LCS International SAS v. SPR Indústria de Confecção SA

At a glance

Parties

LCS International SAS (applicant) v. SPR Indústria de Confecção S.A. (respondent)

Case no.

Homologação de Decisão Estrangeira (HDE) No. 1.914 - EX (2018/0175140-2)

Court

Superior Tribunal de Justiça (Brazil), Corte Especial; Rapporteur: Minister Benedito Gonçalves; session presided by Minister João Otávio de Noronha

Underlying award(s)

Award in ICC Arbitration No. 21360/EMT/GR, seated in France, and Addendum to the award

Forum and rules

Recognition of a foreign arbitral award under the Brazilian Arbitration Law (Law 9.307/96, arts. 38–39), the LINDB, the CPC/2015 and the STJ Internal Rules; New York Convention arts. V and VI

Sector

Apparel and footwear; trademark licensing and retail distribution

Outcome

Recognition of the ICC award granted unanimously on 5 June 2019.

Amount

The award ordered SPR to pay LCS USD 66,650 and USD 62,500 on two invoices (other amounts not stated in the judgment).

The dispute

LCS International SAS asked Brazil's Superior Court of Justice to recognise an award made by a sole arbitrator in ICC Arbitration No. 21360/EMT/GR, seated in France. The dispute arose from trademark licensing, distribution and exclusive retail agreements with SPR Indústria de Confecção S.A., a Brazilian clothing company. The arbitrator found that SPR had breached the agreements and ordered it to pay outstanding invoices. SPR opposed recognition on four grounds. It said the arbitrator had ignored 39 legal documents it filed. It said the parties had been treated unequally on the burden of proof. It said the award gave no reasons on its argument that the relationship was a franchise under Brazilian law (Law 8.955/94). Finally, it said the award went beyond what LCS had asked for. SPR relied on due process (art. 38(III) of the Arbitration Law) and public policy (art. 39(II) and art. 17 LINDB).

Key holdings

1. The formal requirements were met. The applicant filed a sworn translation of the award with an apostille and consular legalisation. Service on SPR in the arbitration was undisputed, and the award was final. Voto, p. 9
2. The arbitrator's jurisdiction came from the arbitration clauses in the contracts (clauses 12.2 and 8.4). The arbitrator also ruled on his own jurisdiction (Kompetenz-Kompetenz), with reasons, holding the clause valid under French law as the law of the seat. The STJ reviews such a ruling only in exceptional cases. Voto, pp. 9–10
3. No breach of due process from the non-consideration of documents RL-01 to RL-39. The right to be heard is not unlimited, and a party must respect the forms and time limits of the arbitration. SPR sent the documents only to the ICC Secretariat, not to the arbitrator and the other side as the procedural rules required. Whether the arbitrator read those rules correctly is not for the court to review in recognition proceedings. Voto, p. 11
4. How the arbitrator allocated the burden of proof, and whether the relationship was a franchise, are merits questions the court cannot examine. In any event, the award gave full reasons for finding that there was no franchise and for its findings on breach of contract. It did not treat the parties unequally. Voto, pp. 13–15
5. The award did not go beyond the claim. The higher figures discussed in paragraphs 447–448 of the award were not awarded. The operative part (item (g)) orders SPR to pay only USD 66,650 and USD 62,500 on the two invoices. Voto, p. 16

Procedural history

1. The sole arbitrator in ICC Arbitration No. 21360/EMT/GR (seat: France) issued the award. Later, at SPR's request for clarification, he issued an Addendum confirming that documents RL-01 to RL-39 had not been properly filed.
2. LCS filed its application for recognition with the STJ (registration no. 2018/0175140-2). SPR filed a defence. The Federal Public Prosecutor's Office gave its opinion in favour of recognition.
3. 8 April 2019The case was withdrawn from the Corte Especial's agenda at the Rapporteur's request.
4. 5 June 2019The Corte Especial unanimously granted recognition of the arbitral award. The judgment was published in the DJe on 11 June 2019.

Tribunal, counsel and experts

Decided by

• Benedito Gonçalves Judge, Superior Tribunal de Justiça, Corte Especial (Rapporteur)
• João Otávio de Noronha President, Superior Tribunal de Justiça, Corte Especial
• Raul Araújo Judge, Superior Tribunal de Justiça, Corte Especial
• Felix Fischer Judge, Superior Tribunal de Justiça, Corte Especial
• Nancy Andrighi Judge, Superior Tribunal de Justiça, Corte Especial
• Laurita Vaz Judge, Superior Tribunal de Justiça, Corte Especial
• Maria Thereza de Assis Moura Judge, Superior Tribunal de Justiça, Corte Especial
• Herman Benjamin Judge, Superior Tribunal de Justiça, Corte Especial
• Jorge Mussi Judge, Superior Tribunal de Justiça, Corte Especial
• Og Fernandes Judge, Superior Tribunal de Justiça, Corte Especial
• Luis Felipe Salomão Judge, Superior Tribunal de Justiça, Corte Especial
• Mauro Campbell Marques Judge, Superior Tribunal de Justiça, Corte Especial

For the claimant

Vicente Coelho Araújo · Renato Stephan Grion · Thiago Del Pozzo Zanelato

For the respondent

Paulo Sérgio Feuz · Cláudio Finkelsteins · Thomas Law · Camila Macedo Simão

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Keywords

• recognition of foreign arbitral award
• homologação de sentença estrangeira
• New York Convention
• Brazilian Arbitration Law
• Brazil
• ICC arbitration
• due process
• right to be heard
• public policy
• burden of proof
• franchise agreement
• Brazilian Franchise Law 8.955/94
• trademark licensing
• Kompetenz-Kompetenz
• ultra petita
• apparel

Summary generated with AI from the published documents — refer to the award for the authoritative text.