Arbitration is the method of dispute settlement based on the autonomy of the parties, who decide to submit their dispute to private judicial system instead of the Judiciary Branch. The advantages commonly associated with arbitration are several, such as greater speed, the flexibility of procedure, possibility of more technical decisions, and confidentiality. Arbitration is considered more suitable for disputes involving complex contractual relationships and expressive amounts, but can be used for any disputes related to freely transferable property rights.[1]

In corporate law, the greatest use of arbitration was mainly because of the reform of the Brazilian Corporate Law, through Federal Law N° 10.303/01, which expressly authorized the inclusion of an arbitration clause in the bylaws of the companies (Section 109, §3rd).[2] Another factor was the mandatory arbitration for publicly-held companies listed in B3's special listing segments, including Novo Mercado, to be managed by the Market Chamber (Câmara de Arbitragem do Mercado).[3]

Although the confidentiality of arbitration is not prescribed by law,[4] but it rather results from choice of parties and/or provisions of the arbitration chambers’ regulation, in practice it is extremely common for procedures to be processed confidentially. This results in discussions and decisions not accessible to the public in general or to anyone who is not part of the dispute directly. Consequently, ignorance about arbitration could, within the capital market, impact the exercise of rights by shareholders and investors.

To improve the mechanisms for the protection of investors and minority shareholders, the Brazilian Securities and Exchange Commission (CVM), in partnership with the then Ministry of Finance, with the financial support of the United Kingdom Prosperity Fund and the technical support of the Corporate Governance Committee of the Organization for Economic Cooperation and Development (OECD), formed a working group to study measures to improve the mechanisms of private enforcement in the Brazilian capital market. The final report of this study was published in November 2020.

Among the various recommendations of the working group, the confidentiality of arbitration procedures was a prominent theme, given the concern with the possible restriction of the exercise of rights by shareholders and investors who might be interested in participating in arbitration proceedings or having knowledge of the issues discussed and their outcomes.

To resolve the issue, CVM published the Public Hearing Notice SDM N°. 01/21[5] to change CVM Instruction N°. 480/09 by creating a duty to publicly held companies of communicating corporate claims to the market. The instruction set forth the rules for registration of issuers of securities and contains several rules applicable to publicly held companies, including those related to periodic and occasional informational duties.

Under the proposal, corporate claims are judicial or arbitration proceedings:

  • involving corporate and securities market legislation, including CVM rules;
  • in which the issuer, its controlling shareholders, or its directors appear as parties; and
  • involving diffuse, collective, or individual homogeneous rights or interests or in which a decision may be given and may affect the legal sphere of the company or other holders of securities who are not part of the proceedings.

As an example, the proposal mentions lawsuits for annulment of corporate resolutions, action for civil liability against officers, administrators and controlling shareholders. In relation to such corporate claims, the issuing company would be required to disclose, in summary:

  • news about the commencement of the arbitration, including the indication of parties, the amounts, assets or rights involved, main facts and request;
  • in the case of judicial proceedings, any interim decisions (of approval or rejection) and the result of judgments on the merits in any instance;
  • in the case of arbitration, interim decisions (granted or denied), decisions on the jurisdiction of arbitrators (positive or negative), decisions on the challenge of arbitrators (accepting or rejecting) and the result of merit decisions; and
  • any agreement proposal or any agreement entered into during the proceeding.

The public hearing was opened for contributions until mid-April and, in all, 18 commentaries were presented by the legal community, including lawyers, associations, arbitration chambers and others.

Among the contributions, some procedural aspects related to the application of the new regulations were suggested, such as:

  • the inclusion of a period of vacatio legis for better suitability of issuers and arbitration chambers; and
  • the need for a transition rule for ongoing proceedings.

On the merits, the contributions were quite varied, including comments on the definition of corporate demands and the content of mandatory disclosure. Among the most recurrent – and most controversial – topics it the disclosure of settlement agreement proposals and decisions on the challenge of arbitrators.

Currently, the audience is under analysis by CVM and there are several relevant suggestions to be considered by the autarchy. The initiative to update the provisions involving the duty of disclosure related to corporate disputes is positive, as well as the broad involvement of the legal community in the debates on the subject. It is now expected that the result of the work will fulfill the intended purpose and be positive for the Brazilian capital market and arbitration.


[1] Law No. 9.307/96, Art. 1 - Persons able to hire may use arbitration to settle disputes relating to available property rights.

[2] Law No. 6.404/76 – Art. 9, §3 - The company's bylaws may establish that disagreements between shareholders and the company, or between controlling shareholders and minority shareholders, may be resolved by arbitration, as specified.

[3] Companies listed in tier 2, Bovespa Mais and Bovespa Mais Tier 2 are also subject to mandatory statutory arbitration.

[4]  Although the Arbitration Law provides that arbitrators must act with discretion (art. 13, §6), there is no provision under the same law that confidentiality is the rule.

[5] Available in