Source: The State of Paraná - PR - ECONOMY - 22/11/2009

Arbitration is a type of conflict resolution that is still little known by most people. However, the solution, regulated by law in 1996, has been increasingly used in Brazil. The main stakeholders are companies, which seek to resolve disagreements more quickly, but with the same legal certainty as the common Justice. The State spoke with Curitiba-based lawyer Maurício Gomm Santos, a specialist in the subject who works in Miami, in the United States. For him, the 2014 World Cup, the 2016 Olympics and the exploration of the pre-salt should further increase the choice of arbitration, in contracts, as a way to resolve differences.

The State: Can you explain what arbitration is and what are its advantages?

Maurício Santos: It is a method of conflict resolution. What differs from the Judiciary is that the parties have the power to choose the judge. And this is relevant within the domestic context and above all internationally. All contracts contain a forum election clause, for use in case something goes wrong. Nobody pays much attention if the contract is domestic, because the local district court is chosen. But, if it is international, each party will want its forum. And arbitration serves as a neutral field. There is no Judiciary in any country, and an expert arbitrator on the subject matter of the contract will be chosen. In a contract for the purchase and sale of goods, the parties may elect a specialist in international trade. The process ends up being faster and therefore cheaper. Arbitration is also confidential, and this is important in matters such as intellectual property, or in partner disputes.

OE: From your experience abroad, what are the differences in the use of arbitration in these countries and in Brazil?

MS: In the United States, the law of arbitration is from 1925. At first, there was also resistance there. Today, both arbitration and mediation are widely used there and also in Europe and Asia. In Brazil, from 2001 onwards, arbitration took hold. The constitutionality of the law was confirmed by the Supreme Federal Court, economically the country became of great interest to foreign investors, who go where there is an adequate habitat for their investment, with economic, political and legal stability. This convergence of positive factors is causing more and more investments to be made, and more and more contracts to be arbitrated. Despite the young age in terms of arbitration, Brazil is one of the countries that most develops the sport in the world.

OE: How do you develop further? Are there numbers?

MS: It is not a country in which the population has knowledge of arbitration, such as France, England or the United States, but the growth of the sport in Brazil today exceeds that of other countries. At the International Chamber of Commerce (CCI), which is the most renowned arbitration institution in the world, in Paris, Brazil is the third country in use of arbitration, after France itself and the United States. In Paraná, the use of Arbitac [from the Commercial Association of Paraná], where I was director and president, has grown a lot. It has received cases, with the majority of the parties placing the clauses in the contract.

OE: And in what types of contracts is the clause used?

MS: Consumer relationship contracts use little and it is still a controversial thesis, due to the consumer's under-sufficiency. It is mostly used in more complex contracts. In international contracts, the rule is arbitration, the exception is to go to the Judiciary. In Brazilian contracts, they appear more and more, due to the experience of lawyers abroad and the insertion of the matter of arbitration in the faculties. In the long run, people are increasingly familiar with the institute and begin to disseminate, recommend the use of the clause. There is a geometric progression.

OE: What is the legal certainty of an arbitration award?

MS: The power of execution is the State. In a conflict, the referee decides which party, for example, has to pay. If you don't pay, the other party goes to the Judiciary and says you have a credit. He does not ask the judge to see who is right, but to tell the party to pay. And then there is a normal execution process, with the penalty of pledging the assets to satisfy the debt. The favorable decision has already been obtained in arbitration. Statistically, most companies comply with the arbitration decision, especially in the international context. The company that does not comply is an ugly duckling in international trade, has no credibility and consequently loses business.

OE: The judge is committed to impartiality with the State and society. And with the referee, how is it?

MS: The arbitrator must be and remain impartial and independent from the parties. When chosen by the parties or by the arbitral institution, the arbitrator expresses that he has no relationship that could tarnish his independence and impartiality. If it does not reveal [some important information], the arbitration award can be annulled in the Judiciary.

OE: Is this annulment common?

MS: It is an exception, but it happens. The referee must be equated with the judge at this level: the criteria of suspicion and impediment of judges must also apply to the referees. And the arbitrator can be held civilly and even criminally liable, if there is corruption, for example. In order to support itself, the arbitration must have the freedom to contract the parties, adequate knowledge by the arbitrators on the matter and on the arbitration, and support to the Judiciary. Arbitrage is not well spoken of by the Judiciary. There is collaboration between them. It is insane to imagine that a judge can understand everything about everything. But the referee can understand much of the little that is the object of the conflict.

OE: Should the facts of Brazil being the future host of the World Cup, the Olympics and of having important recent discoveries such as the pre-salt, increase the choice of arbitration as a conflict solver?

MS: Yes, for two reasons. First, because the number of works will increase, especially in the area of ​​infrastructure. And, being national or foreign companies, the possibility of arbitration in contracts is enormous. A very large increase in these clauses in contracts is expected. By the way, I'm in Brazil with a client from a Texas company, which works with heavy equipment exports, and is looking to arrive early to sell materials to Brazilian companies. All contracts that he will sign will have an arbitration clause. In early December, I will also go to New York to give a training course to US international arbitrators on the Brazilian legal system. They are interested in Brazil.

OE: You have recently been to Latin American events on the subject. What is the panorama of the region?

MS: In the competition between countries, they want to show foreign investors that they are favorable environments for arbitration. This helps to bring in business. Today, in Latin America, there are pro-arbitration countries, such as Brazil, Chile, Peru, Colombia and Mexico, and the cons, which are Venezuela, Ecuador, Bolivia and, to a certain extent, Argentina. The economy of the pro-arbitration countries today grows much faster than the others. There is a relationship between the economic development of countries with the greater or lesser use of arbitration, depending on the tripod of economic, political and legal security.