Brazil / 15 February 2006 / Brazil, Superior Tribunal de Justiça (Superior Court of Justice) / Plexus Cotton Limited v. Santana Têxtil S/A / SEC 967
| Country | Brazil |
| Court | Brazil, Superior Tribunal de Justiça (Superior Court of Justice) |
| Date | 15 February 2006 |
| Parties | Plexus Cotton Limited v. Santana Têxtil S/A |
| Case number | SEC 967 |
| Source |
http://www.stj.jus.br (Official website of the Superior Tribunal de Justiça) |
| Languages | Portuguese |
| Summary | Plexus Cotton Limited (Plexus) and Santana Têxtil S/A (Santana) entered into two contracts for the purchase and sale of cotton. One of the contracts had a clause for arbitration at the Liverpool Cotton Association in the United Kingdom. Santana did not sign either of the contracts. Santana rejected the goods, claiming that the delivery was late and that the quality was inferior to what was contracted for. Plexus initiated arbitration proceedings after Santana rejected the goods and obtained an award ordering Santana to pay approximately two hundred and thirty thousand US dollars for breach of contract. Plexus sought recognition and enforcement (“homologação”) before the Superior Tribunal de Justiça (Superior Court of Justice). Santana raised objections arguing that i) the issue of recognition and enforcement had already been previously decided by the Supremo Tribunal Federal (Federal Supreme Court) and it had become res judicata; ii) there was no valid arbitration agreement due to the absence of unequivocal consent in writing to arbitrate because the contract was not signed and, consequently, the arbitral award violated Article 39(II) of the Brazilian Arbitration Act (which mirrors Article V(2)(b) NYC). The Superior Tribunal de Justiça rejected the request for recognition and enforcement based on the Brazilian Arbitration Act (the Arbitration Act). The majority of the Superior Tribunal de Justiça rejected the objection that the decision had become res judicata, which, if so, would have led to the dismissal of the claim without prejudice. It first took note of Article 4(1) of the Arbitration Act, which has similar but not identical language to Article II(1)(2) NYC (it provides: “Article 4- An arbitration clause is an agreement by which the parties to a contract undertake to submit to arbitration the disputes which may arise with respect to that contract. (1) The arbitration clause shall be in writing and it can be inserted in the main contract or in a document to which it refers”). Based on this provision the Superior Tribunal de Justiça found that there was no agreement to arbitrate because there was no consent in writing, as the contract containing the arbitration agreement was unsigned. The Superior Tribunal de Justiça also added that under Brazilian law there is no equivalent to the English rule which recognizes an arbitration agreement in an unsigned contract. It also held that the lack of explicit consent to the arbitration agreement violated Brazilian public policy under Article 39(II) of the Arbitration Act. |
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Attachment (1)
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