10/06/2022
By occasion of the judgment of the Appeal n. 1972512/CE, the Brazilian Superior Court of Justice’s Third Panel, once again, in deference to the kompetenz-kompetenz principle, acknowledged the impossibility for the state court to extinguish a lawsuit to institute an arbitral court based on the alleged absence of standing to sue, under penalty of usurpation of the arbitrators’ powers.
The lawsuit involves two companies, participants of a consortium, and was filled to constitute an arbitral tribunal given the resistance opposed by the counterparty.
Initially, in first instance, it was decided that since the contract in which the arbitration clause is inserted was signed between a mixed capital company and the consortium, only the company that legally stands for the consortium had the standing to sue, thus extinguishing the lawsuit without judgment on merits.
The judgment of dismissal without prejudice was confirmed in the second instance and an Appeal to the Brazilian Superior Court of Justice was filed by the plaintiff.
The Superior Court of Justice, on the other hand, understood that “the arbitrator will always be primarily legitimated to assess whether the issue submitted to arbitration is, or not, susceptible to arbitral judgment”. As on other occasions, the Court broadened the interpretation of Article 8 of Law nº 9.307/96 (Brazilian Arbitration Law) and recognized the arbitrators’ competence not only to analyze the existence, validity, and effectiveness of the arbitration clause but also its extension, which involves matters regarding the party’s standing to sue.
It was concluded that the state jurisdiction had exceeded its powers by analyzing the standing to sue of the party, which was remedied by the Superior Court of Justice.
The Court, by honoring the kompetenz-kompetenz principle and acknowledging the negative effect of the arbitration clause, enhanced the degree of legal certainty in the use of arbitration as an alternative dispute resolution method, recalling that arbitration is an important “attraction for investors who may contribute to national development”.
Therefore, the autonomy of the parties when opting for an arbitration clause prevailed and, consequently, relinquishes the state jurisdiction, as well as reinforces the primary competence of the arbitrator to decide on his or her own competence even when it is necessary to analyze the extension of the arbitration clause beyond what is established in article 8 of the Brazilian Arbitration Law.
The Dispute Settlement team of the L.O. Baptista Advogados, specialized in the matter, is available to provide clarifications and guidance on the subject.
