1/10/2024
Agribusiness, one of the main sectors of the Brazilian economy, is responsible for more than 25% (twenty-five percent) of Gross Domestic Product (“GDP”) and 37% (thirty-seven percent) of the economically active population’s jobs.
There are countless commercial relationships that arise from agribusiness, such as: partnership contracts or rural leases; the commercialization of agricultural inputs – including soy and sugarcane, for instance – and the warehousing, import and export of products. Many of these economic operations involve perishable products, for example the export of poultry meat.
Given the short shelf life of many inputs, swift and effective solutions to conflicts arising from such relationships are necessary to protect the agro-industrial production chain.
Studies have already revealed the usefulness of arbitration for the sector, however, there are other dispute resolution methods that are also effective, but still underutilized. The Dispute Board is one of them, which consists in formation of a committee by specialists aimed at resolving disputes between the parties, simultaneously to the development of the contractual relationship.
Although the utilization of Dispute Boards is fairly uncommon in the field of agribusiness, the institute is widely used in construction contracts, especially those financed by the World Bank and in public contracts, given that its main objective is to enable quick and technically appropriate solutions, in order to allow the contract to be carried out while saving on transaction costs.
The Dispute Resolution Board Foundation indicates that, in cases where Dispute Boards are used, conflicts tend to be resolved in less than 90 (ninety) days and only 2% (two percent) of disputes are insurmountable and proceed to arbitration or state courts. Furthermore, even in cases not resolved through Dispute Boards, data indicates that 98% of the decisions rendered by the arbitrators or the state court judges uphold the Dispute Board committee’s decision¹.
Due to the effectiveness of the institute in other market segments, the main Brazilian arbitration chambers already created specific internal regulations for this method of conflict resolution, such as the Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada (“CAM-CCBC”), the Chamber of Conciliation, Mediation and Arbitration CIESP/FIESP, and the Business Mediation and Arbitration Chamber – Brazil (“CAMARB”).
For the parties to be able to use this dispute resolution method, it must be contractually stipulated, and the Parties must also stablish whether the committee will have the power to make recommendations (Dispute Review Boards or DRBs), decisions (Dispute Adjudication Boards or DABs) or have both functions (Combined Dispute Boards or CDBs).
L.O. Baptista is available to assist its clients with the specificities of each case, to recommend the best dispute resolution methods and draft contracts that provide for the application of such appropriate dispute resolution methods, also in the agribusiness sector.
Coautoria: Mariana Dias Sallowicz e Silvia Rodrigues Pachikoski
