Brasília, Brazil

On March 07, the Brazilian Federal Attorneys’ Office (“AGU“) established in its Ruling  42 (Portaria Normativa 42), the following criteria for appointment of arbitrators by the Federal Union[1] in arbitrations in which it is a party, including:

  • full legal capacity under Brazilian Law;
  • knowledge compatible with the nature of both the contract and the conflict;
  • absence of any relationship with the parties or the case which would render a judge prevented from judging the case (impedimento and suspeição) under the Brazilian Code of Civil Procedure;
  • absence of conflict of interest, as defined in international standards and/or the rules of the arbitral institution; and
  • not to occupy any position at the Federal Attorneys’ Office, the Federal Revenue Office or the Central Bank of Brazil.

As to the requirement of compatible knowledge, the following elements shall be considered:

  • professional formation;
  • area of expertise;
  • nationality; and
  • proficiency in the applicable languages.

The choice of arbitrators shall be made by the AGU’s Arbitration Division (Núcleo Especializado em Arbitragem), which can also take into account:

  • the arbitrators’ availability;
  • the arbitrators’ experience in arbitration;
  • the number of appointments by the federal Union; and
  • the profile of the arbitrator appointed by the other side.

Although this Ruling does not bring anything completely new compared to the criteria the Federal Union already adopts for appointing arbitrators, it gives more stability and helps in the justification of the choice, which is necessary in view of the principle of transparency of public administration, reflected in art. 154 of the new Brazilian Public Contracts’ Law. In addition, it is interesting to note that this Ruling acknowledges that the AGU can take into account, when selecting the arbitrators even in domestic cases, international standards such as the IBA Rules on Conflict of Interest.

[1] The Federal Union is the legal entity of public law that represents the Federal Government of Brazil internally.

This article was contributed by Trench Rossi Watanabe, a Brazilian firm. Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.