New era for ADR in Brazil - the new code of civil procedure

We can argue that the new Brazilian Code of Civil Procedure should have done more to encourage settlements or ADR, in order to reduce the gigantic number of cases in court. Nevertheless, the ideal changes would come with great resistance from the legal community itself and from the population.

In any case, the new rules encourage parties not to rely solely in court litigation. The movement for ADR became relevant in 1996 with the arbitration law. The development of this law in the jurisprudence was remarkable and Brazil is definitely a pro arbitration jurisdiction (regarding business disputes). Recently, Brazil enacted a mediation law. Finally, the code of civil procedure created new rules in favor of ADR.

It is not even newsworthy anymore the fact that companies are relying in arbitration to solve their biggest disputes in Brazil. After the Supreme Federal Court declared the arbitration law constitutional, lower courts started to enforce the majority of arbitration agreements. Parties need only to make a clear choice for arbitration in their contracts to avoid judicial interference. In these sense, lawyers should avoid providing clauses stating optional arbitration if they really desire to rely on arbitration and have judicial courts enforcing their agreements.

Mediation was also allowed by Brazilian law, but seldom used in business disputes up until now. Recently, the legislator enacted the mediation law. Even more recent is the mediation requirement before a case continues in the courtroom. This was a creation of the new Code of Civil Procedure.

There is more. Lawyers never had discovery in order to prepare their cases. The old code of civil procedure allowed to request documents from the other parties in limited circumstances. This was rarely used. In addition, parties could only produce evidence before filing a suit only when there was a risk to lose the evidence by deterioration. Now, the procedural law provides that parties can start a proceeding for the limited purpose of producing evidence. Thus, parties can seek evidence just to inform themselves about the case, in order to decide whether to pursue litigation, ADR, settlement, or even conclude that they have no case at all. Although this is still very far from what discovery does in the American legal system, this new provisions can prevent litigation, as parties will be able to make informed decisions on their strategies.

Finally, the new code created some financial burdens to parties, increasing the judicial fees to a higher level. It is not ideal yet, but it is something. As mentioned earlier, the ideal change would not be possible at this moment, because would be a drastic change that the current legal culture would resist.

In sum, this can be the beginning of a new era for ADR in Brazil.