Legal representation, contracts and international arbitration

The Brazilian Superior Court of Justice, which has jurisdiction over the ratification of foreign courts decisions (art. 105, I, i, of the Federal Constitution), recently ruled on a case arising between a Japanese company (Casio Computer) and two Brazilian commercial partners (Eletrônicos Prince and After Service). Parties were previously engaged in a court claim and in an arbitration. Following Casio's decision to terminate six contracts of commercial distribution, Eletrônicos Prince filed a lawsuit in the Brazilian courts for damages, which lawsuit was denied. Casio then referred the dispute to arbitration, in Japan, where it was found Casio had no obligations towards the other two companies; and that it actually was entitled to compensation after the termination. This was the award to be ratified by the SCJ.

Brazilian legislation concerning ratification of foreign courts decisions (Decree-Law No. 4,657, of September 4th, 1942, in conjunction with SCJ Rules No. 9, of May 10th, 2005, in conjunction with Federal Law No. 9,307, of September 23rd, 1996) sets out few possibilities for defendants. The Court carries out no proper review of the decision's merits, unless matters of public order, national sovereignty and proper costumes arise.

The Brazilian companies, nonetheless, argued that a default judgment was entered in the arbitration due to their inability to find a lawyer to represent them in Japan. Besides going over the merits of the award, on the grounds that instead of paying damages they should be compensated, Eletrônicos Prince and After Service argued that the certified and sworn translation of one of the six contracts was not entered in the docket since the beginning of the proceedings.

The Court ruled that it was rather the award, and not the contract itself, which was being ratified; and therefore found that it was possible and reasonable for the certified and sworn translation to be entered in the docket after the ratification procedure had started. As for the default judgment, the ruling was that one's actual ability of hiring a lawyer to represent one in an arbitration abroad is not to be confused with one's unequivocal knowledge of said procedure - in accordance to art. 39 of Federal Law No. 9,307, the latter alone would suffice to render the award enforceable and thus allow its ratification in Brazil.

SEC 10.643/EX, Rel. Ministro HUMBERTO MARTINS, CORTE ESPECIAL, julgado em 19/11/2014, DJe 11/12/2014. In Portuguese here.