A recent decision of the Brazilian Superior Court of Justice
(“STJ”) has ruled, for the first time, on the issue of the concurrent
jurisdiction of national courts and arbitral tribunals with respect to
the making of interim measures (Itarumã Participações S.A. v Participações em Complexos Bioenergéticos S.A. – PCBIOS, Resp
no. 1,297,974-RJ). The decision is significant in shedding light on a
topic not addressed by the Brazilian Arbitration Act, and reassures the
view that, where there is an arbitration agreement, the national courts
may only intervene to support arbitration and in exceptional
circumstances.
Facts
Itamurã Participações S.A. (“Itarumã”) entered into a joint venture
agreement with Participações em Complexos Bioenergéticos S.A (“PCBIOS”)
to build and implement a fuel production project through a newly
constituted company Complexo Bioenergético Itarumã (“CBIO”). The
contract was subject to arbitration seated in Brazil, but also provided
for the possibility to resort to national courts for urgent matters.
PCBIOS requested an interim measure from a Brazilian lower court for
suspending its own rights and obligations as a shareholder of CBIO,
based on alleged breach of contract by Itarumã. PCBIOS argued that the
measure was necessary to guarantee the effectiveness of a future award
in arbitral proceedings yet to be commenced.
The lower court denied PCBIOS’s application. PCBIOS appealed that
decision to the Rio de Janeiro
Court of Appeal (“TJ-RJ”). In its reply
to PCBIOS’s appeal, Itarumã informed the TJ-RJ that after the lower
court’s ruling on the interim measure but before the judgement of the
appeal, the parties had by that time signed the arbitration’s terms of
reference and appointed the tribunal. Therefore, the arbitration had
been commenced. Itarumã furthermore argued that the subject matter of
the ongoing interim measure request was subject to the exclusive
jurisdiction of the arbitral tribunal. Accordingly, the appeal should be
dismissed.
However, the TJ-RJ found that it had jurisdiction to decide the issue
and, in turn, overturned the lower court’s decision and granted the
interim measure requested by PCBIOS. The TJ-RJ reasoned that the
arbitration agreement does not prevent national courts from deciding
urgent matters via interim measures. The TJ-RJ reckoned that the parties
agreed to resort to national courts in case of urgent matters, and
opined that, notwithstanding the arbitration agreement, the parties
retain the faculty to apply to the court for any interim measures. The
decision also affirmed that deciding otherwise would be to deny a party
its right to access to justice. Itarumã appealed the TJ-RJ’s decision to
the STJ.
Decision
The STJ granted leave to appeal, and presented the question for
consideration as whether a national court has the jurisdiction to make
interim measures after the constitution of the arbitral tribunal.
Reversing the TJ-RJ’s decision, the STJ determined that it is only in
temporary circumstances, for example where the arbitral tribunal is
unable to act or has not yet been constituted, that national courts may
interfere with disputes subject to the jurisdiction of an arbitration
tribunal. In addition, the STJ held that by the time those temporary
circumstances cease to exist, the application for interim measure shall
immediately be referred to the arbitral tribunal that is eventually
constituted.
The STJ further ruled that any arbitral tribunal, upon receiving the
application for interim measure from the national court, shall
re-examine the interim measure granted (or denied), in order to decide
whether to uphold, amend or revoke the national court’s decision.
Furthermore, the STJ’s judgment suggested a “best approach” to be taken
by the Brazilian court judges in deciding applications for interim
measures of the sort concerned in this case. The recommended method
includes that, at the time of referring the case to the arbitral
tribunal, the court should highlight that a decision on interim measures
is a preliminary ruling conditioned to the arbitral tribunal’s
ratification and, if not ratified, the decision becomes ineffective.
The Legal Position
This is the first instance where the STJ, Brazil’s ultimate authority
with respect to legal issues arising from arbitration, scrutinized the
boundaries separating the jurisdiction of the Brazilian courts and of
arbitral tribunals to rule on interim measures. It is significant that
the STJ’s reasoning results in the inexistence of a concurrent
jurisdiction. Instead, the STJ emphasized that the national courts may
only have jurisdiction to grant interim measures in exceptional and
temporary circumstances, and this jurisdiction shall be neither extended
nor concomitant with the arbitral tribunal’s jurisdiction. The court’s
reasoning has already been followed in a more recent case (Petróleo Brasileiro S.A. Petrobras v Tractebel Energia S.A, STJ, Ag Rg MC no. 19.266-MS)
Conclusion
The precedent set by the STJ has particular importance for
international arbitrations conducted in Brazil. The authorisation (or
express order) given to an arbitral tribunal to review a national
courts’ decision deals with the presumed hesitancy of foreign parties to
arbitrate against Brazilian parties in proceedings seated in Brazil.
The guarantee that, in due course, the tribunal shall have exclusive
jurisdiction to rule on interim measures removes the concerns some may
have had of the local courts favouring Brazilian parties.
In addition, depending on the relief sought, seeking the national
courts directly for interim measures, before the constitution of the
tribunal, may be more efficient than applying to the emergency
arbitrator. Brazilian courts have the innate power to grant ex parte
(and enforce) interim measures, while the emergency arbitrator
provisions provide for the need to listen to the other party before
granting the measure.
The Brazilian Arbitration Act, enacted in 1996, is vague with respect to interim measures.[1]
Fortunately, the STJ has helped to overcome the legal uncertainty by
rendering a series of decisions addressing the issue. This particular
ruling confirms the STJ’s pro-arbitration stance, and guarantees the
exclusive jurisdiction of a duly appointed arbitral tribunal with
respect to the grant of interim measures. The ruling seems to be the
last missing brick in the framework for such measures in Brazil, and is a
significant step forward to encourage foreign parties to arbitrate in
Brazil.
[1] Brazilian Arbitration Act (Law no. 9.307/96).
Art. 22 The arbitrator or the arbitral tribunal may take the parties’
deposition, hear witnesses and determine the production of expertises
and other evidence deemed necessary, either ex officio or at the parties’ request.
(…)
Fourth Paragraph: With the exception of the provisions of Paragraph 2, if coercive or injunctive orders become necessary, the arbitrators may request them from the State Court originally competent to decide the case.
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