With all the difficulties surrounding the resolution of disputes through the Brazilian Judicial system, arbitration has become a safe and efficient option, especially when the dispute relates to financial agreements or even corporate documents such as bylaws or shareholders’ agreements.
Immediately after arbitration is chosen, another choice follows: institutional arbitration or ad hoc (non-institutional) arbitration.
The Brazilian Arbitration Act determines that the arbitration procedure must follow the rules previously agreed by the parties, who may choose to adopt the regulations of an institutional arbitration entity or specialized entity.
Institutional arbitration is managed by an arbitration institution or by an arbitral chamber, in either case with their own rules or regulations. In turn, ad hoc arbitration occurs without the participation of a chamber, so the parties are able to define the procedural rules that will be applied in the arbitration. Another advantage of ad hoc arbitration is cost reduction, since the users do not need to pay the chamber’s administrative fees.
However, the theoretical advantages associated with an ad hoc procedure are not verified in practice. With respect to the much-acclaimed freedom of choice regarding procedural rules, it is important to note that the conflicting parties seldom reach an agreement on how the arbitration should be conducted. Such a predicament demands intervention by the Judiciary, delaying the dispute’s resolution even further.
In our experience, it has been shown that the supposed savings due to the absence of administration fees actually end up significantly increasing the fees payable to the arbitrators, who end up incorporating the role of administrators of the arbitral procedure.
From this angle, engaging an arbitral chamber with its own regulations and highly qualified executive secretaries renders institutional arbitration a more agile and less costly option for conflict resolution in comparison with ad hoc arbitration.
Moreover, the leading chambers' regulations provide consistent solutions to commonly encountered problems that arise on a regular basis in arbitral procedures. In other words, they are “tried and true” regulations that ensure the fluidity of the procedure. One can cite as an example the regulations providing that the arbitrator will be chosen by the arbitral chamber if one of the parties fails to choose one.
Among the leading arbitration institutions in Brazil, whose regulations have already been submitted to the “quality control” of practitioners, we highlight: the Arbitration Center of the Brazil-Canada Chamber of Commerce (the CCBC), the Arbitration Center of São Paulo (Ciesp), the Chamber of Business Arbitration – Brazil (CAMARB), the FGV Conciliation and Arbitration Chamber, the Arbitration Center of the Portuguese Chamber of Commerce, and the Arbitration Center of the American Chamber of Commerce for Brazil (Amcham).
As leading lights among international chambers, we may cite the International Court of Arbitration of the International Chamber of Commerce (ICC) and the International Centre for Dispute Resolution (ICDR). Finally, it is worth noting that it is perfectly possible to carry out arbitrations in Brazil managed by foreign institutions and conducted according to the respective regulations.