Luiz Leonardo Cantidiano**
In order talk about arbitration and corporate law, an
issue that seems to me extremely relevant for good development of this area of
law among us, I would like to throw back to the end of the 1990’s decade. At
that time, I joined a group of advisors hired by Bovespa, leaded by José
Roberto Mendonça de Barros. We were in charge of reaching a diagnosis for our
market (that was in a critical situation) and suggest solutions that could enable
it’s growth and effectively contribute for the full exercise of its economic
function (enable the financing of productive activity in the Country).
From the discussions we had in the group came a new
idea, which was the creation of a business environment where the companies that
wanted to offer securities to investors could join by signing a contract with
the Stock Exchange.
The main objective of this new environment (named
special trading segment) was to strength the governance of issuing companies in
order to ensure better rights to investors. Then, in the end of 1999 and in the
beginning of 2000, the Levels 1 and 2 of the exchange trading and the New
Market were created.
A basic premise
of the work, approved by the management board of Bovespa, was the need to
ensure effectiveness to the rules that would appear in the regulations of
different levels (enforcement). Thus, it was assured that any misbehavior by
managers and controlling shareholders of listed companies on the special
segments mentioned would be appreciated with agility and appropriately.
Indeed, it would be useless to strengthen corporate
governance and improve mechanisms to protect investors’ rights if, the
effectiveness would rely on the judiciary (which is overcrowded of diverse
issues, with no specialized judges to analyze the complexity of the subject
that would be object of judgement) and with the possibility of seeing the
demands submitted to numerous appeals that could eternalize the discussion.
For the reasons set out here (and remembering that the
Supreme Court, in that occasion, just declared the arbitration act
constitutional), the group of Bovespa advisors and technicians concluded that the appropriate
way to ensure true effectivity to the new regulation would be to establish
rules in order to solve disputes by arbitration.
It surprises me now a movement – that seems
orchestrated – that contests the existence of arbitration in corporate law. The
idea is structured on the false argument that, as well as costly, arbitration hinders
the exercise of rights of minority shareholders and investors. The members of
this movement protest against the fact that minority shareholders and investors
are prevented from resorting to judiciary when the company adopt the
arbitration clause to settle the conflicts here exposed.
First of all, I would like to highlight that the
arbitration, contrary to what is claimed, is not a costly process, considering
the quality of the decision which will be issued by specialists in the subject
in discussion and considering the short time between the beginning and the end of
the procedure.
It is widely known that the long period of time to get
a definitive decision of any nature in judiciary also costs a large amount of money.
On the other hand, because the arbitration was contracted
between parties as solution to resolve possible conflicts, it is obvious that
contractors may not disregard unilaterally the agreement in order to solve the
dispute by a method other than the one agreed.
Before purchasing shares or other securities of listed
companies, the investors should be careful to examine the corporate bylaws,
even to see if in they are included clauses settling corporate divergences to
arbitration.
It doesn’t mean, however, that alternative mechanisms to
solve corporate disputes cannot be improved, such as derivative suit (provided under
the law of corporations) or the presentation of collective suits, part of our
legal system.
* Translated from the original version by Diego
Cigolini and Victória Duarte. The original may be found in https://capitalaberto.com.br/temas/legislacao-e-regulamentacao/arbitragem-por-que-mudar-o-que-funciona-bem-no-mercado/#.V1sgLLsrLIV
**Luiz
Leonardo Cantidiano (lcantidiano@mfra.com.br) partner at Motta,
Fernandes Rocha Lawyers and former presidente of CVM.
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