The State of Rio de Janeiro has issued Decree no.. 46,245/2018, regulating arbitrations involving state entities, especially for concession and construction agreements. For other contracts, the arbitration clause may only be included if it involves at least R$ 20 Million (approximately USD $6M).
According to such decree, the State of Rio de Janeiro can only enter into arbitration clauses providing for institutional arbitration. The arbitral institution shall (i) have at least 5 years of experience, (ii) have held at least 15 arbitrations in the previous year; and (iii) hold premises in Rio de Janeiro for submission of petitions and documents. The arbitral institutions that meet those requirements shall request accreditation with the State of Rio de Janeiro, which will publish a list of accredited arbitration institutions, from which the private party may choose in the negotiation of the relevant contract with an arbitration clause.
Moreover, the arbitration clause shall provide for (i) Rio de Janeiro as the seat of arbitration; (ii) Brazilian Law as the applicable law; (iii) Portuguese as the language; and (iv) Rio de Janeiro courts as the venue for injunctions prior to or in aid of arbitration.
There are minimum terms for certain procedural acts, such as 60 days for statements of claims, statements of defense, statements of counterclaim, defenses to statement of counterclaim and final allegations. The hearing shall be scheduled with a 90-day prior notice. The purpose is for the State of Rio de Janeiro to have a long time for preparation.
If the private party is the claimant, it shall advance the fees of the arbitration, the arbitral institution and the court expert, if any. Nonetheless, the final award shall order the losing party to bear or reimburse reasonable expenses of the wining party, including arbitrators’ fees, institutional fees and fees with experts witnesses. Contractual lawyer fees are not recoverable, but the losing party shall pay to the counsel of the wining mandatory success fees (“sucumbência”), depending on the amount of the success, according to the criteria set forth in art. 85 of the Brazilian Code of Civil Procedure.
The arbitration will be public, but information that is confidential under Brazilian Law cannot be disclosed. The arbitrators will decide on controversies as to the confidentiality of a given information. If a third party wishes information on the arbitration, including copy of the submissions, decisions and reports, it will have to be requested to Rio de Janeiro’s State Attorney Office (Procuradoria Geral do Estado do Rio de Janeiro). Hearings will be held privately.
Although such decree is clearly beneficial to the State of Rio de Janeiro, as one may infer from provisions such as the advance in fees and the long terms for submissions, in general it was very well received by the Brazilian arbitration community, since it establishes clear rules for arbitral proceedings.
