(by Vinicius Fedrizzi – Member of the Executive
Group of Arbitration of the Chamber of Arbitration of Federasul)
Many cases, in which the parties opted to use
arbitration as the method for dispute resolution, require a preliminary
injunction in order to avoid harm to one party before the final decision. The
Brazilian Arbitration Statute has a rule that allows arbitrators to grant such
type of remedy if the party demonstrates that the legal conditions to a
preliminary decision are present.
In some situations, due to how the procedural rules
of some chamber of arbitrations are defined, it may take time to constitute the
arbitral tribunal. For example, the delay may occur because the arbitrator refused
his nomination or the arbitrators chosen by the parties still haven’t decided
who would be the third member and president of the tribunal. Therefore, it is
necessary that the law define who must decide if the preliminary relief should
be granted or not.
In fact, this was the issue decided by the
Brazilian Superior Court of Justice by the 3rd Section in the
special appeal number 1.297.974-RJ, as we will comment bellow. The high court
decided that the judiciary has power to decide about the temporary injunction
to avoid harm to the claimant if the arbitral tribunal is not constituted.
However, once defined the arbitrators to the case, the procedure must be
transferred to arbitration, and the tribunal may or may not sustain the
decision issued by the judge.
The decision was based on the idea that the law
cannot permit that a party who has rights remains helpless. If for any reason,
it is not possible for arbitration to provide an urgent measure in order to
avoid damages to the petitioner, the Judicial Power has the duty to provide a
solution until the constitution of the arbitral tribunal, without preventing
the arbitrators’ competence.
The Case:
The parties (Itarumã Holdings and Participações
em Complexos Bioenergéticos S.A” – Bioenergetics’ Complex Holdings) signed a
partnership contract with the goal of implementing the production of fuels
derived from renewable energy sources. To operate the deal, they created a
company called “Complexo Bionergético de Itarumã – CBIO” (Bioenergetics’
Complex of Itarumâ). While executing the contract, the company PCBIOS
(“Participações em Complexos Bioenergéticos S.A” – Bioenergetics’ Complex Holdings)
alleged breach of contract, and sued in a Judicial Court its partner, in order
to obtain a decision that would suspend its obligations and rights in the
corporation CBIO. The claimant used a legal procedure in judicial court that
would prepare the future arbitration that would take place.
In the trial, the Judge dismissed the case. The
Court of Appeal, however, reversed the decision. The reason adopted by the
State Court of Justice of Rio de Janeiro to reverse the first trial was that
the arbitration clause did not avoid the state jurisdiction to assess the case,
especially when the court is called to decide about an urgent measure. The
losing party presented the Special Appeal, which is the legal remedy to take
the discussion to the Superior Court of Justice (the second highest Court of
Brazilian Judiciary system).
The reasoning adopted in the special appeal by
Itarumã Holdings (the losing party) was that the constitution of the Tribunal
has the effect to avoid the jurisdiction of the state court, and only the
arbitrators have the power to decide the controversy. It is important to
mention that the Brazilian Arbitration Statute does have a rule authorizing the
arbitrators to decide about urgent matters before the final solution of the
controversy (article 22, §4º of Statute number 9.307/96). Brazilian Jurists and
the Jurisprudence also recognize this possibility, so there is no question on
that. In the other hand, the arbitrator does not have power of imperium, which means that the
arbitrator cannot execute his injunctive relief; therefore, he may seek for
judiciary’s collaboration to provide effectiveness to the decision.
According to Minister (=Judge of the Higher
Court) Nancy Andrighi, Rapporteur of the case, the issue was about the conflict
of competence between the Arbitral Tribunal and the State Court. Who should
decide about a preliminary procedure? In the case, the fact was that the
tribunal was already constituted, which both parties in their reasoning in the
court of appeal admitted.
Although, the question was about if the
procedure of the injunction should continue in the Judiciary even in the
presence of an arbitral tribunal. A small group of law doctrine understands
that the Judiciary should only send a copy of the procedure to the tribunal,
while others say that the procedure must go completely to the arbitrators,
which means, the judiciary must not keep it. Minister Andrighi adopted the
second position, stating that the “original documents should be directly sent
to the arbitral tribunal”.
Finally, the Superior Court of Justice
concluded that the State Court of Rio de Janeiro could not had decided the
appeal, because, in that moment, the tribunal was already constituted.
Therefore, there was no competence of the state court to judge the preliminary
injunction.
In conclusion, the reasoning of the Brazilian
High Court was pro-arbitration and it stated the necessary cooperation between
the private and the public jurisdiction. This cooperation is essential, in
order to protect the rights of the parties when adopting the arbitration as an
alternative dispute resolution method.
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