‘Arbitration is a well-established institution in Brazil’

What are the main challenges lawyers in Brazil currently face?

In the field of arbitration, one of the main challenges, in my opinion, is the excessive length of proceedings, either due to the behavior of the parties, such as excessive hostility, or due to expert reports, which sometimes involve an unnecessary number of questions or result in inconclusive findings, for example.

The recent Arbitration in Numbers study, conducted by Professor Selma Lemes, indicates that the average duration of an arbitration proceeding in 2022 was approximately 20 months. Furthermore, according to the latest Facts and Figures report from the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (CAM-CCBC) proceedings concluded in 2023 had an average duration of 21 months.

Another challenge is the increasing number of lawsuits seeking to annul arbitral awards. Despite the growing use of this measure, the Judiciary remains supportive of arbitration. For example, research conducted by the Brazilian Arbitration Committee (CBAr) and the Brazilian Association of Jurimetrics indicates that, within the São Paulo State Court of Justice, the probability of success in annulment actions is minimal, with arbitral awards being upheld in the vast majority of cases. However, these actions do end up delaying the enforcement of judgments.

In your opinion, what will the most promising areas for arbitration activity be in the next 12 months?

Although corporate matters are the most common topics in ongoing arbitrations in Brazil, activity arising from new types of conflict are expected to gain prominence soon. These include mining, energy — due to the energy transition —, technological advancements driven by generative artificial intelligence, ESG (environmental, social and governance) policies, which are currently being implemented by economic agents both nationally and internationally, and the impact of climate change and its possible effect on how obligations are fulfilled.

What is your assessment of the current arbitration landscape in Brazil?

Arbitration is a well-established institution in Brazil, a country known for its arbitration-friendly environment, and which  is second on the list of top arbitration users before the International Chamber of Commerce’s Court of Arbitration.

In recent years, global events – such as the Covid-19 pandemic and the war between Russia and Ukraine, for example – have triggered crises in various sectors. The legal implications of these events have necessitated adaptations in the dispute resolution market as well.

From that, a series of challenges have arisen, requiring adaptation and the implementation of efficient solutions. Several recent examples of arbitration’s ability to adapt and self-regulate according to market demands stand out, such as: the explicit provision in the Arbitration Law regarding the possibility of the Public Administration being subject to arbitration, transparency, the extension of the duty of disclosure, premises of corporate arbitration and the jurisdiction for processing pre-litigation discovery actions.

This demonstrates how arbitration in Brazil is flexible, adaptable, and, above all, responsive to market demands, rendering legislative intervention unnecessary. In this regard, along with the Brazilian Arbitration Committee, we have been proactively working through the Legislative Affairs Commission to prevent innovations and/or legislative changes that could negatively impact arbitration in any way.

And what can we expect from L.O. Baptista in terms of innovation in the next few years?

L.O. Baptista embodies the legacy of Professor Luiz Olavo Baptista, – the author of important academic works and a full professor of international trade law at USP's Law School – who contributed significantly to the consolidation of arbitration in Brazil.. L.O. Baptista, which was involved in the case that led to the recognition of the constitutionality of the Arbitration Law in the Brazilian Supreme Court in 2001,  continues to be a firm of reference in the field, with experience in over 500 arbitration proceedings.

We also have a highly regarded team of specialists, both nationally and internationally, with proven experience in various areas of business law, including corporate, M&A, compliance, innovation and technology, regulatory, competition, tax, labor and asset management. This enables us to meet clients’ demands in a creative, personalized and effective way.

Moreover, we are always attentive to market changes and continuously seek to adjust our practices and strategies to better meet the needs of clients. A key highlight is LOtech, the innovation arm of L.O. Baptista, which will be our driver of digital transformation in the coming years. This multidisciplinary team is focused on leveraging generative artificial intelligence and other advanced technology to revolutionize legal services, and aims to deliver efficiency, process optimization and create new ways to meet clients’ needs. One of LOtech’s missions is to provide legal advice to clients  implementing these solutions by combining legal expertise with cutting-edge technological innovation.