Regulation & Law

Mediation Gains Strength in Brazil

In Brazil, arbitration has already established itself as a solid practice since the 2000s. Following this tendency and inspired by the fact that other types of extrajudicial dispute resolution methods have been commonplace for many years in English speaking countries, mediation has been gaining popularity in the Brazilian legal market.

In Brazil, arbitration has already established itself as a solid practice since the 2000s. Following this tendency and inspired by the fact that other types of extrajudicial dispute resolution methods have been commonplace for many years in English speaking countries, mediation has been gaining popularity in the Brazilian legal market.


The latest edition of the Word Bank Doing Business Report, a publication with a focus on analysing and ranking the openness of national business environments, placed Brazil in a much better position – in relation to previous years – concerning the indexes of management and automation of court procedures, as well as the use of alternative dispute resolution methods. Juliana Loss de Andrade, mediator and professor at FGV, approves of those indexes as a way to measure a country’s business dynamics.

 

According to her, international experience shows that the use of alternative means, such as mediation and arbitration, can reduce bureaucracy and speed up processes of recovery of business activities, or even some stages of bankruptcy processes. And there’s further evidence to show that not even the large number of fiscal disputes entangled in the complex processes of restructuring and liquidation of companies in difficulty should be left out of assisted negotiations.

 

The new World Bank evaluation of Brazil can be seen as a direct reflex of recent national efforts to promote extrajudicial mechanisms of dispute resolution, such as the reform of the arbitration law in 2015; the creation of a regulatory framework for mediation in the same year; and the publication of the New Civil Procedure Code in 2016, which many legal experts affirm was the official response for the significant increase of alternative methods in day-to-day legal activity.

 

According to André Gomma de Azevedo, judge at the Court of Justice of the State of Bahia, 2016 was the best year for mediation since 2006, when the Conciliation Movement was created in the framework of the National Council of Justice. “From the implementation of a free online public platform to the increase of large cases being resolved by mediation, 2016 showed that a substantial part of the legal and jurisdictional operators have an interest in resolving their conflicts in a non-adversarial way.”

 

The country has indeed seen a considered growth in the use of alternative methods of dispute resolution, which is particularly good in terms of relieving the system, considering that, in 2016, over 100 million cases crowed Brazilian courts and a congestion charge of 72.2% led the jurisdictional system to consume 1.3% of the entire national GDP. The critical economic environment that hit the country also stimulated this rise in legal conflicts.

 

Moreover, the very adoption of alternative methods presents challenges, such as the training and registration of mediators, as well as the adaptation of courts for the reception of a new procedural system inserted by the new Code. In order to overcome these challenges, some experts suggest the promotion of “consensus culture,” as well as the “de-judicialization” of processes among the legal community, which certainly isn’t something that can happen over the night.

 

Promising international examples are many, however. Juliana points to the Lehman Brothers cases, in which of the 98 that were referred to mediation, 93 resolved by it. She continues by reminding that in the United States, Delaware's business law courts are even considering mandatory mediation, and that Europe, historically more timid in relation to extrajudicial methods, has also been increasing the use of alternative instruments in cases related to corporate insolvency.

 

Overall, it’s been clear that a great number of Brazilian lawyers and legal experts have been increasingly fond of alternative methods of dispute resolution. The enacting of a new code, significant law reformulations, as well as the actual numbers of the use of alternative methods all indicate that from 2017 on, the tendency is that mediation will be a constant in day-to-day legal activity and that arbitration will consolidate itself as a solid practice.

 

L.A.

Read the full Special Report: Brazil: From Political Turmoil to Economic Reassertion

Brazil has been the center of attention for almost a decade now. During this period, the country has gone through various phases. Some argue that it has now entered its most challenging and crucial one. Deep transformation is needed in the political, economic and social landscapes. We talked with some of the very best lawyers, general counsels and financial advisors in the country to better understand the situation and the impact on the Brazilian market.
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