Arbitration Involving Company Under Winding-Up Proceedings

Author:Mr Giovanni Nanni
Profession:TozziniFreire Advogados
 
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The Brazilian Superior Court of Justice ("STJ")

rendered an important decision in the area of arbitration

involving a health plan operator company which is under

administrative winding-up proceedings (a measure applicable to

troubled companies in certain regulated industries).

The company argued that, by virtue of the winding-up

proceedings, it was prevented from closing any business

dealings or disposing of any assets and, therefore, could not

be a party to an arbitration case instituted by another

company.

In its decision, the STJ emphasized that the participation

of the company in the arbitration did not represent a risk to

any public interest related to the winding-up proceedings,

especially because the rights of the liquidated estate (and

consequently the interests of creditors and third parties in

general) could be adequately protected during the

arbitration.

In addition, the STJ confirmed that, by applying the

Kompetenz-Kompetenz principle, the arbitrators have the

authority to decide whether the dispute could be validly

submitted to arbitration.

In general terms, the STJ ruling is an important precedent

for the validity of arbitration involving a company under

administrative winding-up proceedings whenever the public

...

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