Corporate conflicts

Companies are more and more including arbitration in their bylaws

Maria Cibele Crepaldi Affonso dos Santos
Vamilson José Costa
Marina Gabriela Santos Fusinato

Arbitration is able to solve the various situations relating to the particularities involved in the corporate conflicts in a quicker, more discrete and efficient manner than the Judiciary – considering the probable expertise of the arbitrations in the matters discussed. This is why the amount of corporate incorporation documents and derived agreements that provide arbitration clauses to solve the companies’ internal litigation has been increasing.

Even though until 2001 there was no such express legal provision – which was fulfilled by the rise of paragraph third to article 109 of the Corporations Law – the inclusion of arbitration clause in the bylaws is already a traditional and consolidated practice in the Brazilian market, and it tends to continuously expand. Evidences of the success of the use of arbitration clause to solve corporate litigation are the requirements of B3 corporate governance: in order to enter in Level 2 or in the New Market level, the companies must adhere to the Market Arbitration Chamber (CAM).

However, during a long time, some uncertainties regarding the reach and effectiveness of the arbitration clauses included in articles of incorporation and bylaws remained. Given its mixed nature – contractual and jurisdictional -, submission to arbitration requires the expression of the parties’ will; which is why there were certain doubts concerning the mandatory acceptance of the arbitration law in cases of lack of consent among all shareholders.

Recently, Law No. 13129/15, which amended the Arbitration Law (Law No. 9307/96), added article 136-A to the Corporations Law and subjugated a great part of the insecurity that remained as to the effects of the arbitration clause in a corporate instrument. The new rule establishes special quorum to the inclusion of the arbitration clause and, in case of closed capital company, assures the dissenting stockholders’ right to exit upon reimbursement of the value of the stocks.

Another important innovation is the effectiveness of the arbitration clause, which shall respect the 30 days term as from the publication of the minutes of the general meeting that has approved it. That avoids the retroactivity of the clause and also surprises as to its use in a litigation already existing.

Therefore, the arbitration clause included in the bylaws shall bind the company and all of its shareholders, being applicable to solve matters relating to waivable property rights derived from or relating to all and any relationship of the signatory parties with respect to the company. Considering that as a general rule not only specific parties of the bylaws shall be subjected to the arbitration, it is important for the other corporate instruments to provide, consistently, how the matters shall be solved in order to avoid conflicts and complementary discussions prior to the arbitration procedure.

Even though facing less resistance from the jurists’ opinion, binding administrators who are not shareholders of the company is still able to raise some practical difficulties. As a precaution, it is recommended that the administrator’s declaration of acceptance of office expressly refers to its consent to all terms of the bylaws, specially its agreement with the use of the arbitration clause provided in case of litigation derived from such relation.