The purchase and sale of electric power within the Brazilian system is effected through a chamber named “Câmara de Comercialização de Energia Elétrica – CCEE” (Electric Power Commercialization Chamber), which has a “convention for commercialization of electric power” (the “Convention”) setting forth some mandatory terms and conditions for power purchase agreements (“PPA’s”). The Convention includes an arbitration provision.
For many years, disputes before the CCEE should have been resolved via arbitration before the FGV Arbitration Chamber, located in Rio de Janeiro. On February 14, 2023, the Brazilian Electric Power Agency (“ANEEL”) approved a new arbitration provision applicable to the Convention (the “Arbitration Provision”), to be in force as from March 1, 2023, with the following changes on arbitration:
Freedom to choose arbitral institution: The parties will be able to choose the arbitral institution to administrate the arbitration among those previously “approved” by the CCEE. In other words, FGV no longer has a monopoly on those arbitrations. It is expected that the players will soon be able to choose the traditional Brazilian institutions, such as CAM-CCBC, CBMA and CAMARB, and hopefully international institutions such as ICC.
Disputes not subject to arbitration: The Arbitral Provision clarified that it does not apply to bilateral agreements on sale of electric power which have no bearing on CCEE. Moreover, the Arbitration Provision will not apply to disputes between players of the CCEE market and ANEEL. In addition, CCEE will be able to commence lawsuits directly before judicial courts to collect amounts due and unpaid, including penalties.
Applicable Law and language: Brazilian Law shall apply to the arbitrations, which shall be conducted in Portuguese.
Arbitral tribunal: Unless the parties agree otherwise, there shall be an arbitral tribunal composed by three arbitrators.
Seat: If CCEE is a party to the arbitration, the seat shall be the city of São Paulo.
Venue for court relief in aid of arbitration: The courts of the city of São Paulo will be competent to judge court injunctions prior to or in aid of the arbitration, if CCEE is supposed to be a party to the relevant arbitral proceeding.
Collaterals: It was made clear that in the arbitral proceeding the arbitrators will have power to request collaterals and other guarantees from respondent, if the outcome could affect other players of the market.
Compilation of decisions: The “approved” arbitral institutions shall keep a public available compilation of the arbitral decisions regarding CCEE, redacted to the extent possible not to breach confidentiality, if it is the case.
The new Arbitration Provision will be in force as from the publication at the official gazette, which has not yet occurred. It has been welcome in the market, since it will allow the parties to have a broader choice of arbitral institutions.
Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.
