By Giuseppe Giamundo Neto
The government’s intention to allow the use of arbitration to resolve disputes in infrastructure concessions with accumulated financial problems, for which a Provisional Measure (MP) is being prepared, was widely reported in the press today.
One of the main focuses would be the requests for economic and financial rebalancing submitted by concessionaires, especially airport operators, to the regulatory agencies. To be able to initiate arbitration, the concessionaire would have to expressly waive its right to go to the Judiciary. In this way, the government hopes to offer greater legal certainty to investors in current and future concessions.
Well then. There is no doubt that the direct and indirect Public Administration may use arbitration to resolve disputes concerning disposable property rights. Law 13,129 of May 2015, in amending the Arbitration Law (Law 9,307), introduced express provisions to this effect, adding to what was already provided in the Public-Private Partnerships Law (Law 11,079) and in the new Code of Civil Procedure (Law 13,105/15), which encourages the resolution of disputes by means other than state court proceedings (art. 3).
The novelty of the Provisional Measure, therefore, if issued as announced, will be to allow arbitration in concession contracts that did not include arbitration clauses. In this respect, the change will be very positive. The dynamics of a concession contract, as we know, require shorter timeframes for resolving disputes relating to its performance. Waiting for the outcome of a lawsuit may, depending on the case, render a concession entirely unviable, especially considering the need for investment, for which predictability of revenue and return are essential to obtain credit.
Setting aside the question of whether instituting arbitration would in itself be enough to solve the problems currently facing the concessions covered by the Provisional Measure — which, in our view, it certainly is not — practice in arbitrations involving the Public Administration has revealed some obstacles that could be avoided through the Provisional Measure, in order to ensure greater speed in applying the institution.
One issue concerns the choice of arbitral body. It is essential that the Provisional Measure define whether arbitration will be institutional, conducted by a Mediation and Arbitration Chamber, or ad hoc, in which the procedures follow the provisions set by the parties or the arbitrator, without the involvement of any institution. The model could already be chosen by the Provisional Measure, with the respective parameters defined and detailed, failing which bureaucratic issues could potentially stall the procedure. For example, this would also remove any doubt some managers currently have about the need for a tender among arbitral institutions — even though the case clearly and evidently falls within the legal waiver of tender.
Likewise, the choice of arbitrators is always a source of controversy, especially when it falls to a public manager. In the absence of an arbitration clause, the Provisional Measure could establish criteria on the qualities and attributes that arbitrators must have, thus facilitating their appointment and avoiding delays.
In short, beyond allowing the use of arbitration in the troubled concessions covered by the Provisional Measure, it is hoped that there will be adequate rules on the operation of the institution, making it effective in the contracts to which it applies.
