Arbitration & Litigation

Treatment of arbitration in the bill for a new Brazilian Insurance Act

Author Name: Carlos Victor Paixão Ximenes

Castro Barros Advogados, Brazil:

Content of the paper:


This paper aims to discuss and criticise the bill for a new Brazilian Insurance Act in relation to the application of foreign law, the possibility of an international arbitration, and the mandatory disclosure of a summary of the dispute and the respective decision.

Keywords: new Brazilian Insurance Act – application of foreign law – arbitration

Palavras chave: nova Lei de Seguros – aplicação de Direito estrangeiro – arbitragem    


  1. Introduction

It is under analysis of the Brazilian Senate the bill no. 29/2017, for a new Insurance Act.

The bill originally came from the House of Representatives, where it had a long-term legislative history, initiated in 2004 until its approval in 2017. After that, the bill was sent to the Senate [1]. Very recently, on 27 August, 2019, the reporting senator presented his  report in favour of the approval of the bill and, on 30 September 2019, it was set to be voted by the Constitution and Justice Commission, before being included to be voted by the full Senate anytime soon [2]. The new Insurance Act seems to be imminent.

Some of the provisions from the act have raised concerns particularly within the arbitration community, since they limit the application of foreign law and the possibility of an international arbitration in relation to insurance contracts and also oblige the disclosure of a summary of the dispute.

The purpose of the paper is to discuss and criticise such provisions, which mean a relevant regression in the development of arbitration in Brazil and may adversely impact the insurance business in Brazil (possibly affecting P&I clubs), especially because some relevant disputes are usually adjudicated abroad.


  1. The provisions from the bill under analysis

Among the 129 articles of the bill, four are the object of this paper [3].

First, articles 5th and 9th provide the following [4]:

“Art. 5th All acts practiced on the exercise of the insurance activity will be construed in accordance to this Law.

“Art. 9th The insurance agreement, in its different types, will be governed by this Law.

  • 1st The Brazilian Law applies with exclusion of any other laws:

I – to the insurance agreements executed by an insurance company authorised to operate in Brazil;

II – when the insured or proponent has residence or domicile in the country;

III – when are located in Brazil the goods on which the insured interest falls; or

IV – always when the goods on which the insured interest falls are deemed as relevant to the development of the Brazilian infrastructure.


Second, articles 126 and 127 set out  the following [5]:

“Art. 126. It is absolute the jurisdiction of Brazilian Courts to settle disputes related to the insurance agreements executed in the country”.

Art. 127. The venue for the lawsuits involving insurance is the domicile of the insured or beneficiary, unless if they file the lawsuit opting for any domicile of the insurer or its agent.

Sole Paragraph: The insurer and the reinsurers, for the purpose of actions and arbitrations among them, in which are discussed the agreements subject to this Law, shall be demanded on the venue of their domicile in Brazil.”

Finally, article 63 provides the following:

“Art. 63. The resolution of disputes by ADR will not be agreed by adhesion to clauses and predisposed conditions, demanding an instrument signed by the parties, and will be in Brazil, governed by Brazilian Law rules.

Sole Paragraph. The responsible for the resolution of disputes [Arbitral Tribunal, Mediator etc.] is obliged to disclose, in an official media of easy access to anyone interested, the summary of the disputes and the respective decisions, without particular identifications.”

The articles above expressly forbid (i) the application of foreign Law to insurance agreements that meet at least one of the situations listed in the 1st paragraph of article 9th  of bill no. 29/2017 and (ii) an arbitration abroad to discuss these contracts; and also oblige the disclosure of some elements of the disputes.

  1. Criticism to these provisions

First of all, it is necessary to mention that this paper is written taking into consideration reinsurance and insurance contracts involving large and balanced companies, with no room for the application of Consumer Law (which indeed deserve a different protection).

Having said that, despite the undeniable improvement that the new Insurance Act will represent, the limitations above have been [6] and deserve to be severely criticised.

This is because the essence of arbitration is party autonomy. Parties shall be free to decide not only to arbitrate, but also how to arbitrate, where to arbitrate, the law governing the arbitration, among others. Restricting these rights means a relevant – and unjustified – step back in the arbitration system in Brazil for insurance-related matters.

It is worth to mention that the Arbitration Act (Federal Law n. 9,307/96), enacted 23 years ago and which is based on the Uncitral Model Law, does not impose any similar restriction. Instead, article 38 expressly authorises the enforcement of foreign arbitral decisions. Further to that, since 2002 Brazil is also a signatory to the New York Convention (Decree 4,311/2002), in addition to other regional conventions. All of this means that the country agreed to recognise and enforces foreign arbitral decisions.

It is widely known that the arbitration world is borderless, and so is the insurance market. Some types of risks in Brazil have been for years (not to say centuries) insured abroad because Brazilian market does not provide certain coverages [7]. Insurance contracts executed in Brazil are not rarely subject to reinsurance abroad. In order to ensure predictability, several foreign entities demand that the contract be governed by foreign Law and provide for arbitration abroad in case of dispute. Such kind of provisions are nothing more than reasonable. However, in the year of 2019, Brazil, literally going back to the past, is trying to forbid this possibility. It is hardly understandable why the State is doing such intervention in the field of arbitration and insurance, mostly when involving parties are sophisticated enough to decide their own business.

Such kind of anachronistic provisions also go against the new Brazilian economic policy, which is liberal and business-oriented, marked by the so-called “Economic Liberty Law” (Federal Law n. 13,874/2019). Such a law, as provided by the Article 1st, aims to “set rules of protection to the free enterprise and to the free exercise of the economic activity” [8]. Even considering the already mentioned long-term legislative history, if the new Insurance Act comes into force with the mentioned provisions after the “Economic Liberty Law”, it will be deemed as a surprise.

The Economic Liberty Law, among other things, reinforced the already existing constitutional principle of free enterprise (article 170), adding article 1st, IV, which means that the limitations imposed by the Bill for the New Insurance Act is arguably against the Constitution.

Taking away from insurance and reinsurance companies the possibility to choose to arbitrate wherever they want and applying the legislation desired is an obvious violence to the principle of party autonomy, which shall govern the private relationships. At the end of the day, the new Law eventually annihilate the institute of arbitration in insurance-related matters.

It is no less than reasonable to allow the parties to an insurance or reinsurance contract to choose a legislation friendlier to their business and/or to arbitrate in a tribunal more used to disputes involving complex insurance cases. Parties should be allowed to organize their business counting on the predictability of a legislation and arbitrators familiarised to such business. In other words, parties should be provided with legal certainty.

A more business-friendly legislation and legal certainty are key features to attract business to Brazil, particularly in the insurance field, with so many foreign players and with international culture. In other words, to attract even more business in this key economic activity – responsible for 6.5% of the Brazilian economy [9] – it is important for the country to be a safe, open-minded place, and in line with the legislation from the developed markets.

The truth is: the bill for the new Insurance Act should be praised in relation to several aspects, but it is anachronistic on the treatment of arbitration. Another example of that – and of how provincial (to say the least) the bill is – is Article 51, which provides that the contract will “mandatorily be written in Portuguese” and its paragraph 2nd, which provides that “the clauses written in foreign language will be null”. Again, such provision is understandable when involving consumers, but there is no reason to oblige sophisticated parties to write a contract in Portuguese. It is clear that the bill is very provincial and apparently was written by Brazilian people for Brazilian people only, which is regrettable.

The inclusion of these provisions in the bill for the new Insurance Act may be seen as a kind of “market reserve”, i.e., an imposed protection to the Brazilian arbitration-related professionals. Brazil does have professionals capable to handle complex arbitration proceedings, but obliging parties to arbitrate here against their will is definitively not the best way to show it to the world and to attract business to the country, as mentioned.

Juliana Kruegger Péla [10] also mentions, as one of the reasons for such provisions, that insurance contracts are not simple private agreements because they may impair third parties that may not be bound by the arbitration clause, possibly creating some practical issues. She also mentions the academic interest in creating and developing precedents on insurance matter in Brazil, which is indeed desirable, but in our opinion, does not justify the mandatory provision to arbitrate in Brazil with Brazilian Law and in Portuguese.

In short, none of the arguments in favour of the prohibition of arbitration abroad and the application of foreign Law and foreign language seem to be sufficient to justify such anachronism. Instead, they mean a major step back in the development of arbitration in Brazil and will impact the structuring of Insurance business in Brazil (eg, possibly affecting P&I clubs), especially because some relevant disputes are usually adjudicated abroad.

Finally, the obligation to disclose a summary of the dispute (Art. 63, Sole Paragraph) goes against one of the perceived advantages of an arbitration, i.e., the confidentiality. Although the bill provides that such disclosure should be made “without particular identifications”, it is widely known that some cases can be easily identified only by the “summary of the dispute and respective decision”. Therefore, this is another provision that may severally impair party autonomy and the arbitration itself. Again, the academic interest in creating and developing precedents, or the “judicial progress” cannot overcome the reality[11].

  1. Conclusion

The above-mentioned articles from the bill for the new Brazilian Insurance Act – which expressly forbid (i) the application of foreign Law to insurance agreements with certain connections to Brazil and (ii) an arbitration abroad to discuss these contracts; and also obliges the disclosure of some elements of the disputes – are a relevant regression to the international-minded field of arbitration and insurance.

We do expect these specific provisions to be rejected by the Senate or to be vetoed by the President – which would be coherent to his “Economic Liberty Law”.


  1. According to Brazilian legislative rules, a bill for a new act needs to be approved by both the House of Representatives and the Senate – which jointly constitute the Parliament – before being ratified by the President. The quorum for approval depends on the hierarchy of the law.
  2. The status mentioned here is as of 07 October 2019 and may change anytime soon.
  3. The full text and information about the status can be found at (access on 07 October 2019).
  4. Free translation of the original text.
  5. Idem.
  6. On this regard, it is worth to mention papers written by Selma Maria Ferreira Lemes, available at (access on 07 October 2019); Marcia Cicarelli, available at (access on 07 October 2019); Felipe Vollbrecht Sperandio, available at (access on 07 October 2019). It also received a contrary opinion from Brazilian Arbitration Committee (CBAr), available at (access on 07 October 2019).

An opposite view can be found in papers written by Ernesto Tzirulnik (who was a member of the commission that drafted this bill), available at (access on 07 October 2019) and (access on 07 October 2019).

With all due respect to the later, we firmly disagree with his position.

  1. This is exactly one of the few situations in which the current Brazilian Law authorizes an entity domiciled in Brazil to contract insurance abroad (art. 20, I of Complementary Federal Law n. 126/2007).
  2. Free translation of the original text.
  3. Statistics available at (access on 07 October 2019).
  4. Arbitragem no Projeto de Lei de Contrato de Seguro. In VII Fórum de Direito do Seguro – IBDS / Instituto Brasileiro de Seguro e Resseguro. São Paulo: Roncarati, 2018. p. 372-381.
  5. Expression used by José Maria Muñoz Paredes in its paper named “Comentários sobre o Projeto de Lei de Contrato de Seguro do Brasil, sob a perspectiva espanhola”. In VII Fórum de Direito do Seguro – IBDS / Instituto Brasileiro de Seguro e Resseguro. São Paulo: Roncarati, 2018. p. 66.

Short biography:

Carlos Ximenes is a senior counsel at Castro Barros Advogados, working with civil and commercial litigation and consultancy, with focus on contractual disputes involving banking and insurance law and cases involving liability and antitrust law.

He has a Law Degree from Rio de Janeiro Federal University Law School; Postgraduate certificate in Civil Law from Rio de Janeiro State University School of Law; Master of Laws (LL.M) in International Business Law (with focus on Arbitration and Insurance Law) from Queen Mary University of London; and MBA Legal Management of Insurance and Reinsurance from National School of Insurance (ongoing)