The Brazilian Consumers' Protection Code provides that clauses limiting consumers' rights must be highlighted and easily understandable (Article 54, section 4).

Article 4, section 2 of the Brazilian Arbitration Act, Law No. 9307/96, stipulates that an "[i]n adhesion contracts, the arbitration clause will only be valid if the adhering party takes the initiative to initiate arbitration proceedings or if it expressly agrees to arbitration by means of an attached written document, or if it signs or initials the corresponding contractual clause, inserted in boldface type."

Article 8 of the Brazilian Arbitration Act provides that the arbitrator must determine whether the arbitration agreement is invalid, ineffective, inexistent or not.

Article 20 of the Brazilian Arbitration Act provides that a party wishing to raise issues as to the invalidity, nullity or ineffectiveness of the arbitration agreement must do so at the first possible opportunity after the commencement of the arbitration.

Article 267, item VII, of the Code of Civil Procedure provides that a lawsuit brought before a state court shall be quashed without judgment on the merits when there is an arbitration agreement.

The claimant filed a lawsuit requesting the judicial review of a banking contract entered into with the respondent by virtue of its alleged abusive clauses. Given the existence of an arbitration clause, the claim was quashed without judgment on the merits by the lower court, which held that it lacked jurisdiction to hear the claim.

The claimant filed an appeal arguing that it was possible for the courts to review the contract due to the abusiveness of the arbitration clause which had been inserted into a consumer contract.

The Court of Appeal upheld the lower court decision on the following grounds:

When ruling on the appeal, the Seventeenth Civil Chamber of the Rio Grande do Sul Court of Appeals confirmed the decision to decline jurisdiction in favour of the arbitral tribunal. The Court relied on Article 8 of the Brazilian Arbitration Act, which contemplates the kompetenz-kompetenz principle. The judge stated that it is up to the arbitrator to rule on the validity of the arbitration clause. He expressly mentioned the kompetenz-kompetenz principle and quoted well known Brazilian professors on the subject. Even in cases where the party challenges the validity of the arbitration agreement and the jurisdiction of arbitral tribunal, the arbitral tribunal still has competence to rule on its own jurisdiction.

Finally, the Court of Appeals stated that in any case, there was no abuse of the Consumer Protection Code in the arbitration clause and the clause complied with the requirements of Article 4, section 2 of the Brazilian Arbitration Act.

The Court of Appeals therefore concluded that the Brazilian legal system rejects the analysis of the arbitration clause by the judiciary and reaffirmed the lower court decision.

Although the kompetenz-kompetenz principle has already been firmly established in Brazilian case law, this decision provided the court with an opportunity to examine the principle in the context of consumer rights. The court also underlined the non-abusive nature of the arbitration clause in consumers' agreements.