BRAZIL confirmed that mandatory arbitration provisions in business contracts are enforceable. This will please foreign investors who prefer not to have disputes decided in the local courts.

The Brazilian Supreme Court confirmed on December 12 that a recent law that permits arbitration is consistent with the Brazilian constitution. The status of the law had been in doubt since it was enacted in 1996 after the Supreme Court suggested earlier that the law conflicted with a right under the Brazilian constitution to have one’s day in court.

The case reached the Supreme Court after lower courts in Brazil refused to recognize an arbitration award granted by a Spanish tribunal on grounds that the decision was not ratified by competent authority. The underlying dispute was between MBV Commercial and Export Management Establishment, a Swiss company, and Resil Industria e Comercia Ltda., a Brazilian company. The Supreme Court said the award would be recognized in Brazil.

Keith Martin