Brazil
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
The formal ADR methods (ADRs) that are commonly used in Brazil for the resolution of all types of commercial disputes are conciliation, mediation, reference to Dispute Boards and Online Dispute Resolution (ODR).
Conciliation is a conflict resolution method which may be used at any moment of a dispute (before, during or even after the lawsuit), as per the Brazilian Code of Civil Procedure (Article 166 et seq.). It is a voluntary and non-binding process, in which an independent person will help the parties through the proposition of alternatives for the solution of the dispute. This technique is highly effective and commonly used in Brazil.
Mediation is a voluntary, private, and non-binding procedure, provided for under Brazilian Mediation Act (Law no. 13.140) and the Brazilian Code of Civil Procedure (Article 166 et seq.). In such dispute resolution method, a trained professional will aid the parties through the negotiation of a settlement of the dispute. Although it is a very common dispute resolution method, it is not the most used in Brazil, due to the costs and the possibility to conciliate a conflict even in the Judiciary.
Reference to a Dispute Board is mainly used for solving conflicts related to long term contracts. A Dispute Board is a committee of one or more independent professionals who will periodically monitor the progression of the contract. The dispute board will act in the management of the relationship between the parties, preventing the escalation of disputes arising from the natural wear and tear of relations between the parties. Although there is no disposition for Dispute Boards on the Brazilian Code of Civil Procedure, there are several laws authorizing the use of this mechanism, including in contracts with the public administration, including the new law on bids and administrative contracts (Law no. 14.133/21).
Online Dispute Resolution (ODR) is also an ADR method where the hearings and proceedings are held online, through websites or mobile phone applications. The Brazilian National Council of Justice (CNJ) has already been encouraging the implementation of ODRs since 2017 and even implemented the “100% Digital Judgment” in the Judiciary itself. The progress in the field of online conflict resolution occurs not only due to the improvement of the electronic process, but also because of the elaboration of a whole new procedure for the online resolution of conflicts. Although they are not very commonly used to solve commercial disputes, Brazil has a series of websites and lawtechs that provide for ODR, such as “ConciliarBR”, “JUSPRO” and “Mediar 360”.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Even though the Brazilian Code of Civil Procedure states that the utilization of ADR shall be encouraged, the participation in ADR is not mandatory. It should be noted that, in Brazil, when a party files a judicial lawsuit, it is legally obliged to state whether it is interested in holding a conciliation or mediation hearing, within the Judiciary.
However, the ADRs by themselves, if not carried out within the scope of the Judiciary (which mediation and conciliation may be), does not suspend the lawsuit or even the deadlines for its filing. Moreover, except if the parties previously agree that they must engage in ADR before arbitration or litigation, litigation or arbitration can be commenced or continued whilst ADR is pursued and will still be available if no settlement is secured.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
There is no pledge of the Brazilian government that states that all cases must necessarily be the subject of ADR before being submitted to the Judiciary or to arbitration. There are also no plans to make ADR compulsory. However, as already referenced, the Brazilian Code of Civil Procedure states that the utilization of ADR shall be encouraged and even predicts for conciliation and mediation to be used within the scope of the Judiciary.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes. It is possible for the parties to agree to engage in one or more ADR mechanisms before submitting a dispute to litigation or arbitration. In Brazil it is especially common for parties to agree mediation-arbitration clauses (“med-arb clauses”), which state that parties are required to submit the dispute to mediation before they can initiate any arbitral proceeding.
When does ADR generally take place?
In Brazil, ADR may be used at any given moment of a dispute. ADR can be sought by the parties before, during and even after litigation. After litigation, the parties mainly use ADR to negotiate payment terms or even rights granted by a judgment.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Yes. In Brazil, ADR is usually confidential and safeguarded by without prejudice privilege. In this sense, Brazilian Mediation Law establishes confidentiality as one of its tenets. However, to ensure its confidential nature, parties usually enter into an agreement to explicitly guarantee secrecy.
Does the output from ADR create precedents?
Given its confidential nature, outcomes from ADR procedures do not establish precedents. Also, outcomes from mediation cannot bind third parties who have not engaged in the procedure.
Who bears the costs of ADR?
In general, parties split the costs associates with the ADR procedure. However, due to their autonomy, the parties may agree a different distribution of who bear the costs.
Is your jurisdiction subject to any specific rules for cross border ADR?
Although Brazil is not yet a party to any international mediation treaties, progress has been made towards signing such treaties.
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
The Brazilian Mediation Law provides for the use of mediation by public entities, which are allowed to create its own ADR institutions, to grant and secure its compliance with the laws governing public institutions in general.
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