Brazilian Federal Government issues Decree regulating arbitration in dispute resolution between Public Administration and transport and logistics sectors

On September 23, 2019, the Brazilian Presidency issued Decree 10,025 of September 20, 2019 (“Decree“), which regulates arbitration related to ports, toll roads, railways, waterways and airport public infrastructure.

In accordance with the Decree, arbitration will be utilized by the Federal Government and its entities limited to settling disputes with infrastructure operators, such as concessionaires, permittees, lessees of public facilities, authorized entities or port operators.

Arbitration may be used to settle disputes in connection with the following matters:

  1. the economic-financial balance of PFI agreements;
  2. default on contractual obligations by either party;
  3. the calculation of indemnities on damages arising from the termination or assignment of the agreement.

Only arbitral chambers that meets the regulatory requirements and that are duly registered by the Office of the Federal Attorney General (“AGU”) can judge disputes regarding arbitrations between the Federal Government and infrastructure operators. The Decree sets out the following minimum requirements:

  1. be in regular operation as an arbitral chamber for at least three years;
  2. have their good repute, competence and experience recognized in relation to the conducting of arbitral procedures;
  3. have their own regulation, available in Portuguese.

Regarding arbitral awards, the Decree provides that payment by the Federal Government must be made by judicial bond or small amount order of payment, as the case may be. Moreover, the parties may agree that the execution of the award can be made by instruments provided in the infrastructure agreement, replacing the monetary debt, or compensation of already existing debts between the parties.

Therefore, by regulating the arbitration for federal infrastructure agreements, the Decree aims to promote alternative dispute resolution between the Federal Government and the infrastructure operators. It is important to note that arbitration procedures are quicker than judicial procedures and the arbitrators are more specialized than traditional judges. In this way, if properly applied, the Decree could increase legal certainty for the individual, streamlining the resolution of conflicts between the private sector and the government and promoting the development of infrastructure in the country.

Our Infrastructure Law team is available for any further clarification on this matter.