The Brazilian Federal Justice Council recently hosted its so-called 1st Campaign for the Prevention and Extrajudicial Resolution of Conflicts. The Council’s “Campaigns” are intended to promote debate on Brazilian legislation and, after each Campaign, guidelines on best practice are published. Although these guidelines do not bind the courts, they are highly persuasive and are often used by judges to support the rationale behind their decisions. Among almost 90 approved guidelines on the prevention and extrajudicial resolution of conflicts, three deal expressly with DBs. These include: (i) recognition of DBs as a valid consensual method of conflict resolution under the Civil Procedure Code (ii) that the decisions of DBs bind the parties unless and until a judicial or arbitral decision is otherwise issued and (iii) the recommendation that DBs be used in construction contracts and infrastructure projects to reduce cost and allow immediate resolution of conflicts. As a result, it is expected that the Brazilian courts will uphold DB decisions, recognising them as valid, enforceable and aligned with the objective of promoting alternative dispute resolution. Scope for use of DBs The use of DBs in construction contracts and infrastructure projects may help to address the problems with delays and cost overruns that have plagued many major Brazilian infrastructure projects. The infrastructure sector is in a state of flux in the wake of the “Car Wash” corruption scandal, which has sullied the reputation and the balance sheets of many of Brazil’s largest construction contractors. It is likely that these companies will, in many cases, be replaced by smaller or foreign players that do not have the same long term relationships with the public authorities and state-controlled companies. The use of DBs in these new relationships may help to build trust. In particular, public sector clients need to have confidence in decisions to grant variation orders, which were used to disguise kick-backs in some of the Car Wash cases. Given Brazil’s huge demand for new infrastructure investment, and upcoming PPP and concession programmes, there is a lot riding on new, dispute free, projects. It is to be hoped that this latest support from the Federal Justice Council will act as a catalyst for the wider use of DBs in Brazil, and that these can play some part in improving project management, avoiding disputes and delivering on Brazil’s infrastructure demands.
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