Mediation scenario in Brazil: Covid-19 restrictions and the adherence to the Singapore Convention

Carlos Roberto Siqueira Castro
Siqueira Castro Advogados; Conference Quality Officer, IBA Mediation Committee
csc@siqueiracastro.com.br

Conflicts are inevitable and are an integral part of the human condition. It is natural for humans in social coexistence to experience myriad conflicts due to the plurality – and sometimes antagonism – of goals, interests, and perceptions of social awareness. The difficulties underlying social interactions may surface in this context and the conflict may settle between persons, groups, or organisations.

Although inherent in life in society, conflicts disturb the balance of the system and social peace, and must therefore be pacified. It is the state that must draw up rules of socially accepted conduct, with effects, which not only regulate but also transform social realities, and establish behavioural guidelines for the generality of social dynamics in the endless aspects of human relations. This power can be exercised through jurisdictional activity as well in order to impose the solution of the conflict between the parties with the rigorous application of the law.

The principle of access to justice prevents threats to rights and injuries to individual or collective rights in civil or criminal jurisdiction. It is consecrated, among other fundamental rights, in Article 5, XXXV of the 1988 Brazilian Federal Constitution: the law shall not exclude any injury or threat to a right from the consideration of the judicial power. This postulate, which was formally incorporated into the Brazilian constitutional regime with the 1946 Constitution, means, quite simply, that the judiciary, in the context of the organic-functional and three-party separation of state powers, is the one in charge of conclusively ruling, that is, with the judicial attribute of the final enforcing power, on the application of the objective right.

Nevertheless, the Brazilian judiciary structure suffers from disquieting deficiencies, which promotes its malfunctioning, and, consequently, generates discredit in the jurisdiction as a means to pacify conflicts. Associated with the structural problem of the judiciary is the perception rooted in the citizens that it is the only worthy method of conflict resolution, which has contributed to the exponential growth of the number of lawsuits filed over the past few years.

Indeed, the extraordinary number of lawsuits brought to the Brazilian courts is a consequence of this culture of conflict: on average, for each group of 100,000 inhabitants, 10,675 filed a lawsuit in 2020. As expected in this scenario, Brazilian justice is experiencing a calamitous situation. During 2020, 25.8 million cases were filed with the judiciary and although 27.9 million were dismissed, at the end of 2020 the stock of pending cases within the Brazilian judicial system was 75.4 million.

These impressive numbers reflect on the length of the judicial lawsuit. The average time from the filing of the complaint to the final judgment is 5 years and 4 months at state jurisdiction and 5 years and 8 months at federal jurisdiction. It is quite a contrast with what is required by the Brazilian Federal Constitution, which prescribes that 'a reasonable length of proceedings and the means to guarantee their expeditious consideration are ensured to everyone, both in the judicial and administrative spheres'.

As can be discerned, the judiciary provides jurisdiction in an inadequate and unsatisfactory form to those who aspire, beyond the solution of the conflict itself, to an ideal of justice. What is to be noted is that even if the system suffers deterioration as a result of its inefficiency, as a counterpoint, there is an undeniable benefit of abandoning the preconceived idea of the courts as the only way to solve conflicts. That scenario allows, even if under the preoccupation of solving only the accumulation of lawsuits and the slowness of jurisdictional response, to unveil and develop other methods of conflict resolution.

Alternative dispute resolution methods have been progressively adopted in Brazil, despite the culture of litigation and the difficulties of changing the mentality oriented to the resolution of conflicts through the courts.

Aware of its problems and difficulties in fulfilling the duty to render efficient justice, the state has been embracing policies to promote the use of alternative methods of conflict resolution. Some of these methods are already partially inserted as a stage or as an act of judicial procedure, as can be seen with conciliation (present in provisions of the Civil Procedure Code, Civil and Criminal Special Courts Law and Labour Law), mediation (Civil Procedure Code and Mediation Law) and arbitration (Civil Procedure Code, Commercial Code and Arbitration Law).

In fact, society is experiencing a progressive growth of the utilisation of alternative methods for social pacification, among which, negotiation, conciliation, arbitration and mediation can be cited. This is because these methods have several advantages over judicial proceedings.

Negotiation, of the parties' own initiative and execution, is a self-composing method that has long been adopted in society, especially in business. Conciliation is utilised inclusively as a component stage of the judicial process. In this regard, it is worth mentioning that the Civil Procedure Code of 1973 provided that a conciliation hearing would be held as an autonomous act, in addition to determining that it was incumbent upon the judge to try, at any time, to conciliate the parties. The Labour Law elects conciliation, via ‘Prior Conciliation Commissions’, as an alternative for the resolution of labour conflicts.

Arbitration has long been present in Brazil's legal system. The Political Constitution of the Empire of Brazil, promulgated by Emperor Dom Pedro I on 25 March 1824, allowed the parties to name arbitrators to resolve civil disputes. Arbitration was present in the 1939 and 1973 Civil Procedural Codes, however it was only with the enactment of Law n. 9307/96 that the homologation of the arbitration award became unnecessary and, thus, arbitration was effectively transformed into an alternative solution to conflicts, independently of the judiciary.

It is worth noting that from the strengthening of arbitration in Brazil under the advent of Law No. 9307/96, there has been an exponential growth in new approaches to conflict resolution, including the interest in mediation.

Mediation has acquired relevance under the influence of the Mediation Law (Law 13,140/15) and the new Code of Civil Procedure (Law 13,105/2015). The impact of the new Civil Procedure Code (CPC) should be highlighted – this came into force in March 2016 and has made it mandatory to hold a prior conciliation and mediation hearing. In 2019, the Brazilian judiciary granted 3,887,226 sentences homologating agreements.

It is important to remember that even before the referred Law of Mediation and Code of Civil Procedure of 2015, the National Council of Justice, by means of Resolution CNJ No. 125/2010, established the National Judicial Policy for adequate treatment of conflicts of interest within the judiciary and expressly stated that conciliation and mediation are effective instruments of social pacification, solution and prevention of disputes and, therefore, should be fostered measures to incentive the self-composition of disputes and social pacification through those methods.

The Permanent Centers for Consensus Methods of Conflict Resolution were then created in the courts and, afterwards, the Judicial Centers for Conflict Resolution and Citizenship – CEJUSC – were installed, which in 2019 already numbered 1,284 centres distributed over the state courts of the country. This movement in favour of ADR is also evident in civil society organisations, with a remarkable expansion in the number of training courses, institutes and centres of mediation since the foundation, in 1997, of the National Council of Mediation and Arbitration – CONIMA – which congregates more than 60 entities dedicated to mediation.

Whatever the alternative method of conflict resolution may be, it will always be possible to point out advantages in relation to the traditional jurisdiction, and it is true to say that mediation stands out for being faster and less expensive than the solution through judicial procedures or arbitration. However, the greatest advance in consensual solutions is undoubtedly the composition of controversies through the utilisation of digital platforms. Article 46 of Law 13.140/15 (Mediation Law) allows mediation over the internet or any other means of communication that enables remote negotiations, provided the parties are in agreement.

In the same regard, Article 334, paragraph 7 of the Code of Civil Procedure provides that 'the performance of procedural acts by videoconference, or by other real time audio-visual transmission technology, is allowed' and that 'the conciliation or mediation hearing can be held by electronic means, in accordance with the law'.

At this point, we refer once again to the distressing situation of the judiciary and the need to adopt alternative methods of conflict resolution which are more rapid, efficient and less costly. In this context, the transposition of ADR into the digital environment is a measure, if not an imposition, of absolute convenience. As a matter of fact, in order to illustrate the aforementioned, 4.44 per cent of the total number of lawsuits in progress in the state courts in Brazil (which represents 2,295,880 lawsuits) are related to consumer law, a kind of dispute that is suitable for online dispute resolution (ODR). ​​​​​​​ Still, all those statistics and numbers are from before Covid-19.

Covid-19 restrictions

Around the world, the Covid-19 pandemic has caused widespread disruption of companies’ activities in all areas of the economy. This assumes greater importance when it comes to Brazil, where, so far, around 24,000,000 Covid-19 cases have been confirmed – which is likely to be higher due to a deficiencies in testing policy –  and around 623,000 individuals have died due to Covid-19. The crisis caused by the pandemic brought courts new challenges due to imposed restrictions on mass mobility, resulting in the lack of physical attendance. However, the courts have not been inactive. The National Justice Council (Conselho Nacional de Justiça) issued a resolution (Resolution 313/2020) which establishes, within the scope of the judiciary, an extraordinary duty regime, to standardise the functioning of judicial services, with the objective of preventing contagion by the coronavirus and guaranteeing access to justice in the emergency period. That mentioned resolution expressly states that the attendance of parties and lawyers is suspended, and should be undertaken remotely using the available technological resources.

Additionally, the National Justice Council established an emergency videoconferencing platform to hold hearings and judgment sessions in the judiciary, in the period of social isolation, resulting from the Covid-19 pandemic. Following this guideline, state and federal appellate courts implemented remote attendance for parties and lawyers through email and telephone. For its part, the Brazilian Federal Supreme Court (STF) has adopted the videoconferencing as an additional tool for the Court, as an emergency response to the social distancing measures. As a result, the Court issued 32,592 rulings through videoconference sessions from January 2020 to January 2022. Those initiatives illustrate how the lack of physical attendance at courts promoted new forms of action by the judiciary, with the help of technology, as the courts are using several digital tools, including WhatsApp, Zoom and Skype among others, facilitating trial sessions, hearings, orders and subpoenas.

It is worth mentioning that Law 13,994/20, of 24 April 2020 amended the law that introduced the Civil and Criminal Special Courts, in order to allow for the use of 'available technological features of sound and image transmission in real time' in conciliation hearings held by the Civil Special Courts, which a new endeavour for the Special Courts Law.

Moreover, this crisis caused by the pandemic has offered an opportunity for the rise of, and use of new forms of, conflict resolution by the judiciary. The increased usage of online mediation in Brazil since the pandemic's start is noteworthy, although, as stated before, mediation is relatively new in Brazil as it was regulated in Brazil through two laws – the Mediation Act and the new Civil Procedure Code – both providing that the mediation can be held via videoconference or by other electronic means.

Although these aforementioned legal provisions have existed since 2015, there is no question that the lack of in-person attendance is an important element in the development of online mediation as an immediate solution to the socio-economic impact of the pandemic on legal relationships in dispute.  It should be recalled that mediation offers numerous benefits to the parties, which may be further enhanced if it is performed online – of particular interest to many businesses during the global pandemic.

Furthermore, those actions paved the way for many other court initiatives in Brazil transposing the use of online solutions to mediation and fostering online mediation. The first auspicious initiative came from the Department of Internal Affairs of the São Paulo Court of Justice, which developed a project of pre-procedural conciliation and mediation for business disputes arising from the effects of Covid-19, aimed at entrepreneurs, companies and other economic agents, provided they are involved in legal business related to the production and circulation of goods and services. This system provides that the interested party can formulate a request by institutional email, which will be processed by one of the Courts of Commerce and Arbitration of the Capital of the State of São Paulo. As it is a hybrid system, in the first stage, a judge of law will chair a conciliation hearing – the innovative role of the judges in the pre-mediation phase is notable – and then, only if there is no consensus, the case will be forwarded to a mediator, chosen by the parties or, if there is no consensus, appointed by the judge. The conciliation hearing or mediation session will be done through the Microsoft Teams system, which was made available by the State Court of Justice of São Paulo.

Another opportune initiative was taken by the Court of Appeals of the State of Espírito Santo, which created a project to hold online mediation sessions by the Judicial Centers for Conflict Resolution and Citizenship (CEJUSCs) in conflicts arising during the pandemic period caused by coronavirus. Unlike the São Paulo Court of Justice's system, it is not a hybrid system and there is not a conciliation hearing prior to the mediation itself. The procedure is initiated by the reception via email of the parties’ application containing the claim and the scheduling request for mediation hearing. If it concerns a conflict that has occurred during the period of the Covid-19 pandemic, the demand is forwarded to the CEJUSC, which will realise sessions of mediation by means of videoconference system on a platform indicated by the Court or by other suitable means that best suits the case.

For its part, the Court of Justice of the State of Rio de Janeiro implemented, by a normative act signed on 22 June 2020, the 'Special Regime for Handling Conflicts Relating to Corporate Reorganization and Bankruptcy', which consists of several measures to offer mediation in judicial and extrajudicial procedures for business disputes directed to previous renegotiation, corporate reorganisation and bankruptcy of companies affected by the impact of the Covid-19 pandemic. The Superior Council of Labour Justice addressed a recommendation to magistrates in office at CEJUSCs regarding conflicts involving the preservation of health and safety at work in public services and essential activities. It is recommended that labour magistrates make best efforts to foster mediation, with the participation of the interested parties, through electronic message applications or videoconferencing. The Superior Council of Labour Justice adds that magistrates should give preference to the use of applications and/or messaging and video conferencing software that is freely and openly available and features audio and video recording.

As can be perceived, this crisis has forced the courts to use technology, to be more aware of the benefits of online mediation and to apply more commonly this method of dispute resolution. Almost all mediations have been conducted through an online system, which provides some undeniable advantages over conventional ADR that are pertinent to the continuation of video mediation after the pandemic period.  First, as it does not require face-to-face sessions, there is no need to travel to the sessions, which is convenient for the parties, especially for those who live far from urban centres. Another circumstance in which ODR would be beneficial is where there is a party who is elderly, physically disabled or has mobility difficulties. Nevertheless, in Brazil, accessibility may have some limitations due to economic conditions, since 25 per cent of the population has no access to the internet and the percentage of people without access is even higher in the countryside, at 47 per cent.

Even for those who have access to the internet, in order to avoid the technology becoming a barrier to online mediation, the mediator must be attentive so that messages are correctly received and understood, since there may be delays and this might lead to the parties talking over each other or to the messages not being heard properly and misunderstood.

Secondly, ODR has a lower cost than traditional ADR. There are no travel expenses with transportation as well as no expenses with fees for hours that would be spent on commute. Not only that, but videoconference mediation breaks down geographical barriers, permitting interstate or international mediation at no major additional cost, and it also allows the parties to elect, even when residing in the same location, a mediation centre in another state or even in another country at no additional travel-related cost.

Thirdly, it facilitates the establishment of more self-contained communication due to the absence of personal interaction. In some cases, the parties come into the mediation session emotionally charged, and it is correct to say that aggressiveness is a component that can represent a barrier to the satisfactory development of the mediation. Experience indicates that during online sessions the parties are inclined to behave with a lesser degree of aggressiveness (as someone seeing himself on the screen tends to moderate his words). 

Fourthly, the scheduling of mediation sessions is simplified when it is not necessary to adjust the schedule of several people in order to be at a certain and determined place and stay there for hours.

Despite the advantages previously listed, it seems that face-to-face mediation is not going to lose importance or substantially lessen in its usage after the pandemic. There will certainly be an equilibrium between the face-to-face and online mediation. As well as advising their clients on the best methods to solve their disputes, lawyers will also have the ability to indicate whether online, face-to-face or hybrid mediation will be the more suitable form, based on the type of conflict, the type of mediation, geographical and technological limitations, and the particular interests of the parties involved, among other variables.

In one way or another, the fact is that over the last 20 years, the interest in alternative methods of conflict resolution has experienced exponential growth in Brazil, within which mediation has been gaining relevance.  

The adherence of Brazil to the Singapore Convention

Brazil has a modern and safe legislative framework on alternative methods of conflict resolution. At national level, mediation is governed by Law No. 13.140/15, called the Law of Mediation, published on 26 June 2015, which came into force on 23 December 2015, as well as by the Code of Civil Procedure, published on 16 March 2015, which came into force on 17 March 2016.

However, at the international level, until last June Brazil did not have an international reference for the agreements resulting from mediation, although the Singapore Convention on Mediation had entered into force in September 2020. This was recently remedied, as Brazil signed the Singapore Convention, becoming its 54th signatory country. This adherence to the Singapore Convention implies Brazil's insertion into the relevant international commercial context. Although it is premature to predict whether the Singapore Convention will be as important for mediation as the New York Convention was for arbitration, its potential to increase the credibility of mediation as a reliable option for dispute resolution in international commercial disputes is unquestionable. It is also undeniable that that the lack of an efficient and harmonious system for the transnational enforcement of the agreements resulting from international mediation has been remedied.

Therefore, the Singapore Convention will be extremely important as a vehicle for facilitating international trade between Brazil and other states that are signatories to the Convention and it will be significant in promoting mediation as an alternative and effective method of resolving international commercial disputes. It is important to note that the Convention allows an agreement reached by the parties in an international commercial mediation to become binding and enforceable by each party in accordance with its procedural rules and under the conditions set out in the Convention.

In this aspect, it is relevant that Brazilian Civil Procedure Code recognises the enforceability of international extrajudicial titles, if the formal requirements are fulfilled and since the procedural law admits its enforceability without the need of judicial homologation.  For all these reasons, the adherence to the Singapore Convention was a major step, even more so if we consider the international commercial context, as among the signatory countries of the Singapore Convention is China – Brazil's main trading partner. Moreover, the United States, India, South Korea, and so many other key trading partners of Brazil are signatories to the Convention.

I will conclude with a prediction that it will boost the use of mediation in Brazil. The challenges that arose due to the pandemic accelerated and generalised the use of online mediation, and in the context of foreign trade, the Singapore Convention enabled faster solutions for international commercial disputes without financial and commercial costs associated with arbitration, or judicial proceedings.