A Continuing Trend in Arbitration Grows Stronger

Although arbitration has increasing acceptance for commercial matters in Brazil, there is significant opposition in other areas of the law. One of the strongest sources of disapproval has historically been labor law. But a recent decision from the labor courts of São Paulo marks a continuing trend in favor of arbitration.

Labor law in Brazil normally falls into a completely different set of rules and decisions. The substantive law tilts in favor of the employee, and the labor courts exercise their jurisdiction jealously. The labor courts have high case loads, and there is little in the form of binding precedent, as the common law system recognizes. Further, it is not uncommon for two nearly identical cases to have completely contrary results. And for years, these courts have refused to recognize arbitration clauses, even in contracts with high-level executives. It appears that trend is changing.

Valor Economico is reporting that the one of the labor courts in São Paulo recently refused to enforce an arbitration clause between a high-level executive and his former employer, BTG Pactual, a highly renowned Brazilian investment bank. Labor courts routinely seek to protect workers from arbitration using the theory that the labor contract is a contract of adhesion. In other words, the employer foists the contract on the employee, so the court should not enforce a one-sided negotiation. In Valor article, the labor court rejected the application of this reasoning because the executive had sufficient bargaining power to allow the court to enforce the arbitration clause.

Although this decision is not binding on other courts, it shows a continuing trend in the Brazilian judiciary. Where contracts with high-level employees call for arbitration, courts increasingly enforce the arbitration clause.


SILC Welcomes Diego Gosis

SILC is pleased to announce the arrival of Diego Gosis as of counsel to the firm. Diego specializes in investment and commercial arbitration, having appeared on behalf of the Republic of Argentina over 20 times and currently representing Venezuela in addition to his work with Argentina. Diego’s profile has a full description of his work, and GAR has a brief write-up of the announcement.

Mauricio Gomm Quoted on Recent Decision in Brazil

The international arbitration world has long looked askance at the decision in Inepar v. Itiquira. But the decision has been overturned, as covered by leading arbitration magazine Global Arbitration Review, which quoted Mauricio Gomm, along with other noted practitioners.

International Trade and Brazil: An Ever-Evolving Picture

It seems like Brazil is in the news constantly these days, and for good reason–its economy is growing, unemployment is dropping, and apparently there are 19 new millionaires per day. But the picture of international trade is increasingly complex. No longer is growth based solely on foreign direct investment from the United States and Europe. Instead, Brazilian investment abroad is increasing, trade ties are expanding in different directions, and the Brazilian government is embarking on new ventures all over the world. A few articles sum up these changes.

Recently, the magazine Florida Trend named Brazil the “Floridian of the Year.” For those living in Florida, especially South Florida, this should come as little surprise. The full article is worth reading, including some points:

“Indeed, 2011 became the year that cemented Brazil’s importance to Florida. For the first time, Brazil surpassed the United Kingdom as the top source for overseas tourists. Brazilians played a key role in soaking up Miami’s distressed real estate to the point that developers began new condo projects . . . Brazil, as it has been since 1998, was again Florida’s top trade partner. Florida captures 22% of all U.S.-Brazil trade and runs a surplus, exporting $13.8 billion to Brazil while importing just $2.2 billion.”

The article also noted the investments by Brazilian companies in Florida, including a new plant by Embraer and the international expansion of the restraurant franchisor, Giraffas. For Florida, international trade with Brazil defies the common notion of a one way street going south.

Another development has been the growth and reliance on ties with China. The Economist has followed this story closely, noting an estimated 19 billion USD in investment slated for 2012. But the relationship is increasingly complex, with the Brazilian government moving to protect its industry from Chinese competition:

“The prominence of the location is appropriate: imported Chinese cars have suddenly become a visible presence on Brazil’s roads. This has alarmed Brazil’s car industry and President Dilma Rousseff’s government. Last month a 30-percentage-point tax increase on cars with less than 65% local content took effect, taking the tax on some imported models to a punitive 55%—on top of import tariffs.”

Again, this change in the trade dynamic is putting pressure on other areas long thought moribund. In the same article, former minister Sergio Amaral calls on Brazil to galvanize the internal market in South America to meet the challenge of competing with the Chinese.

Finally, Brazilian investment lead by the government has reached to all corners of the world. This week, President Dilma Rousseff visited Cuba on the occasion of releasing the last piece of a multi-million dollar loan to redevelop the Puerto de Mariel, near Havana. The national Brazilian development bank, BNDES, financed the project, which includes a large development zone near the port for the export of Cuban goods. BNDES loaned over 600 million dollars to help develop the port, and Brazilian company Odebrecht had lead the construction efforts. In addition to investments in Africa and other parts of South America, it is apparent international trade with Brazil will increasingly include all areas around the globe.

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