The Brazilian Franchising Association (“ABF”) signed an agreement with the Brazilian Intellectual Property Association (“ABPI”) in August, establishing the ABPI as a recognized institution for conciliation, mediation, arbitration, and dispute resolution procedures in the franchising sector.
Agreement Between Associations for Arbitration Procedures in Franchise Deals in Brazil
As an alternative to the Judiciary, ABPI includes the famous Intellectual Property Dispute Resolution Center (“CSD-ABPI”), which is supported by various Brazilian intellectual property specialists as arbitrators.
The use of arbitration to resolve disputes in the franchising industry has grown, in part due to the combined legislative framework established by federal laws No. 9.307/96 (“Arbitration Law”) and No. 13.966/19 (“New Franchise Law”). The latter, in particular, states in its first article 7 that the parties may choose an arbitration center to settle franchise agreement issues.
The inclusion of an explicit provision for the inclusion of an arbitration clause in franchise agreements addressed any concerns that may have arisen concerning the legitimacy of the parties’ choice.
As a result, it is critical that the contracting parties discuss the inclusion of an arbitration clause, choosing arbitration as an alternative to the Judiciary, with care in the wording of the arbitration clause provided for in the Franchise Agreement, in the selection of the Arbitration Chamber and its regulations, and in the selection of the arbitrator (s).
The main advantages of choosing arbitration for the franchising sector in Brazil are:
- confidentiality and privacy of information restricted to the parties, lawyers, and arbitrators;
- quicken of the procedure particularly in comparison to the judicial process;
- competence in the possibility of choosing arbitrators who are familiar with and experienced in the franchising sector as an alternative to the judicial process, that frequently do not have the knowledge and expertise in the issue; and;
- confidentiality of information restricted to the parties, and lawyers.
The parties can reduce what many consider to be arbitration’s biggest drawback—the potential for the whole arbitration process to be significantly jeopardized if the arbitrator lacks the necessary experience and expertise to resolve the dispute—by designating an institution with expertise in the subject.
You can find the list of Brazilian IP Firms here.