*André de Almeida, Eduardo Machado Tortorella and Júlia Molnar Terenna
Even after the recent 24th anniversary of Law n. 9.307/96 (The Arbitration Law) much is still being debated with respect to its application. This is because with its ever more frequent gradual application and the relevance of the theme considering the congestion to the Judicial Power it is natural that some uncertainties arise, punctual judicial intervention being necessary, consequently, to resolve issues related to the procedural aspects of arbitration or arbitration clause interpretation.
Preliminarily, it is worth mentioning that arbitration clauses consist of two modalities: the arbitration clause per se and the arbitration agreement. Whereas the first is inserted within an agreement signed between the contracting parties the second occurs only in the case of conflict, towards establishing that the litigation be resolved via arbitration rather than in the courts.
Although arbitration clauses are commonly known and in the dominion of the Brazilian business world, it is of extreme importance that their redaction be precise and complete so as to avoid greater conflict resulting from them. This is because the non-observance of specific aspects could generate unnecessary discussions and hinder the instigation and course of the arbitration proceeding, which choice by the parties normally is made exactly for reason of its being an efficient, expeditious and successful means of resolution of highly complex conflicts.
A relevant aspect of arbitration clauses that has been widely questioned in recent years has to do with the possibility or not of their use relative to the accessory instruments of the main contract. In other words, the discussion concerns whether the establishing of arbitration in the main contract also impacts on the other contracts that are drafted and exist for reason of the main contract, which in practice serve to guarantee performance on the base obligation contracted between the parties. Common, amongst others, is the guarantee, a type of accessory agreement that generally guarantees a principal lease or mortgage, a contract type that normally serves to guarantee a principal loan.
On the topic, on October 16, 2020 the Brazilian Judiciary took an important step towards resolving this interesting discussion, deciding that the arbitration clause inserted in the main contract could extend to the accessory agreement as well. Said decision was that of the Third Chamber of the Superior Court, in Special Appeal n. 1.834.338/SP, the Honorable Marco Aurélio Bellizze presiding.
Said judgment demonstrates itself to be considerably emblematic and certainly will have pronounced impact in orienting decisions related to the possibility or not of extending the arbitration clause to the accessory instrument. This is because, as is perceivable, the Third Chamber of the Superior Court resolved the matter from the negative perspective, holding that its application to all of the contracts is necessary exactly for reason of there not existing any provision in the law restricting said application. In other words, in the case in question as there was no caveat to the main contract or its accessory instruments the court understood it to be possible that the arbitration clause extends to them.
It must be mentioned, however, that this understanding regarding the extension of the clause is not indiscriminately valid with respect to all situations, it being necessary to analyze in detail not only the language of the clause but the content of the contracts themselves. For this reason, the prevailing interpretation is that it is possible to extend the arbitration clause in main contracts to accessory contracts when there is exists no caveat within them with respect to not resolving litigation via arbitration.
In light of these considerations, the importance of the well-drafted arbitration clauses is clear with respect to avoiding greater conflicts resulting from them, as this is related to the possibility or not of their extending to possible accessory agreements. This is because practice establishes that arbitration clauses are treated as “midnight clauses,” the last to be discussed and put together in the drafting of business agreements. As respects this situation, the physical tiredness that results following the drafting of an extensive document together with, oftentimes, the pressure of executing the transaction results in the arbitration clauses sometimes being drafted without the observance of the specific aspects of the case in question, thus generating unnecessary discussion between the parties with respect to procedural concerns.
Further, the decision leads one to conclude that the arbitration clause should not only be stipulated in the main contract but in the accessory agreements as well if any. Said clause can be positive, extending arbitration (or another distinct method of conflict resolution) for the solution of conflicts arising from the accessory agreements, as well as negative, excluding said method from the litigation from which they resulted. Whatever the chosen modality, the clause should be well drafted so as to avoid divergent and/or incorrect interpretations.
Almeida Advogados has professionals with extensive corporate law and conflict resolution alternative method experience that are available to continue applying recent Brazilian court precedent in best assisting its clients.
*André de Almeida, Eduardo Machado Tortorella and Júlia Molnar Terenna