The State of São Paulo has issued on July 31, 2019 Decree 64,356, which regulates arbitration with such State and the entities it controls.

Institutional arbitrations should be preferred, being ad hoc arbitrations allowed only in exceptional cases, which shall be duly justified before this choice is made. The State of São Paulo will prepare a list of pre-approved arbitration centers, among the ones with secretarial capabilities and hearing centers in São Paulo and widely-known experience and track-record in arbitration involving state entities. The selection of institution shall be preferably made in the arbitration clause among the listed institutions. If it is not, the claimant can choose the applicable institution from the list.

The seat of arbitration shall be the city of São Paulo and Brazilian Law shall apply. The panel shall be composed of three arbitrators, unless the value at stake is low or the issue is not complex, in which case a single arbitrator is allowed. The language shall be Portuguese, but technical documents can be produced in English.

Claimant shall advance the fees of the institution and the arbitrators. The losing party cannot be sentenced to reimburse the winning party of attorneys’ fees, but the panel can grant “sucumbência”, that is to say, to sentence the losing party to pay an amount from 10% to 20% of the value at stake to the counsel of the wining party, over and above the amount of the award..

The arbitrators shall be independent and impartial. The parties can request information on whether the arbitrators have any case against the State of São Paulo and whether they represent clients in litigation whose subject matter is similar to the one discussed in the arbitration.

The arbitration will be public and the State of São Paulo will be allowed to publish the files in its web-site, provided that any legal obligation of confidentiality shall be respected. The attendance to hearing however can be restricted to the parties and their counsel, as well as to the witnesses and experts.

The rules enacted by the State of São Paulo are simple and reasonable. Now the three largest Brazilian States (São Paulo, Rio de Janeiro and Minas Gerais) have regulation on arbitration with state entities. It is expected in the Brazilian community that the Federal Union will soon enact its own regulation.