On Thursday, March 12th, 2020, DRRT along with Brazilian co-counsel, Finkelstein Advogados, requested mandatory arbitration under the auspices of the Market Arbitration Chamber (“MAC”) of the B3, against JBS S.A. and other defendants (“JBS”) on behalf of ninety-five institutional shareholders seeking over BRL 1.4 billion ($280 mio) in compensation for damages caused by JBS’s illegal activities over the past decade. Pursuant to Article 49 of JBS’ bylaws the “Company [and] its shareholders…undertake to resolve through arbitration any dispute or controversy which may arise between them…before the Market Arbitration Chamber, under the terms of its Arbitrations Regulations”, leaving confidential arbitration as the only way to recover damages.
DRRT’s Managing Partner, Alexander Reus, was invited to speak at the 17th Brazilian Congress of International Law and at The Center for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada for presentations regarding investor protection in Brazil and around the world. He participated, along with Mr. Claudio Finkelstein and others, on a panel named “Shareholder Loss recovery: Arbitration vs. Litigation? Quo vadis?”.
Redress - Generally
In modern legal proceedings, different countries and jurisdictions have all had to confront a need to administer a large volume of cases that can arise out of a common set of facts. Often these cases involve relatively few defendants with many thousands of plaintiffs. In the context of investor recovery proceedings, a common circumstance is that a business entity and its directors are accused of wrongdoing (the defendants). Often the defendants’ conduct is alleged to have caused recoverable harm against many injured investors (the plaintiffs). The many investor-plaintiffs largely all share the same injury caused by the related conduct of the same relatively few defendants. In resolving this and similar situations, countries have developed a number of approaches.
History and expansion of arbitration in the United States
The U.S. Federal Arbitration Act (FAA) was passed on 1925. Since then, the Supreme Court has interpreted it on a number of cases, finding that the FAA prevents state legislation from prohibiting or limiting the use of arbitration clauses in all sort of contracts, even those designed to protect workers’ rights (Epic Systems Corp. v. Lewis 584 U. S. ____ (2018)), or consumer’s rights (AT&T Mobility v. Concepcion, 563 U.S. 333 (2011)). Consequently, arbitration clauses have become more common. It has become almost impossible to challenge arbitration clauses, even if they hinder access to justice and while challenges may still be brought, the arbitration panel itself must examine them.