BRAZILIAN SUPERIOR COURT OF JUSTICE DENIES RECOGNITION OF A FOREIGN ARBITRAL AWARD DECLARED VOID BY THE COUNTRY OF ORIGIN
Under the Brazilian Arbitration Law, an arbitral award that has been entered outside of Brazil is considered a foreign award. To be effective in Brazil, the award must be recognised by the Brazilian Superior Court of Justice, which has jurisdiction for this purpose. However, the Superior Court of Justice can decline to recognise the award, depending on specific situations provided for in the Arbitration Law and the New York Convention, to which Brazil is a signatory.
In a recent case of the first impression, the Special Court of the Brazilian Superior Court of Justice considered this matter and unanimously rejected a request to recognise a foreign arbitral award that had been voided by a court decision entered in the country of origin of the award.
This ruling was entered when deciding Contested Foreign Award #5,782/AR, in which an Argentinean court had previously voided an arbitral award at the request of both parties to the case.
The request for recognition was filed by EDF International S/A (EDFI), claimant in an arbitration case filed against the companies ENDESA and YPF S/A before the International Chamber of Commerce (ICC). The arbitration case sought an adjustment to the amounts in an agreement with the respondents due to the change in the exchange rate between the Argentinean peso and the US dollar in December 2001, as a result of the economic crisis in Argentina.
The arbitration proceeding was heard normally and an award was entered partially granting EDFI’s prayer for relief. Afterward, however, the award was definitively voided by the Argentinean National Chamber of Commercial Appeals on the grounds that the arbitration decision had been reached on the basis of equity, which was prohibited. Despite the award having been voided, EDFI filed a request to recognise the award in Brazil.
Apr-Jun 2016 issue
BKBG – Sociedade de Advogados