The Superior Court of Justice (STJ) confirms that public administration is allowed to resort to arbitration

The First Panel of the Superior Court of Justice (STJ) has ruled that mixed-capital companies may resort to arbitration to resolve contractual disputes.The case involved a dispute between TMC Terminal Multimodal de Coroa Grande SPE and the mixed-capital company Nuclebrás Equipamentos Pesados (Nuclep), a company linked to the Ministry of Science and Technology.

The ruling is significant because it was issued by one of the court's panels and reinforces the STJ’s interpretation on the matter. In 2005, the STJ reached the same conclusion in a case involving Companhia Estadual de Energia Elétrica (CEEE) of Rio Grande do Sul and AES Uruguaiana. At that time, it was the court’s first ruling on the subject, delivered by the Second Panel of the STJ.

Among the various points raised during the trial, the STJ determined that the use of arbitration is not prohibited for public administration entities. According to the justices, "disposable" public rights — those of a contractual or private nature — can indeed be subject to arbitration.TMC's attorney, Alessander Lopes Pinto, partner at França, Lopes Pinto Advogados Associados, explained that TMC, a special-purpose entity, signed a lease agreement in 1997 for the port complex operated by Nuclep, located in Itaguaí, Rio de Janeiro.

According to the lawyer, the contract established that TMC would manage the port terminal and storage area, pay Nuclep monthly fees for operating the complex, and carry out infrastructure investments in the area which were also expected of Nuclep. He claims that the investments were not carried out, which in part contributed to making the business unviable. In 2004, after four contract amendments, Nuclep decided to charge TMC the outstanding payments. According to Raquel Hogemann, head of Nuclep's legal department, the company had gone nearly ten years without receiving payment. Nuclep filed a lawsuit with the 42nd Civil Court of Rio de Janeiro to recover the overdue amounts, terminate the contract, and regain possession of the port complex.

The case was dismissed without judgment on the merits because the lower court judge determined that the dispute should be resolved through arbitration, as the contract contained an arbitration clause. In 2005, the Ministry of Science and Technology issued an administrative order ratifying the contract termination initiated by Nuclep.As a result, TMC filed a writ of mandamus with the STJ seeking to enforce the lower court’s decision that the matter be settled through arbitration. The STJ granted two preliminary injunctions in favor of TMC and recently ruled on the merits of the case.

Nuclep's attorney stated that the company's initial understanding was that, since the contract involved public administration and the object of the agreement was a port, the Arbitration Law would not apply. However, after the STJ granted the injunction, Raquel Hogemann explained that both parties reached a consensus to proceed with arbitration."We hope that this alternative method (arbitration) fulfills its role in providing legal protection," she said. According to her, the arbitration process has already begun and is nearly concluded.

Cássio Telles Ferreira Netto, president of the Arbitration Council of the State of São Paulo (Caesp), noted that there are now numerous laws authorizing the use of arbitration by public entities. He cited, for example, the Concessions Law and the Public Procurement Law. In his view, secondary or disposable rights can always be subject to arbitration.