People capable of contracting may use arbitration to resolve disputes
Due to a deficiency in the Judiciary in terms of the effectiveness of judicial provision — in turn marked by procedural slowness, a low level of technical knowledge in the matters subject to the demands and high cost due to delay — much has been said about arbitration as a method alternative dispute resolution.
The use of this procedure, which consists of a private dispute resolution mechanism characterized by speed, informality, and specialization, has become common practice in large disputes. In fact, vis-à-vis the judiciary, the advantages of the arbitration route are not limited to speed and quality; autonomy of will and confidentiality also include the range of advantages inherent to arbitration. The big question, however, is knowing which conflicts can – and which are recommended – be judged by arbitrators.
From a legal point of view, people capable of contracting may use arbitration to resolve disputes relating to available property rights. Furthermore, interested parties may submit the solution of their disputes to arbitration through an arbitration agreement, expressed through an arbitration clause or arbitration agreement.
USE OF THE COMMITMENT CLAUSE
The arbitration clause, as a type of arbitration agreement, is agreed between the parties prior to the existence of the dispute. In other words, it is the convention through which the parties undertake, through a contract, to submit to arbitration any disputes that may arise in relation to such contract. In contrast, the arbitration agreement is signed between the litigants after a dispute arises.
Therefore, from a legislative perspective, to insert an arbitration clause in a contract for the eventual submission of a dispute to arbitration, it must be observed whether the parties are capable and whether the conflict in question is related to available property rights. However, not always, once the legal requirements of “arbitrability” of the conflict have been met, it is advisable to proceed through arbitration.
REQUIREMENTS FOR USING ARBITRATION
From a practical perspective, to assess the benefit of using arbitration, in principle, one must observe: whether it is a highly complex issue, whether the specific case requires a rapid solution, whether the issue discussed is confidential and if the dispute involves a high value. Once two of these four requirements are met, arbitration will certainly be the best way to resolve the demand.
This is because, in the case of a matter of high technical complexity such as, for example, a real estate development contract or a shareholder agreement, the solution to a possible dispute will certainly also require high-level know-how. That is why the ability of the parties to choose who will judge that demand is so important; The dynamics and complexity of commercial relations require specific solutions for each situation, so that a standard dispute resolution system, as shown by the judiciary, is unlikely to adequately meet the needs of the conflicting parties.
In relation to speed, a considerable characteristic of arbitration, the parties must assess how harmful it can be to discuss the issue in court since, statistically, a judicial process takes around three times longer to conclude a dispute than in an arbitration procedure. . Imagine two societies hostage to the Judiciary, with their operations halted due to the dispute and unable to develop.
Regarding the issue of secrecy, the parties must consider that the arbitration is confidential, if they so wish, in order to preserve themselves, whether in relation to their suppliers, employees and even competitors. In other words, litigants make that dispute private, thus avoiding exposure to the market.
Finally, if the contract underlying the relationship between the parties involves a high value, something around at least R$ 1.500.000,00, the arbitration clause must certainly be inserted and link any dispute to the arbitration court. This is because, even though the initial costs and arbitrators' fees are high, the arbitration procedure, in these cases, proves to be more advantageous both for the creditor, who will possibly receive what is owed to him more quickly, and for the debtor, who will not have his debt incurring interest and fines over 5 years (average time of a judicial process.)
Exceptionally, in international commercial contracts, it is recommended to use the arbitration clause regardless of whether two of the four requirements listed are met, as almost 160 countries are signatories to the New York Convention, in order to guarantee the parties a final, binding and enforceable decision. no merit review in all of these.