Is Arbitration the Answer?

There’s been a growing focus on using alternative dispute resolution procedures in contract disputes. In the US, for example, mediation and arbitration clauses now commonly replace litigation. And there are often good reasons to at least consider including arbitration when negotiating contracts.

Nowhere is this more true than in Brazil. A 2014 NPR article reported that there were 95 million cases pending in Brazilian courts with only 16,000 judges to hear them. As of May 2023, there were over 83 million cases pending. The delays are staggering.

A 2022 report stated that lawsuits in Brazil take an average of over 2 years from start to finish, with some state court cases lasting as long as 4 years. These numbers don’t even account for appeals or actions to enforce a judgment, which can add another 9 years to the total.

That’s where arbitration can be extremely useful. While it’s often thought of as a way to minimize cost, in Brazil, the primary purpose is to avoid the delays associated with the slow judicial system. But there might be yet another compelling reason to consider arbitration aside from speed.

When filing a lawsuit in Brazil, you risk being assigned a judge who’s inexperienced or not that sophisticated. They’ll undoubtedly be overworked and will have limited resources and time to analyze the case. With arbitration, however, you can choose by contract who’ll resolve your dispute.

If you’re doing business in Brazil, consider adding an arbitration clause the next time you negotiate a contract.