The Superior Court of Justice in Brazil (STJ) (Case No. 185.702/DF) has ruled that it has jurisdiction to decide conflict of competence between arbitral tribunals constituted pursuant to the rules of the same arbitral institution.
Case No. 185.702/DF presented the STJ with unique facts. The arbitration tribunals involved were formed under the jurisdiction of the Market Arbitration Chamber (“CAM”). However, the rules of CAM do not provide guidance on how to address the impasse that arises when CAM arbitral tribunals reach conflicting decisions in arbitration cases with overlapping claims and causes of action. As a result, the president of CAM appropriately acknowledged their lack of authority to resolve the competence conflict based on the existing rules.
The STJ’s decision is unprecedented in the Court’s case law – and certainly unique among international jurisdictions. The premise of the ruling is that arbitration has a jurisdictional nature, thereby giving the STJ authority to resolve such conflicts when the applicable institutional rules do not provide for a solution to the deadlock created by arbitral tribunals that have rendered irreconcilable decisions.
The STJ’s jurisdiction over arbitration-related competence conflicts has been the subject of debate in Brazil. In particular, whether an arbitrator or arbitral tribunal can be said to be a “judge of fact and law” under the Brazilian Arbitration Act (Law No. 9.307/96, Article 18) and whether arbitral tribunals fall within the scope of the Brazilian Federal Constitution provision which states that the STJ has authority to decide “conflicts of jurisdiction between any courts (…) as well as between courts and judges not bound to them and between judges bound to different courts” (art. 105, I, d).
Whilst the jurisprudence of the Superior Court of Justice (STJ) has established its authority to adjudicate competence conflicts between arbitral tribunals and state courts, its stance on conflicts between arbitral tribunals has been inconsistent until now. In Case No. 113.260/SP dated 8 September 2010, the STJ decided that state courts should resolve conflicts between arbitration institutions, as they fell outside the STJ’s jurisdiction. However, in Case No. 111.230/DF dated 8 May 2013, the STJ declared that arbitral tribunals are regarded as “any courts” under the Brazilian Constitution and, consequently, within the purview of the STJ’s jurisdiction.
In Case No. 185.702/DF’s ruling, the STJ clarified its jurisdiction over conflicts of competence between arbitral tribunals within the same arbitral institution. The Court concluded that conflicting decisions rendered by different arbitral tribunals cannot stand, as it would create legal uncertainty. The STJ confirmed its authority to resolve such conflicts and stated that state courts cannot decide them.
The STJ’s recent ruling did not specifically address the issue of conflicts between arbitral tribunals in different arbitration chambers. However, the rationale behind the STJ’s recent judgments (such as recognizing the jurisdictional nature of arbitration and treating arbitral tribunals on par with other courts) indicates that from now on the STJ will likely apply the same reasoning to conflicts between arbitral tribunals in different arbitration institutions. There is no justification for not doing so.
Interestingly, one of the STJ’s sitting judges noted the importance of arbitration institutions providing rules capable of resolving any internal conflict of jurisdiction in favour of parties’ autonomy which she said to be “the cornerstone of any arbitration proceeding”. It is notable that, at present, most arbitration institutions in Brazil do not address such issues in their rules, but the STJ’s decision might encourage them to do so.
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