RECOGNISING THE VALIDITY OF A US COURT DECISION BY THE BRAZILIAN SUPERIOR COURT OF JUSTICE IN THE RATIFICATION OF AN ARBITRAL AWARD
Almost 10 years ago, the Brazilian Adriano Dedini Ometto sold two sugar and alcohol plants to Spanish company Abengoa, which paid for them with BRL 300m in cash; as a consequence of this transaction, the company assumed total debts amounting to BRL millions.
After some time, Abengoa felt it was betrayed, and stated Mr Ometto sold the plants based on a promise that their production capacity would be higher than it actually was. The case was tried before the International Chamber of Commerce (ICC). The resulting award was favourable to Abengoa; Ometto was ordered to pay indemnification amounting to nearly US$150m.
The decision, which became final, was challenged in the US at federal level. According to Ometto, the award should be annulled because the chairman of the arbitration tribunal was not impartial, having a conflict of interest arising from his relationship with Abengoa during the arbitration process. The chairman of the arbitration tribunal argued he was not aware of the conflict of interest alleged by Ometto, and Ometto was not successful in this North American lawsuit.
Meanwhile, Abengoa filed lawsuit 9412/SE before the Brazilian Superior Court of Justice, aiming to have the foreign decision duly ratified, making it valid and effective in Brazil as provided for in the Civil Procedure Code. This would allow it to collect the award payable to it. In the claim, Abengoa tried to demonstrate that all the requirements needed for ratification had been met.
Ometto opposed the decision, alleging the New York Courts made a mistake when determining compliance with an award that would be defective based on the chairman of the arbitration’s conflict of interest.
Jul-Sep 2016 issue
Azevedo Sette Advogados