Cultural Considerations in Advocacy in Latin America: Brazil

The aim of this chapter is to outline some of the aspects of evidence production in arbitration proceedings held in Brazil that highlight some of the peculiarities of our domestic practice in relation to standard international practice, which is mainly due to our civil law tradition and the influence of domestic litigation.

In this regard, three important methods of evidence production are considered: (1) witness examination, (2) document production and (3) technical evidence production.

In Brazil, as in the international context, the procedural aspects of arbitration are not exhaustively disciplined by the Brazilian Arbitration Law (Law No. 9,307/96) nor by the rules of the arbitral institutions.^[2] As is the case in most jurisdictions, Brazil’s Code of Civil Procedure (applicable to domestic litigation) is not automatically applicable to arbitration proceedings,^[3] in which arbitrators boast extensive powers in regard to the production of evidence.

It is precisely in the discipline of evidence that there is one of the greatest ‘clashes’ of arbitration: flexibility against legal certainty.^[4] Although it is not intended to compromise the flexibility of the procedure, it is necessary that the stages for the production of evidence are predictable. Uncertainty about the specific procedural rules governing testimonial evidence, for example, can risk due process and the efficiency of the proceeding.^[5]

Article 21 of the Brazilian Arbitration Law establishes that arbitration proceedings will be conducted as agreed by the parties in the arbitration agreement, including evidence production questions. Paragraph 1 of the Article provides that, if the arbitration agreement does not specify how the procedure should be conducted, and if the parties do not reach an agreement on the matter, the arbitrators will settle it. The procedural rules must respect the due process and right to be heard, as Paragraph 2 of Article 21 highlights the principles of adversary proceedings, equality between parties, arbitrator impartiality and free evaluation of evidence. This applies to rules created by both the arbitrators and the parties. The non-observance of the provisions laid out in Paragraphs 1 and 2 of Article 21 could lead to the annulment of an arbitration award in a lawsuit before state courts.^[6]

Witness examination

In view of this, it is the duty of the arbitrators, respecting the will of the parties, to establish the necessary rules for conducting the production of the oral examination according to the needs and form of the arbitration proceeding. It is not common practice for Brazilian parties in domestic arbitration, at the outset of the proceeding, to apply the International Bar Association (IBA) Rules on the Taking of Evidence,^[7] although domestic arbitration in Brazil has become more flexible in the sense of increased adoption of the Rules or parties agreeing on procedural rules for witness testimony (or the production of evidence in general terms) in the terms of reference or Procedural Order No. 1.

In domestic cases, Brazilian arbitrators often issue a procedural order at the end of the pleading phase (memorials phase) inviting the parties to state whether they want to produce testimonial evidence and to submit the names of the factual witnesses, identifying the specific facts about which the witnesses may testify. Some arbitrators invite the parties to submit witness statements before the evidentiary hearing.^[8] Although this is not yet common practice in Brazil, it is becoming increasingly common.

Show arbitrators you are not afraid of the facts, even unwelcome ones

In my years of experience as counsel and arbitrator, few were the occasions where a party was 100 per cent right and the other was 100 per cent wrong.

Therefore, rare exceptions aside, presenting a case in black-and-white terms will most likely come across as far-fetched. Instead, it is more effective to rely on the techniques of framing and to focus the tribunal’s attention on certain aspects of the case, namely those favourable to the client.

However, opposing counsel will certainly do the contrary, drawing the tribunal’s focus towards other matters pertinent to the dispute. Consequently, it is just as important to be prepared to address the unfavourable aspects of a case.

In this scenario, appraising the conflict under notions of justice, fairness and reasonableness – even in arbitrations in law – may assist counsel in presenting their client’s best possible case to the tribunal, limiting the impact of its unfavourable aspects.

This does not mean that counsel should rely on smoke and mirrors. Arbitrators are seasoned professionals and will not be receptive to attempts to disguise or confuse the facts.

Finally, I recommend studying to understand how an arbitrator’s mind works, and which steps he or she will need to take to reach a decision. Invest time in identifying which are the key issues at hand and present them clearly and in an orderly manner to the arbitrators. Showing arbitrators that you are not afraid of the facts is essential to gaining their attention and, hopefully, winning the case at the end.

– Eleonora Coelho, Eleonora Coelho Advogados

Regarding the production of testimonial evidence in domestic cases, a witness examination is generally carried out first by the counsel of the party who appointed the witness for direct examination, in line with the procedure stated in Article 459 of the Brazilian Code of Civil Procedure. Subsequently, the witness will be questioned by counsel of the opposing party (cross-examination), whose questions are limited to the subjects that were addressed during the direct questioning or to the questions posed by the tribunal. Re-direct examination followed by re-cross-examination by the opposing counsel is also possible but is always limited to the answers given by the witness during the first examination.^[9]

Contrary to international practice, in most domestic arbitration cases, testimonial evidence does not encompass witness statements made before the evidentiary hearing. This may be an issue for the opposing counsel’s preparations, as he or she will not have details of the testimony to be presented at the hearing. Brazilian arbitrators usually consider that witnesses act more spontaneously during direct examination and therefore prefer this method, due to the application of the principle of orality in the legal systems of civil law countries, which prevents the acceptance of written testimonial evidence.^[10] Direct examination also allows more flexibility to conduct cross-examination as the scope of the testimony may become broader than is usual in a written witness statement.^[11] As a rule, arbitrators do not allow leading questions during a direct examination,^[12] only during cross-examination. Further, in domestic cases, arbitrators will very often reject questions to factual witnesses regarding contractual interpretation or that contain arguments from the party.^[13]

Cross-examination can also be used for experts contracted by the parties to provide technical evidence.^[14] In most cases, examination is limited to the content of an expert’s report, and arbitrators can invite experts for both parties to focus only on the technical issues on which they disagree. As discussed in the following section, in domestic cases it is common for arbitrators to appoint their own expert to opine upon the adversarial technical reports brought by the parties.

Another peculiarity of Brazilian domestic arbitration is the potential application of the rules of domestic litigation when questioning parties’ legal representatives. Whereas in international proceedings a party’s representative is heard in the same capacity as a factual witness,^[15] in Brazil the legal representative may not be sworn to testify under oath and, consequently, arbitrators may not give the same weight to their testimony.^[16] In other words, legal representatives may not have the same obligation as factual witnesses to tell the truth under the charges of false testimony provided in Article 342 of the Criminal Code.^[17] In contrast, in international arbitration, legal representatives are always sworn in and must testify with a commitment to tell the truth.^[18]

In Brazilian domestic arbitration, parties can expect the proactive participation of arbitrators at the evidentiary hearing, who, in addition to elucidative interferences, can, at any moment, formulate questions about topics not addressed by counsel and determine the examination of witnesses not appointed by the parties. Arbitrators have a duty to oversee the process of witness examination and any actions that may affect the effectiveness of the proceedings, such as curbing any language that may cause offence and otherwise protecting witnesses, and discouraging dramatic performances and overlong questioning.^[19]

Document production

The Brazilian Arbitration Law allows the parties to domestic arbitration a great deal of freedom in choosing the rules that will be applicable to the procedure,^[20] which means that the Brazilian Code of Civil Procedure is not automatically applied.^[21] When it comes to document production, parties may agree to follow international arbitration procedural rules, such as the IBA Guidelines, the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules or the Prague Rules on the Efficient Conduct of Proceedings in International Arbitration, which, aligned to the civil law tradition, move away from the production of evidence as a largely party-driven effort.^[22]

Because of this, in practice, arbitration is more flexible than court procedures – which are commonly described by national legal scholars as rigid^[23] – including regarding the production of documentary evidence. In court procedures, there are specific timings and methods to be observed: the parties usually attach available documents to their initial complaint (i.e., the statement of claim), but only after they have responded to each other’s claims are they able to specify the type of evidence they intend to produce in court, indicating its relevance to the judgment of the case.

In domestic litigation, with the exception of provisional measures for early production of evidence, if a party wishes to request production of a document by its adversary, it often has to wait until the specified time for submission of evidence. Only after that, based on the parties’ allegations, will the judge determine what evidence does and does not need to be produced. If the judge admits a request for production, the requested party may only exempt itself from presentation of the document in the instances expressly stated in the Code of Civil Procedure.^[24]

In domestic arbitration, on the other hand, these formalities do not necessarily apply, and tribunals usually have greater discretion than court judges to make alternative and original decisions to allow the production of evidence. As established by national legal scholars, this is mostly due to the fact that the ultimate goal of arbitrators is to find the material truth behind the parties’ allegations, in spite of procedural aspects.^[25]

In practical terms, this means that arbitrators can determine, for instance, that:

• a party presents documents at an earlier or later stage of the procedure;
• a certain type of evidence (such as documentary or testimonial) is produced before the technical evidence;^[26] or
• international requirements are applied to a domestic arbitration, such as cross-examination (as discussed above), party-appointed expert witness, depositions or even the adoption of the Redfern schedule for document production.

In relation to this, the Brazilian Superior Court of Justice recently recognised an arbitral tribunal’s jurisdiction to decide autonomous claims for production of documents when an arbitration clause was established between the parties. According to this judicial precedent, requests for autonomous early production of evidence – independent from the existence of a claim on the merits – can be granted by arbitral tribunals even if the general requirements for provisional measures are not present (i.e., even if there is no urgency).^[27]

Furthermore, a request by one party for production of documents by its adversary is more widely admitted in arbitration than in court procedures. This is partly because the duty to cooperate, which derives from the nationally established principle of good faith, is more intensely applied in arbitration. However, it is not only the parties that are subject to the duty to cooperate: arbitrators are too, and must therefore assist the parties in obtaining a specific document or information that is essential to resolving the conflict.^[28]

Nevertheless, this does not mean that an arbitral tribunal should admit requests for production of documents indiscriminately. To prevent fishing expedition attempts, a request can be analysed according to international guidelines (such as the IBA Guidelines or UNCITRAL Model Law),^[29] considering criteria such as:

• the relevance of the requested document;
• the materiality of the document;
• the specificity of the document;
• proportionality; and
• non-privilege of one of the parties.

If the request is admitted, the refusal of the requested party to present the document may lead the tribunal to seek enforcement before judicial courts, as, according to the Brazilian Arbitration Law, arbitrators are not competent to enforce orders,^[30] even though they have the jurisdiction and authority to impose fines for non-compliance with an arbitral decision.^[31]

Alternatively, if the party’s refusal is justified by confidentiality issues, the tribunal may demand that the party presents the full document to the arbitrators and an edited version to the requesting party, providing to the latter only those parts of the document that are essential for clarification of the specific allegation.^[32] Finally, the tribunal may also draw adverse inference from the allegation that is related to the requested document, although this is less common in domestic arbitration.

Party-appointed experts

As discussed above, arbitration proceedings held in Brazil can be influenced by domestic litigation rules. Even with the efforts of the parties and arbitrators to free themselves of domestic procedural laws, establishing the arbitration as an independent field of procedure, the Brazilian Code of Civil Procedure remains a strong source of influence.

These interactions with national legislation have both advantages and disadvantages. For the purposes of this chapter, we focus on a particular concern, namely issues pertaining to the production of expert evidence.

As in most countries with a civil law tradition, Brazil’s Code of Civil Procedure establishes that a tribunal-appointed expert must produce a technical report. In this situation, the judge should nominate an expert that he or she trusts, who should thereafter work alongside the parties and their own experts – to assist counsel with any work outside their area of expertise^[33] – to produce an official technical report.

The first problem in these circumstances is the number of experts incurring expense for the parties. Not only will the parties have to bear the costs of their own experts, who are indispensable for the proceeding, they will also need to pay for the expenses incurred by the expert nominated by the judge – or arbitrator, as this approach is commonly adopted in domestic arbitration. Second, instead of each party presenting its own technical reports with its memorials (during the pleading phase), there will be another stage of the proceeding specifically for the technical evidence to be presented, as proposed by the expert appointed by the tribunal. In general, arbitration can take up to six months longer when this method of presentation of technical evidence is used. Further, the tribunal-appointed expert is usually chosen from a list that does not necessarily include the most capable or best-informed professionals on the specific topic,^[34] and who may also attempt to form his or her own opinions on a particular subject.

International arbitration practice is different. The emphasis is on the cross-examination and focusing on the right of the parties to obtain evidence, and technical reports are usually produced by party-appointed experts.

If this is the case, instead of the arbitrator nominating an expert, each party will appoint its own expert who will prepare individual independent technical reports. Even though engaged by the parties, the technical opinion of the party-appointed expert must be independent as they will play the part of technical witnesses, answering questions from both the parties and the arbitrators. As pointed out by Professor Carlos Alberto Carmona, one of Brazil’s most prominent arbitrators, this may be seen as an interesting alternative to the exclusion of tribunal-appointed experts, as is so often the case in domestic arbitration in Brazil, outlining that arbitral proceedings should not be influenced by national procedural law.^[35] As discussed above, this is not the usual process in Brazil – in view of the influence of national legislation – but as arbitration procedures develop, the removal of tribunal-appointed experts may become a normal part of proceedings.

Nevertheless, as the provision of technical evidence has evolved considerably towards a more efficient approach, the exclusive reliance on party-appointed experts has become more common in domestic arbitration.^[36] This approach has been recently validated by the Superior Court of Justice, in the judgment of an action for annulment of arbitral award for alleged violation of due process because the arbitrators accepted technical evidence produced by party-appointed experts and denied a request for the appointment of a tribunal’s expert.^[37] The Superior Court followed the international trend of accepting the flexible form of adversary proceedings in arbitration. In this regard, the Court held that technical evidence provided by an expert other than the one appointed by the arbitral tribunal should be considered valid because this type of technical report and testimony is different from a party’s technical assistant (a non-independent expert), usually adopted in domestic litigation. It was therefore recognised that the rigidity of civil procedure should not be applied to arbitration.^[38]

Notes