After months of discussion, the Brazilian Superior Court of Justice (STJ) ended the conflict of jurisdiction between the Arbitral Tribunal of the International Court of Arbitration of the International Chamber of Commerce (ICC) and the Regional Federal Court of the 2nd Region. The debate at the STJ revolved around the possibility of the Arbitral Tribunal deciding on its own jurisdiction in cases involving an oil concession agreement whose value exceeded R$30 billion.

The original dispute involves Petrobras and the National Agency of Petroleum, Natural Gas and Biofuel (ANP). For the purposes of reducing costs, the State company proposed to the ANP the allocation of seven oil fields in order to reduce the payment of its special participation. The regulatory agency, however, disagreed with Petrobras, making clear that it would not relinquish Petrobras’ payment of special participation and denying the administrative request claimed by the State company by means of administrative decisions.

After Petrobras was unsuccessful in reversing the aforementioned decisions at the administrative level, it presented its request for the institution of arbitration proceedings before the ICC, in accordance with the express provision of the concession agreement, and additionally filed a writ of prevention, registered under No. 0005535-47.2014.4.02.5101, in order to protect the integrity of the procedure until the arbitrators were appointed. The ANP, in turn, sought to prevent the arbitral procedure from moving forward through other procedural means, such as the filing of so-called anti-suit injunctions.

Since then, divergent positions arose from the Federal Justice of Rio de Janeiro and the Federal Regional Court (2nd Region), for and against the continuation of the arbitral proceedings. The main debate surrounded the arbitrability of the rights involved, due to the nature of the issues under discussion. In other words, there was debate as to whether matters related to the division of oil fields would involve patrimonial and available rights, capable of being disputed in an arbitration procedure- a legal requirement which is established in the Brazilian Arbitration Act (Law No. 9.307/96), or if these issues would have to be resolved before the Judiciary.

In practice, the resolution of the dispute between Petrobras and ANP could mean the overnight imposition of payments involving millions related to special participation by the State company.

Faced with such legal uncertainty, Petrobras decided to raise the conflict of jurisdiction in question at the STJ, registered under No. 139.519/RJ. After consecutive postponements, the Court declared the jurisdiction of the Arbitral Tribunal by a majority of votes.

The decision of the STJ entrenches the legal certainty of the oil sector and of the concession contracts, as well as strengthens arbitration in the conflicts involving this matter.