builder, who agrees in a construction project to carry out works in accordance with a plan accepted by the person who commissioned the work, does not have the right to demand an increase in the price, even if the salaries or material become more expensive, or the project agreed to increases, in relation to the plan, unless the increase or alteration is the result of written instructions provided by the commissioning party, and exhibited by the contractor.

384. Marcos Aurélio da Dilva Viana explains that the correct interpretation of this provision was disputed among scholars of contracts law, but the Supreme Court ruled in favor of mitigating the strength of the rule:

Legal scholars are divided on the issue of the interpretation of the norm, while case law has followed the line of mitigating the rigor of the provision. This is what the 1st Bench of the Supreme Court (STF) did in case no. RE 11.442, when the Reporting Judge Min. Luis Gallotti stated: "Rigorously requiring the written authorization of the commissioner of building work every time there was an increase would amount to benefiting from another's loss." Interpretation of art. 1.246 of the Civil Code. (Construction Projects and the Courts-A Empreitada de Construção nas Decisões dos Tribunais, São Paulo, Saraiva, 1980, p. 63/64)

The STF, in turn, made it clear that "in the lack of written documentation it would not be legally appropriate to impose on a contractor the inadequate rigidity of the rule set out in art. 1.246 of the Civil Code, as this would be to the unfair advantage of one party to the detriment of another". (Construction Contract and Civil Liability, São Paulo, Saraiva, 1981, 2a ed. p. 19)

385. Thus, the Arbitral Tribunal declares that the payment of the balance of additional services based on a price proposal and verbally approved is due and orders Respondent to pay to Claimant the amount of . . . adjusted in accordance with clause 6.4 of the Contracts, plus interests applied at the rate of 0.5% per month only from . . . the date that the Respondent received the Request for Arbitration, according to article 397 of the Civil Code of 2002, until the date of effective payment.

. . . . . . . . .

g) Price escalation

392. Claimant argues that pursuant to the Contracts, the price agreed upon is to be adjusted annually and that according to the practice established by the parties, Respondent had calculated and delivered to Claimant the amount due according to the adjustment, so that Claimant could issue separate invoices for the price escalation.

393. Claimant argues that, according to the price escalation clause of the agreement (Clause 6.4), the month of the adjustment was April and, therefore, he issued invoices based on information presented by the Respondent related to price escalation for the months May, June and July. Respondent refused to pay these invoices.

394. Respondent does not deny the facts, but alleges that if this claim is granted, Claimant would be benefiting from its own turpitude. Claimant would have caused the delay and then would have benefit from it.

395. However, according to Brazilian law, monetary adjustment does not constitute an increase in the principal amount due, but only the means of maintaining the value of said amounts. It is not a benefit, not a plus:

Interlocutory appeal (agravo regimental). Recovery of legal fees-interpretation of contractual clauses-prohibition by binding precedent-financial adjustment-applicability-appeal refused.

I. It is not appropriate to use a special appeal to seek interpretation of the intention of the parties set out in a contractual clause relating to attorney's fees.

II. Financial adjustment is merely an attempt to preserve the identity of money over time, bearing in mind inflation, and it forms part of the principal charged.

III. Ascertaining whether there has been any advance payment, and if so, how much was paid, falls within the exclusive jurisdiction of the ordinary courts, in that it is an issue of fact, which is not subject to re-examination on (special) appeal. (Appeal No. Ag 12806 / PR, Reporting judge Sálvio de Figueiredo Teixeira, 4th Bench, DJ 7th October 1991, p. 13976 - our highlights)

396. Thus, the Arbitral Tribunal declares that the payment of the price escalation is due and orders Respondent to pay to the Claimant the amount of . . . adjusted in accordance with clause 6.4 of the Contracts, plus interests applied at the rate of 0.5% per month only from . . . the date that the Respondent received the Request for Arbitration, according to article 397 of the Civil Code of 2002, until the date of effective payment.

397. The fact that the value of some of the claims presented by Claimant, as stated in the Terms of Reference, differ from the amounts mentioned in its Closing Submission do not constitute any irregularity because the Terms of Reference expressly stated that "the Claimant notes that the amount mentioned above is only an estimate and therefore shall be quantified at the appropriate opportunity in this Arbitration".'