ARBITRATION FACING THE BRAZILIAN STATE: NEW LIGHTS ON OLD ISSUES
Marilda Rosado de Sá Ribeiro* & Jorge Pedroso**
ABSTRACT: This article aims to analyze arbitration in Public Administration contracts in the Brazilian Oil and Gas sector, and the challenges to its real effectiveness. Initially, it is outlined the development over time of the institute of arbitration in Brazil, emphasizing that Brazil is moving towards adopting practices similar to international ones, in relation to arbitration between the State and private entities, especially in what concerns the scope of study of International Investment Law. We also highlighted in the second chapter the most critical points regarding arbitration with public administration with doctrine basis, and also the arbitration concentration in the Petroleum Industry, pointing out the causes that impose its reception in foreign and national laws. Besides, we demonstrated that the entrenchment of its effectiveness is an important attraction for foreign companies wishing to make investments of great size in Brazil. In chapter three, we deeply analyzed the emblematic Brazilian precedent – Conflict of Competence no. 139.519/RJ – that reinforces the application of the principle of kompetenz-kompetenz by the Brazilian Judiciary. According to this principle, any nullity claim of agreement or arbitral clause must be decided by the Arbitral Court itself and not by state jurisdiction. Therefore, this important decision rendered by STJ gives prestige to arbitration as an extrajudicial means of conflict resolution, evidencing a cultural change in the Brazilian judging stance.
KEYWORDS: Arbitration; Brazil; International Investment Law; Conflict of Jurisdiction; Principle of Competence-Competence
The fundamental role of arbitration in the dispute resolution between States, in the field of Public International Law, has already been the object of our previous studies. Its corollary is the conflict resolution through peaceful means, as supported by Nguyen Quoc Dinh, Patrick Dallier and Alain Pellet, as an imperative norm of absolute value. Guido Soares was one of the first great names of the Brazilian internationalist doctrine to highlight the importance that arbitration had gained at that time, primarily regarding petroleum contracts. It belongs to this author the remark that “the theme of pacific dispute resolution between states constitutes one of the foundations of all General International Law, as it addresses norms conceived since the emergence of this Law, that aim to avoid the use of force or military threats, which are denial of the International Law.” 
The inaugural basic distinction about the arbitration theme is herein replicated: a) arbitration between States, basically typified by the use of the Public International Law, subdivided in ad hoc and institutional; b) arbitration between private parties, subdivided in internal and international; c) arbitration between States and private parties, regulated by the traditions and customs of international commerce.
The importance of arbitration in international agreements is entrenched in the affirmation made by Jean Robert and Bartrand Moreau, in the sense that it is “not possible the existence, today, of a serious international agreement without an arbitration clause”. It is not by chance that one of the themes of interest of the doctrine that studies agreements between sovereign States and foreign investors is the possibility of the Public Authority to agree with private individuals dispute resolution by means of arbitration.
W. Laurence Craig, William W. Pakk and Jan Paulsson, in the book International Chamber of Commerce Arbitration, enunciate that, on the businesses between States and private investors, arbitration is frequently the only acceptable mechanism for dispute resolution. For the State, the preference is due to avoid the publicity as much as the submission of another foreigner to the national judiciary, which would be an affront to the State’s sovereignty. For the foreign investor, choice of arbitration avoids an undecided court regarding waiving jurisdictional immunity or influenced by governmental interests, giving more assurance as to the impartiality of the judgment in the event of a future conflict.
In other words, the greater the guarantee of compliance with the principle of legal certainty, the greater the investor’s confidence and the better the reputation of the host State. This aspect is relevant in the modern Brazilian society, which has long been debating the need for investments in the country, so that the economy can develop and make a qualitative leap.
This theme is part of a wider context of Investment International Law, which adopts the principles and rules applicable to foreign investments, as a normative framework necessary to ensure the legal security of investments made, with emphasis on long-term ventures in structural and strategic sectors.
In a clear parallel with the most favored nation treatment standard under International Trade Law, the practical consequence for the receiving State is to enable the foreign investor to also benefit from the most favorable treatment that may have been offered to investors from a third country. The inclusion of this standard in bilateral treaties, for example, came from a longing to ensure to the foreign investors a treatment at least as favorable as the one offered to the generality of the nationals of other States.
Another pillar of the International Investment Law is the national standard of treatment, which requires that the treatment of the receiving State with foreign investors be equal to that granted by the State to national investors in similar circumstances. The practical application of this principle serves to avoid and eliminate any discrimination in the domestic rules regarding the offer of benefits to the national investor, to the detriment of the foreign investor.
The standard of fair and equitable treatment is a classic parameter of International Law, expressed as an undetermined legal concept, whose inclusion in the international investment treaties aims not only to establish a basic standard of treatment, but also to assist in the interpretative task of other material provisions of the treaties and, even, fill any regulatory gaps in the legal systems. It is common to see that the standard of fair and equitable treatment includes a prohibition on the adoption of measures that violate the principle of legal certainty in relations between the receiving State and the foreign investor.
In fact, a characterizing element of International Investment Law is the complementation by arbitral tribunals of fundamental concepts and principles of the subject. In the absence of global regulatory instruments, it is up to arbitration to give normative density to concepts such as “fair and equitable treatment” and “integral protection and security”. The main forum for international investment arbitration between the receiving State and the foreign investor is the International Centre for the Settlement of Investment Disputes (ICSID), created by the 1965 Washington Convention within the World Bank.
In the early 1960s, when Brazil was invited by the World Bank to take part in the Washington Convention, it was established – from the opinion of the Ministry of Foreign Affairs – an understanding contrary to the arbitration mechanism that would be established through the ICSID. Among other reasons, the opinion of Augusto de Rezende Rocha considered that the transfer of “essential public functions to an international tribunal, which in its organization and functioning, will be susceptible to prejudicial influence to its own sovereignty” was contrary to the legal and political order of the country.
The Brazilian stance was influenced by the Calvo doctrine – dominant in the political environment of Latin America at the time – according to which the foreigners could have at least the same rights granted to nationals, resorting exclusively to the national courts. With the change in the global geopolitical panorama, Latin-American countries started to adopt a more dynamic insertion policy in the global economy, ratifying the Washington Convention belatedly, as observed in the cases of: Paraguay (1983), Ecuador (1986), Chile (1991), Argentina (1994), Bolivia (1995), Venezuela (1995), Colombia (1997) and Uruguay (2000). Despite the change of stance of the other Latin-American countries, Brazil has never signed the Washington Convention.
The Brazilian restrictions on international investment arbitration were also evident during the course of the bilateral investment treaties – technically called Agreements on Reciprocal Promotion and Protection of Investments (ARPPI) – in the National Congress. The multiplication and the dissemination of these agreements in several countries have been observed, in parallel with the liberalization process of the investment regimes of the 1980s and 1990s. In a different way adopted in the Washington Convention, the Brazilian Government ended up yielding to the proliferation of investment agreements and signed fourteen bilateral investment treaties – mostly with European Union countries – between 1995 and 1999. However, ratification of all these agreements faced resistance in the National Congress. The Executive Branch has decided to withdraw the bills in course in the Chamber of Deputies.
It was exactly in this context of profound reforms promoted in the 1990s that Brazil published Law 9.307/1996, known as the Arbitration Law, which was also designed to create a more favorable environment for receiving foreign investments.
Although set forth for the first time in the Imperial Constitution of 1824, there is no doubt that the historical mark for the regulation of arbitration in Brazil was with the Arbitration Law. In it, the most relevant points for the adoption of the institute were defined, such as the choice of the arbitrator, the applicable rules, judgment criteria (whether by law or by equity), deadlines and procedure, among other issues.
Five years after its publication, the Federal Supreme Court (“STF”), in a leading case on the matter, confirmed the constitutionality of the Arbitration Law in an incidental way, in the judgment of an appeal originating from the process of ratification of a foreign arbitral award (SE 5.206), on December 12th 2001. The Brazilian Supreme Court, by a majority, considered that the adoption of the arbitration clause does not constitute an offense against article 5th, XXXV, of the Constitution of the Republic (“the law shall not exclude from the appreciation of the Judiciary Branch damage or threat to rights”), since eventual annulment of the arbitration award may always be declared, ultimately, by the Judiciary Branch.
Despite the literality of the constitutional command, the Arbitration Law, itself disposed in its article 33, that “the concerned party can plead to the competent body of the Judicial Branch the declaration of nullity of the arbitral award, in the cases provided in this Law”. It is to be noted that the Law 13.129/2015 made a subtle correction in the wording of this provision, which originally granted jurisdiction to the Judicial Branch to “decree” the nullity of the arbitral award, rather than simply “declare” such nullity.
Wrapping up another discussion regarding the jurisdictional nature of the arbitral procedure, the wording of article 515, VII, of the Code of Civil Procedure of 2015, innovated by expressly providing that the arbitral award constitutes an extrajudicial enforceable title, thus being equivalent to a judgment given by a magistrate. It is therefore independent of any type of homologation to be executed directly by the competent court.
In addition, since the issuance of the Arbitration Law, Brazil has ratified and internalized in national law numerous conventions on the matter. Such measures, together with the reformulation of the Arbitration Law, promoted by Law 13.129/2015 and other legislative improvements, have helped to definitively consolidate arbitration as an alternative method of dispute settlement in Brazil. An indisputable proof is the fact that, currently, several Brazilian law firms have areas specialized in dealing with arbitration, an unimaginable fact two decades ago.
Even so, for lack of specific authorization, during the almost two decades that followed the enactment of the Arbitration Law, there was a discussion in the legal environment regarding the validity of the arbitration clause in agreements set forth between the public authority and private parties. In fact, the option of arbitration in agreements with the Public Administration has been controversial for a long time. Much has been questioned about the unavailability of the public interest and the rights covered by public agreements.
In fact, the original wording of article 1 of Law 9.307 did not authorize, but also did not prohibit the use of the arbitral procedure by the public administration, providing only that “persons able to contract may rely on arbitration to settle litigation relating to available patrimonial rights”. It is not unknown, however, that the issue had already been sparsely regulated in several other specific laws, filling in the gap that had existed before.
Due to the uncertainty left by the wording of the norm, after ample debate, the National Congress, aligned with the international tendency, published Law 13.129, on May 26th 2015, only ten days after the enactment the New Civil Procedure Code and added, among other provisions, the first paragraph of article 1 of Law 9.307, entrenching the possibility of the state to carry out, with private parties, the use of arbitration to resolve disputes arising from administrative agreements.
This is the wording of the 1st Article of the Arbitration Law, after the enactment of Law 13.129/2015, the main legal provision, today, that expressly authorizes the adoption of the commitment clause in agreements signed between individuals and the public authority:
Art. 1 The persons capable of contracting may avail themselves of arbitration to settle disputes relating to available patrimonial rights.
§ 1 The direct and indirect public administration may use arbitration to settle disputes relating to available patrimonial rights.
§ 2 The competent authority or direct public administration agency for the signing of an arbitration agreement is the same for the making of agreements or dealings. ” (our highlights)
With this approach, the legislator has placed Brazil in line with what is happening in the rest of the world, whether in private oil industry agreements or, often, in the exploration and production agreements with host countries, which is the main focus of this work.
II. Arbitration in petroleum contracts
Arbitration in the State Contracts acquires special relevance in concession contracts for the exploration and production of petroleum, since such contracts, usually, are concluded between the government of the host State, or state enterprise that holds the monopoly of natural resources in the country, and a multinational company. Furthermore, they are extremely technical, complex contracts, involving millions of dollars in investment.
Jacob Dolinger and Carmen Tiburcio affirm that arbitration consists in the form of solution of controversies “more adapted to the international character of the petroleum industry”. This is because the concession contracts for exploration and production of petroleum involve legal relations between States and private companies, and, consequently, legal regimes and diverse objectives. The reference to arbitration involving “National Iranian Oil Co.” and the investor “Sapphire Petroleum Ltd.” is classic, which, in 1958, included in the concession agreement an arbitration clause to protect the investments of the individual investor.
Arbitration is a reality in all countries that have opened their markets to the petroleum industry. Brazil followed this trend when it issued Law 9.478/1997, which ended Petrobras’ monopoly for the pursuit of exploration and production of petroleum and natural gas.
In the same sense, many Latin America countries realized that, in order to attract foreign investment, they would need to adopt arbitration, either by ratifying international conventions that admitted international arbitration or by changing their domestic legislation.
In the oil and gas sector, specifically, Law 9.478/97, which deals with national energy policy, contemplates arbitration in article 43, X, by providing for the possibility of the concession agreement to contain the rules on dispute settlement related to the agreement and its execution, and may also include conciliation and international arbitration.
Actually, the unequivocal possibility of the adoption of arbitration by the Public Administration only confirms a practice that has long been used by the administration itself in search for solutions to conflicts involving agreements signed with the private sector, increasing its applicability to the typically administrative contracts when involving available patrimonial rights.
We must still find out, however, which are these available patrimonial rights to which the State can adopt the arbitral solution, a subject that was approached brilliantly during the judgment of the Conflict of Jurisdiction nº 139.519 – RJ (here referred simply as, “Conflict of Jurisdiction”), by the Superior Court of Justice, about which we will briefly discuss henceforth.
Much of the controversy resides, clearly, within the meaning of the word “available”, which is frequently confused with the notion of free disposition or mere liberality on the part of the Public Administration, even though these are not the most appropriate meanings of the word.
To attribute to a determined public patrimonial right the “available” characteristic implies, in fact, that it can be object of negotiation between the public authority and the individual through Private Law’s institutes. As long as it does not have a specific public destination, it is subject to economic valuation seeking to attend precisely to the public interest.
This last definition stems (not exclusively) from the rule contained in the article 852 of the Civil Code, which, by providing for the possibility of judicial or extrajudicial settlement of disputes, prohibits the solution, through an arbitration clause, of State, personal, family and other matters that don’t have a strictly patrimonial character.
III. The prevalence of the principle of competence-competence
In this context, it is important to highlight the difference between the primary public interest and the Public Administration’s interests or secondary public interest. Quoted in Justice Regina Helena Costa’s vote in the judgment of the Conflict of Jurisdiction, the illustrious Justice Eros Grau, in a legal opinion about arbitration in administrative agreements, with the support of Celso Antônio Bandeira de Mello, teaches us that the public interests or primary interests are the interests of the collectivity as a whole, while the secondary interests are those the State (by the mere fact of being a subject of rights) could have like any other legal entity, namely, regardless of its quality as servant of interests of the community.
The Public Administration may, therefore, have the secondary interest of resisting the payment of indemnities, even if they are appropriate, or of denying well-founded claims that the people may have, defending, in such a way, only their interests as a legal entity, as an authority with the spirit of spending the least amount of resources possible and stuffing the largest amount for themselves. However, it would not be attending to the primary public interest, namely, the one that the law points out as being the collectivity’s interests through the observance of the legal system established in order to cure the interests of all.
This distinction is necessary insofar as the secondary public interests are not to be taken into account if they do not coincide with the primary interests, which are the only ones that can be pursued by the public authorities, in order to delimit any questions that may arise with the alleged label of interest when, in fact, they are intended solely to serve the interest of the administration itself.
For this purpose, we will use the Conflict of Jurisdiction n. 139.519 RJ as the guiding thread of the study as a leading case on this theme. This case concerns a positive conflict of jurisdiction between the Federal Regional Court of the 2nd Region and the International Chamber of Commerce’s (ICC) International Court of Arbitration. This dispute in STJ questioned the jurisdiction of the Arbitral Court to decide on litigation involving Petrobras and the National Petroleum, Natural Gas and Bio Combustible Agency (ANP) from a petroleum exploration and production concession contract.
In the original conflict, Petrobras questioned ANP’s legitimacy to promote the unilateral amendment of the agreement by requesting the unification of an area comprising 7 oil fields, known as ‘Park of the Whales’. This unification altered considerably the basis of calculation of the special shares Petrobras should collect for the State. Due to the disagreement, Petrobras, with basis on an arbitration commitment clause in the original concession agreement, filed an arbitral procedure with the ICC and, at the same time, filed a precautionary lawsuit in the state court, requesting the suspension of the effects arising from ANP’s normative decision, namely, the suspension of the new transfers.
This Precautionary lawsuit was accepted by TJ/RJ’s 5th Court, and the suspension of the effects of ANP’s normative decision was determined. The regulatory agency, on the other hand, challenged the decision, claiming that the cause of the request referred to an unavailable right, that is, the payment of Special Shares, and, therefore, it would not be the Arbitral Court’s jurisdiction to decide about the matter. As a result, the Conflict of Jurisdiction nº 139.519 RJ was prompted.
This case presents itself as relevant because it approaches the issue of availability of rights in the scope of public agreements and, consequently, the limits for the adoption of arbitration in this context. The solution given by STJ established the principle of competence-competence of the arbitral domain, since it stated that arbitration takes precedence as a means of out-of-court dispute resolution. According to this principle, any claim of nullity of an agreement or arbitral clause must be decided by the Arbitral Court and not by the state jurisdiction. Therefore, this important decision of the STJ prescribes arbitration as a mean of out-of-court settlement of conflicts, evidencing a cultural change in the Brazilian judging stance.
The Superior Court´s judgment of the Conflict of Jurisdiction, brought about by the invocation of the Kompetenz-Kompetenz principle, signaled to the market what would be the interpretation of the Judiciary Branch regarding the concept of public interest and availability of public patrimonial assets for submission or not, in the event of dispute, of agreements entered into between the public administration and individuals that contain a clause of commitment to the arbitral jurisdiction.
Justice Regina Helena Costa, by requesting a review to render her vote, made a significant contribution not only by acknowledging the application of the Kompetenz-Kompetenz principle, which determines the jurisdiction of the arbitral court to analyze prima facie its jurisdiction to process and adjudicate a particular conflict originated from an agreement with a commitment clause – or, in Cândido Rangel Dinamarco’s words, mentioned when the review-vote was rendered, “is the jurisdiction of the arbitrator to, in first place, decide on the concrete existence of the arbitral jurisdiction”.
On the other hand of the argumentative effort presented by Justice Napoleão Nunes Maia Filho, rapporteur of the Jurisdiction Conflict, Justice Regina Helena Costa, backed up by respected doctrinators and members of the Superior Courts, presented a brilliant reasoning in her opinion, whose clarity makes it obligatory to transcribe, although partially, in this work:
“In terms of availability or unavailability of the patrimonial right that is the object of the concession agreement (pgs. 44/95e), it is necessary to analyze the subject of the coexistence of an available patrimonial right of the Public Administration with the principle of the unavailability of the public interest.
The public interest is always unavailable because it belongs to the collectivity, and not to the Public Authority, according to Celso Antônio Bandeira de Mello’s always-remembered doctrine:
The unavailability of the public interests means that, being interests qualified as entitled by the collectivity, – internal to the public sector – they are not found to the free disposal of whomever, by being impossible to own. The administrative branch that represents them does not have availability on them, in the sense that its encumbrance is only to cure them – which is also a duty – in the strict conformity of what disposes the intentio legis.”
(Curso de Direito Administrativo, São Paulo: Malheiros, 2015, p. 76).
Maria Sylvia Zanella Di Pietro presents a clear lesson regarding the unavailability of the public interest and the existence of available rights of the Administration:
Precisely by not being able to dispose of the public interests whose custody is attributed to them by law, the powers attributed to the Administration have the character of power-duty; they are powers that it cannot fail to exercise, since it can be subject to being held liable for omission. (…) It becomes very clear in the provision that the public interest is unwavering by the administrative authority.
The principle of the unavailability of the public interest is not to be confused with the idea of unavailable patrimonial rights; the public interest is always unavailable; patrimonial rights may be available or unavailable.
It is possible, in the state-owned enterprises that exercise economic activity, based on article 173, § 1º, indent II, of the Federal Constitution, since the legal provision provides for the subjection of these companies to the legal regime of the private companies, also in regards to the rights and civil, commercial, labor and tax obligations.
Therefore, it is correct to state that the public interest is unavailable. But this does not mean that all of the patrimonial rights, under public law scope, are unavailable. Sometimes, the availability of a public property can be of more interest to the collectivity than its preservation.
But it can decide about the patrimonial effects resulting from the use of prerogatives of the public authority, such as to amend or rescind unilaterally the agreements, which can lead to an economic-financial imbalance. These are aspects that are included in the concept of available patrimonial rights, not because the Administration can waive its rights, but because they are rights that can be valued economically.
(Direito Administrativo. Rio de Janeiro: Editora Forense. 29ª ed. 2016. pp. 1019/1029 – our highlights).
Added to this is the classic doctrine of Eros Roberto Grau, which distinguishes two forms of economic state activities – economic activity in the strict sense and public service, as follows:
“Any form of action or translation of ownership of assets can be economically measurable, that any action of the State in a direct and participatory manner turns out to be an economic activity in the broad sense” and, therefore, available.
(A ordem econômica na constituição de 1988. São Paulo: Malheiros Editores, 2010, 14ª ed., pp. 99/101).
Consequently, whenever the Administration contracts, the patrimonial right is available and may, therefore, be subject to an arbitration clause, without affecting the public interest. (our highlights)
In this line of reasoning, Marçal Justem Filho warns:
The argument that arbitration in administrative agreements is inadmissible because the public interest is unavailable leads to an insurmountable impasse. If the public interest is unavailable to the point of excluding arbitration, then it would also be unavailable for the purpose of producing administrative agreements. Just as the Public Administration would not have jurisdiction to create a binding obligation as to the manner in which the litigation was composed, it would not be invested with the power to create any binding obligation by contractual means. In other words, not only arbitration clauses, but also all administrative agreements would be invalid.
(Curso de Direito Administrativo, São Paulo: Revista dos Tribunais, 11. ed., 2015, p. 824/825 – our highlights).”
Thus, concludes the Justice, whenever the Administration hires there is availability of the patrimonial rights object of this agreement, which can, logically, contain an arbitration clause without affecting the availability of public interest.
The Public Administration, when reaching out for arbitration as a method of resolution of disputes that have as their object an available patrimonial right, is not disregarding the public interest nor renouncing its service. On the contrary, by acting in this manner, it is rightly prescribing the principle of unavailability of the public interest.
The conclusion adopted by Justice Regina Helena Costa is very well supported by the jurisprudence of the Superior Court of Justice, as observed in the following judgments mentioned when she rendered her review-vote:
“CIVIL PROCEDURAL LAW. SPECIAL APPEAL. PUBLIC BIDDING. ARBITRATION. BINDING TO THE NOTICE. JURISDICTION CLAUSE. ARBITRAL COMMITMENT. FINANCIAL ECONOMIC BALANCE OF THE AGREEMENT. POSSIBILITY.
5. Both doctrine and jurisprudence have already indicated that there is no legal obstacle in the stipulation of arbitration by the public authority, notably by the mixed economy corporations, admitting as valid the commitment clauses provided for in notices of public tenders and agreements.
6. The fact that there is no provision for arbitration neither in the notice of public bidding nor in the agreement signed between the parties does not invalidate the arbitral commitment signed subsequently.
7. The provision of the arbitral court, instead of the place of the administration (state jurisdiction), for the resolution of a certain controversy, does not violate the content nor the rules of the dispute.
8. The choice of court clause is not conflicting with the arbitral court, since the scope of coverage may be different, having the need of the action of the Judiciary, for example, to grant emergency measures; execution of the arbitral award; establishment of arbitration when one of the parties does not accept it in a friendly way.
9. The controversy established between the parties – keeping the economic and financial balance of the agreement – is of an eminently patrimonial and available character, to such a point that the parties could have solved it directly, without intervention of both the state jurisdiction and the arbitral court.
10. The submission of the controversy to the arbitral court was a voluntary act of the concessionaire. In this context, its subsequent stand, aiming for the challenge of this act, borders on bad faith, as well as being detrimental to the public’s own interest in seeing this dispute solved swiftly.
11. Once the commitment has been signed, it is the arbitral court that must solve the controversy.
12. Special appeal not granted. (REsp 904.813/PR, Rel. Ministra NANCY ANDRIGHI, TERCEIRA TURMA, julgado em 20/10/2011, DJe 28/02/2012 – our highlights).
CIVIL PROCEDURAL LAW. ARBITRAL COURT. COMMITMENT CLAUSE. DISMISSAL OF THE LAWSUIT. ART. 267, VII, OF THE CODE OF CIVIL PROCEDURE. MIXED ECONOMY CORPORATION. AVAILABLE RIGHTS.
1. Commitment clause is the act by which the contracting parties formalize their desire to submit to arbitration eventual divergences or disputes that may occur during the execution of the agreement. After adjustment, which can only occur in cases involving available rights, contracts are bound to out-of-court settlement of the pending matters.
2. The election of commitment clause is cause for dismissal of the lawsuit without judgment of the merits, in the terms of article 267, VII, of the Code of Civil Procedure.
3. Agreements signed by mixed economy corporations that exploit economic activities of production or sale of goods or services are valid (CF, article 173, §1) and effective and stipulate an arbitration clause submitting to arbitration any disputes arising from adjustment.
4. Special appeal granted.
(REsp 606.345/RS, Rel. Ministro JOÃO OTÁVIO DE NORONHA, SEGUNDA TURMA, judgment on 17/05/2007, DJ 08/06/2007, p. 240 – our highlights).”
The depth with which Justice Regina Helena Costa presents her grounds in the vote cast during the trial of the Conflict of Jurisdiction allows us to conclude with assurance that every time the Public Government contracts with the private individual, they will be dealing with available patrimonial rights. And if it is an available patrimonial right then it can be submitted to the arbitration jurisdiction
Furthermore, the Superior Court of Justice established the jurisdiction of the arbitral tribunal so that, in cases of doubt, it could decide, in first place, about the power of the arbitral jurisdiction, entrenching the adoption of the Kompetenz-Kompetenz principle by the Brazilian legal order.
It can be observed that Brazil is moving towards adopting practices similar to international ones in relation to arbitration between the State and private entities, especially in what concerns the scope of study of International Investment Law. Therefore, it can be seen that not only has there been an increase in the use, in general, of arbitration in recent years, but also an adaptation of Brazilian practice to the international practices.
In regards to the oil and gas sector, after the discoveries of the promising reserves of Brazilian pre-salt, Brazil has been the focus of the attention of large foreign investors.
However, with a crisis in the oil price of recent years, it has become urgent to improve the means to attract foreign capital, which is so necessary for the development of this sector, and the entrenchment of the effectiveness of arbitration is an important attraction for foreign companies wishing to make investments of great size in Brazil.
The expectation regarding the arbitrator’s impartiality impacts the risk analysis that companies make during the process of choosing the places where they will invest. This is because of the fear that, in the event of litigation, favoring the host State will increase the costs of prevention.
The case discussed in this work presents itself as emblematic because it approaches the theme of availability of rights in the field of public agreements and, consequently, about the limits for the adoption of arbitration in this context. The solution given by STJ established the principle of competence-competence of the arbitral domain since it stated that arbitration takes precedence as a means of out-of-court dispute resolution. According to this principle, any claim of nullity of agreement or arbitral clause must be decided by the Arbitral Court itself and not by state jurisdiction
Therefore, this important decision rendered by STJ gives prestige to arbitration as an extrajudicial means of conflict resolution, evidencing a cultural change in the Brazilian judging stance.
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 Special thanks to Bernardo de Freitas Ramos and Isabela Hummel Hohl for their contribution on research and elaboration of this article and to Bernardo Steinitz from Barbosa, Raimundo, Gontijo, Câmara Advogados for his contribution on the translation of this article from Portuguese to English.
* International Private Law and Petroleum Law professor in the University of the State of Rio de Janeiro (UERJ). Doctorate degree in International Law by the University of São Paulo (USP). Partner of the Energy, Oil and Gas sector of Barbosa, Raimundo, Gontijo, Câmara Advogados.
** Master’s degree in International Law by UERJ. Partner of the Energy, Oil and Gas sector of Barbosa, Raimundo, Gontijo, Câmara Advogados.
 The obligation for the states to refrain from the use of force was already contained in article 1 of the Hague Convention for the Pacific Settlement of International Disputes of 1907, in verbis: “With a view to obviating as far as possible recourse to force in the relations between States, the Contracting Powers agree to use their best efforts to ensure the pacific settlement of international differences.” RIBEIRO, Marilda Rosado de Sá. Direito do petróleo: as joint ventures na indústria do petróleo. 2. ed. atual. e ampl. Rio de Janeiro: Renovar, 2003. p. 134.
 DINH, Nguyen Quoc; DAILLIER, Patrick; PELLET, Alain. Direito internacional público. Translation Vítor Marques Coelho. Lisboa: Fundação Calouste Gulbenkian, 1999. p. 721.
 SOARES, Guido Fernando Silva. Direito internacional do meio ambiente: emergência, obrigações e responsabilidades. São Paulo: Atlas, 2002. p. 625. It is noteworthy that Brazil has resorted to arbitration – on Public International Law – in the scope of international conflicts in several occasions, as an arbitrator or as a party. About this theme, see MELLO, Celso D. de Albuquerque. Curso de direito internacional público. 10. ed. Rio de Janeiro: Renovar, 1994, v. 2. p. 1.155-1.171; ACCIOLY, Hildebrando. Manual de direito internacional público. 12. ed. São Paulo: Saraiva, 1996. p. 426-434.
 ROBERT, J.; MOREAU, B. apud CRETELLA JÚNIOR, José. Da Arbitragem e seu Conceito Categorial. Revista de Informação Legislativa. Brasília, DF, ano 25, n. 98, p. 127-138, abr./jun. 1988
 CRAIG, W. Laurence; PARK, William W.; PAULSSON, Jan. International Chamber of Commerce Arbitration. New York: Oceana; Paris: ICC Publishing, 1985. p.17. See also RIBEIRO, Marilda Rosado de Sá. Solução De Controvérsias Na Indústria Do Petróleo in Arbitragem. Rio de Janeiro, 2017, p. 372-401.
 RIBEIRO, Marilda Rosado de Sá e JUNIOR, Ely Caetano Xavier - A Segurança Jurídica Como Fator de Atração de Investimentos Estrangeiros para a Exploração e Produção de Petróleo in Regulação em Setores Estratégicos: Mineração e Energia. Rio de Janeiro, 2017, p. 195.
 ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT. Most-favoured-nation treatment in International Investment Law (OECD Working Papers on International Investment 2004/2). OECD Publishing, 2004, p. 18. Sobre o Direito Internacional dos Investimentos, vide RIBEIRO, Marilda Rosado de Sá e JUNIOR, Ely Caetano Xavier - A Segurança Jurídica Como Fator de Atração de Investimentos Estrangeiros para a Exploração e Produção de Petróleo in Regulação em Setores Estratégicos: Mineração e Energia. Rio de Janeiro, 2017, p. 191-248.
 BELLAK, Christian; KÜBLBÖCK, Karin. Bilaterale Investitionsschutzabkommen, Direktinvestitionen und die Interessen der Entwicklungsländer. In: ÖSTERREICHISCHE FORSCHUNGSSTIFTUNG FÜR ENTWICKLUNGSHILFE. Österreichische Entwicklungspolitik: Berichte, Analysen, Informationen. Wien: Südwind Verlag, p. 17-30, 2004, p. 22.
 ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT. Fair and equitable treatment standard in International Investment Law (OECD Working Papers on International Investment 2004/3). OECD Publishing, 2004, p. 17-19.
 SUBEDI, Surya P. International Investment Law: reconciling policy and principle. Oxford: Hart, 2008, p. 117. In this particular, the author’s opinion: “While the main principles are not fully settled, and state practice and efforts made within and outside of the UN point in conflicting directions, the decisions of international courts and tribunals on these matters have been relied upon to deduce the rules applicable, not only to expropriation and compensation, but also to the meaning of the terms ‘fair and equitable treatment’, ‘due process of law’, and ‘full protection and security’”.
 A detailed insight on the Washington Convention can be found in SCHREUER, Christoph; MALINTOPPI, Loretta; REINISCH, August; SINCLAIR, Anthony. The ICSID Convention: a commentary. 2ª ed. Cambridge: Cambridge University Press, 2009.
 ROCHA, Augusto de Rezende. Parecer DAJ/138 – criação de órgão de arbitragem internacional: BIRD. 20 de agosto de 1964.
 Recently, some Latin-American countries have expressed their dissatisfaction with ICSID and have decided to denounce the Washington Convention. This is the case of Bolívia (2007), Equador (2010) and Venezuela (2012), as GAILLARD, Emmanuel points out. Anti-arbitration trends in Latin America. New York Law Journal, v. 239, n. 108, p. 1-3, 2008.
 About the evolution of the Brazilian stance, see MOROSINI, Fabio Costa; XAVIER JUNIOR, Ely Caetano. Regulação do investimento estrangeiro direto no Brasil: da resistência aos tratados bilaterais de investimento à emergência de um novo modelo regulatório. Revista de Direito Internacional, v. 12, n. 2, p. 420-447, 2015.
 BRAZIL. Supreme Federal Court. Foreign decision: arbitral award that solved a dispute between two companies about rights that are undoubtedly available – the existence and the amount of credits due to commissions originated from commercial representation of a Brazilian company overseas: commitment signed by the requested party which, in these proceedings, agrees with the request of homologation: absence of approval, in the origin, of a judicial authority or an equivalent public body: homologation denied by the President of the STF, in the understanding of the Court’s jurisprudence, dominant at the time: appeal granted, by unanimous decision, having in sight the subsequent edition of L. 9.307 of 23.9.96, which has provisions about arbitration, so that, when homologated the award, it can have effects in Brazil as an extrajudicial executive title. [...].SE-AgR 5206 / EP - ESPANHA. Plaintiff: M B V Commercial and Export Management. Defendant: Resil Industria e Comercio Ltda. Rapporteur: Jus. Sepúlveda Pertence – Kingdom of Spain – STF – Rapporteur Justice Sepúlveda Pertence. Diário da Justiça, Brasília, 30 abr. 2004, p. 29. See comments to each one of the votes in DOLINGER; TIBURCIO. Op. cit., nota 9, p. 55-65. See also RIBEIRO, Marilda Rosado de Sá. Solução De Controvérsias Na Indústria Do Petróleo in Arbitragem. Rio de Janeiro, 2017, p. 372-401.
 According to Law 9.307/1996:
Art. 32. The arbitral award is null if:
I – the arbitral commitment is null;
II – rendered by a person unfit to be an arbitrator;
III – does not contain the requisites of article 26 of this Law;
IV – is rendered outside the limits of the arbitration commitment;
V - (Revogado)
VI – proven that it was rendered by prevarication, concussion or passive corruption;
VII – rendered outside the deadline, regarding the provisions in art. 12, III, of this Law; and
VIII – the principles contained in art. 21, §2 of this Law are disrespected.
 UNITED NATIONS. United Nations Commission on International Trade Law. Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 1958. Information available in: <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html> Access: 19 Jun.. 2018- Protocolo de Genebra de 1923 (Decreto 21.187, de 22/03/32), Convenção Interamericana sobre Arbitragem Comercial Internacional, de 1975 (CIDIP – Panamá – Decreto 1.902, de 09/05/96) and the Convenção Interamericana sobre Eficácia Extraterritorial de Sentenças e Laudos Arbitrais Estrangeiros de 1979 (CIDIP – Montevidéu – Decreto 2.411, de 02/12/97), Protocolo de Cooperação e Assistência Jurisdicional em Matéria Civil, Comercial, Trabalhista e Administrativa de 1992 (Mercosul – Lãs Leñas – Decreto 2.067, de 12/11/96), Acordo sobre Arbitragem Comercial Internacional do Mercosul de 1998 (only approved by Decreto Legislativo 265, de 29/12/00), which had its application extended to Bolívia and Chile (also only approved by Decreto Legislativo 483/01). In 2002 Brasil took an important step towards finally ratifying the New York Convention of 1958 (Convenção sobre o Reconhecimento e a Execução de Sentenças Arbitrais Estrangeiras - Decreto 4.311, de 23/07/02), ratified by 129 countries.
 DI PIETRO, Maria Sylvia Zanella. As Possibilidades de Arbitragem em Contratos Administrativos. Revista Consultor Jurídico, September 24th 2015 edition.
 RIBEIRO, Marilda Rosado de Sá. Direito do Petróleo. 3. ed. Rio de Janeiro: Renovar, 2014. p. 565.
 Ibid., p. 442.
 BRUNET, Alexia e LENTINI, Juan Agustin Arbitration of International Oil, Gas, and Energy Disputes in Latin America, 27 Nw. J. Int'l L. & Bus. 591 (2007).
 DI PIETRO, Maria Sylvia Zanella. As possibilidades de arbitragem em contratos administrativos. Revista Consultor Jurídico, September 24th 2015 edition.
 GRAU, Eros Roberto. Arbitragem e contrato administrativo. Revista Trimestral de Direito Público, n. 32, 2000, p. 147.
 BANDEIRA DE MELLO, Celso Antônio. Curso de Direito Administrativo, 4ª edição, Malheiros Editores, São Paulo, 1993, pg. 22.