The São Paulo Court of Appeals also denied claimants’ time-bar argument but overturned the lower court’s judgment, annulling the award based on lack of legal reasoning and breach of due process in the arbitrators’ ruling on quantum. Respondents then appealed to the São Paulo Court of Appeals. Although this motion was dismissed by the majority of the arbitral tribunal, the Brazilian lower court understood that the merits of the application were analyzed and, as a result, the Second Decision – and not the First – should be the one considered as initial term for the 90-days limitation period. As to claimants’ statute of limitations defense, the lower court considered however that the claim was not time-barred under Brazilian law, since the second motion for clarification filed in the arbitration extended the 90-day limitation period. According to the lower court: (i) the arbitral award did not decide on matters falling outside the arbitrators’ jurisdiction (ii) respondents failed to produce evidence of the alleged partiality of the arbitrators and (iii) the application of a certain legal rule pertains to the merits of the award, which cannot be reviewed by the Judiciary. On August 11, 2020, a Brazilian lower court issued a decision refusing to set aside the award.
Among other defenses, claimants argued that the claim was time-barred under Brazilian law. Nevertheless, in May 2019, respondents filed a motion to vacate the arbitral award, alleging in sum that the award (i) violated due process by dealing with matters beyond the scope of the submission to arbitration (ii) was rendered by partial arbitrators, who allegedly had dubious relationships with claimants’ counsel and (iii) violated public policy by failing to apply the restitutio in integrum principle provided for under Article 944 of the Brazilian Civil Code. The minority arbitrator, however, issued a dissenting opinion, which not only admitted but also granted respondents’ motion.Īlmost a year elapsed from the First Decision (June 2018) to the Second Decision (May 2019).
Because the first motion was rejected in full and no amendments to the award were needed, the majority understood that respondents were not entitled to file a second motion for clarification in the first place (“Second Decision”). Later, in May 2019, the new tribunal rendered a majority decision dismissing the second motion for clarification and imposing a fine against respondents for deliberately postponing the proceedings’ closure. Soon thereafter, all three arbitrators withdrew and a new tribunal was constituted. Subsequently, respondents filed a second motion for clarification – which appeared to be but a replication of the first – and raised accusations against the arbitrators’ impartiality and independence.
In May 2018, respondents filed their first motion for clarification, which was unanimously rejected in June 2018 (“First Decision”). In the arbitral proceedings that led to the Vyttra Case, the tribunal rendered an award against respondents (plaintiffs in the set aside proceedings) in April 2018. We hope this post steers the debate into the right direction. As we will see, there have been different views on whether motions for clarification that were deemed inadmissible by arbitral tribunals could still extend the 90-day legal limitations period for seeking annulment. In this post, we discuss the position taken by Brazilian courts in the Vyttra Case and others that involved the issue of multiple motions for clarification against arbitral awards. Vyttra Diagnósticos Importação e Exportação Ltda. Said rule begs the question: if the losing party wishes to submit successive motions for clarification to the arbitral award, does that mean that the 90-days deadline is indefinitely extended? The answer is intuitively negative, but what is the legal limit applicable in this case? And how can said guerilla tactic be restrained?Ī recent decision rendered by the São Paulo Court of Appeals in Brazil dealt with these issues ( see, Appeal n. 13,129 amended certain provisions of the BAL, which included adding the second trigging event (i.e., a decision on a motion for clarification) to its original text. The interested party has a 90-day period as from (i) notice of the partial or final arbitral award or (ii) the decision on a motion for clarification to file an annulment request before Brazilian courts (BAL, Article 33, 1 st Paragraph). 9307/1996 “BAL”) establishes a short deadline for any interested party to seek annulment of an arbitral award in court. As most arbitration laws, the Brazilian Arbitration Act (Law n.