Saturday, September 30, 2006

Non-lawyers as sole arbitrators in Brazil

In Brazil, arbitrators do not have to be lawyers: non-lawyers can be chosen as arbitrators under Section 13 of the Brazilian Arbitration Act ("BAA"). While experienced professionals may bring valuable expertise to the arbitral tribunal, should arbitrators who are not lawyers be appointed as sole arbitrators?

In Brazil, however, the trend is to choose —as sole arbitrators— individuals with legal training and previous experience with arbitration (non-lawyers being appointed —in practice— to three-arbitrator tribunals). This is due to several reasons, among which I will list two of the most important:

(i) naked awards are against Brazilian public policy: reasoned awards are mandatory to arbitral awards made in Brazil —as per Section 26, II of the BAA. Drafting arbitral awards in Brazil is not simple, as following Section 26 of the BAA, the award must necessarily include (a) a report of the dispute, (b) the reasons for the decision, with a proper analysis of all factual and legal issues involving the dispute, and (c) the arbitrator's decision. Lawyers are better prepared to draft the award and to deal with the formal requirements of arbitral awards;

(ii) arbitration procedure is complex (arbitration is essentially, a "legal" proceeding), where arbitrators may face complex issues, such as, for instance, one of the parties' request to the arbitral tribunal for the issuing of interim measures of protections (under Brazilian law, would that be the case for the arbitral tribunal's issuing of an "order", or the rendering of an "interim award"?) .

The amounts in dispute in arbitrations may be very high, and the issues in dispute by the parties may be very complex. This requires a lawyer as sole arbitrator, or a lawyer as one of the members of the arbitral tribunal (and serving as chairmen of the tribunal).

You can click here for a good article on this subject.

4 comments:

Anonymous said...

Mr. Oliveira, can foreign persons be appointed as arbitrators in Brazil?

Pedro Alberto Costa Braga de Oliveira said...

Yes, foreigners can act as arbitrators —in arbitral proceedings or single arbitral hearings taking place in Brazil—, without any problems, as there are no restrictions under the BAA based on nationality or citizenship.

My blog post "Does Brazilian law sets forth any requirements, qualifications or qualities for arbitrators?", dated October 5, 2006, addressed this topic.

Best regards.

Pedro

Simon (Lawyer, London) said...

I'm not sure I agree that a sole arbitrator ought to be a lawyer; many arbitrations are concerned with specialist factual/expert issues, and it can be useful to have (say) an engineer as the arbitrator. Usually, if the arbitrator needs to know the answer to specific legal points, he can (with consent of the parties) obtain assistance. Is this possible in Brasil? Kind regards, Simon

Pedro Alberto Costa Braga de Oliveira said...

Simon: Yes, it is possible that the arbitrator obtains the assistance of a expert witness. I'd still appoint a lawyer as the sole arbitrator, given today's status of arbitration in Brazil. Thank you for posting a question/comment here. Pedro