Arbitration or Litigation on Corporate Disputes?

According to a recent study[1], in the last 8 years, the number of arbitration cases in the main arbitration centers in Brazil jumped from 128 in 2010 to 1,567 in 2017. The amounts involved in the disputes increased from R$ 2.8 billion in 2010 to R$ 26.30 billion in 2017 and corporate and contract disputes lead the number of arbitrations in the country.
However, this figure is still small compared to nearly 2 million[2] litigation cases in the state justice discussing contractual obligations.
Commonly, during the negotiation of a commercial contract, the parties face the discussion of the advantages and disadvantages of choosing arbitration as the method of dispute solution.
From the outset, the cost is discussed. The costs involved in litigation are relatively lower than those incurred in an arbitration procedure, especially if the arbitration is formed by a tribunal of three arbitrators, each of them with his/her remuneration.  On the other hand, it is argued that speed that the arbitration disputes are settled is a great advantage. The average time of an arbitration procedure is 16 months[3], whereas a civil litigation at the state courts takes an average of 3 years in the discovery phase and almost 6 years in the execution phase.
However, other advantages and disadvantages must be considered. One may say that other benefits of the arbitration are the choice of the judges, a more technical analysis of the subject matter and the secrecy of the process.    An argument in favor of the courts is the double degree of jurisdiction, non-existent in the arbitration proceedings, which decisions are final and without the chance of relief to a higher court. In addition, the lack of jurisprudence due to the secrecy of the arbitration proceedings, hinders the risk assessment of an adverse outcome to the dispute. Another disadvantage of the arbitration procedure is the dependence of the Judiciary on the promotion of diligences that require coercion to be carried out.  Thus, the choice of arbitration to resolve contractual and corporate disputes must be made in a very conscious way, including not only cost analysis but also the confidentiality, technicality of the disputed issue and the time to obtain a resolution.  Candido Martins is available to provide any clarification.
[1] Search “Arbitration in Numbers and Values ​​- 2017”. Selma Ferreira Lemes.
[2] Report “Justice in Numbers -2017”, of the National Council of Justice.
[3] Data provided by the Brazil-Canada Arbitration and Mediation Center.