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São Paulo Court of Appeal acknowledges supportive role of courts in pre-arbitral injunctions
Practical Law UK Legal Update 0-516-4411 (Approx. 3 pages)
São Paulo Court of Appeal acknowledges supportive role of courts in pre-arbitral injunctions
by Practical Law
| Published on 15 Dec 2011 • Brazil |
Eduardo Damião Gonçalves (Partner), Flávio Spaccaquerche Barbosa (Associate) and Diego Nocetti (Associate), Mattos Filho Advogados
In a decision of 23 November 2011, the Court of Appeal of the State of São Paulo (TJSP) acknowledged the supportive role of the judiciary in pre-arbitral injunctions. In this case the parties had executed a contract containing an arbitration agreement under which the parties were allowed to apply for any urgent interim measures directly to state courts. However, the claimant's request to the court for an urgent interim measure was denied by a lower court judge on the ground that such a measure would be within the jurisdiction of the arbitral tribunal. After the filing of an appeal, the TJSP overturned the lower court’s decision.
Background
Article 22, § 4° of Law No. 9,307/96 provides that "Except as provided in § 2, if enforcement or precautionary measures are required, the arbitrators may request them from the court that would have jurisdiction to hear the case."
Article 267, VII, of the Code of Civil Procedure (Law No. 5,869/73), as amended by Law No. 9,307/96, provides that a lawsuit concerning a dispute which is subject to an arbitration agreement shall be inadmissible.
Facts
In order to ensure compliance with a sugar cane purchase contract between the parties, the claimant (Cosan) initiated search and seizure proceedings against the defendant (Paulo Sergio Cornacini), aiming to seize a certain amount of sugar cane which was about to be delivered to a competitor. The arbitration agreement executed by the parties contained a provision that permitted them to request any urgent interim measures to the judiciary. The lower court dismissed the proceedings, holding that such a measure would be within the jurisdiction of the arbitral tribunal, based on article 267, VII, of the Code of Civil Procedure. Cosan lodged an appeal, arguing that the parties themselves had stipulated in the contract that urgent interim measures could be sought in court.
Decision
The TJSP overturned the lower court's decision, holding that:
- Parties are free to choose arbitration as a dispute settlement mechanism. Taking into consideration the principle of the autonomy of the parties, it is also legal to insert a clause in a contract establishing that urgent measures can be requested from the courts.
- Irrespective of the above, the arbitral tribunal would still have jurisdiction to hear the merits of the case.
Comment
The decision clearly illustrates the courts' support for disputes subject to arbitration when it comes to urgent measures before the constitution of the arbitral tribunal. The most important feature of this is that the decision correctly emphasises that, even when parties turn to the judiciary for such measures, state judges do not look into the merits, which are left for the consideration of arbitrators.