I. Introduction
Brazil has been widely regarded as an arbitration-friendly jurisdiction. The Brazilian Arbitration Act (Law no. 9,307/1996, as amended in 2015, “BAA”) is inspired by the UNCITRAL Model Law. Brazilian courts generally favor and respect arbitration agreements and awards. Brazil is a member state of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and other regional treaties, such as the 1975 Interamerican Convention on International Commercial Arbitration (the Panama Convention).
As many leading jurisdictions, Brazilian arbitration law is rooted on party autonomy, subject only to compliance with “the principles of due process of law, equal treatment of the parties, impartiality of the arbitrator and freedom of decision” (Art. 21, para. 2, BAA).
One important aspect of party autonomy in arbitration is the express possibility of choosing the rules of law applicable to the merits of the dispute, including general principles of law, trade usages, and the lex mercatoria (Art. 2, paras. 1 and 2, BAA). In court litigation, by contrast, the possibility of choosing the law applicable to contractual obligations is contested, lacking express authorization in the 1942 Introduction to Brazilian Law Act (“LINDB”). In fact, scholars have relied upon the express authorization contained in the BAA to advocate for a general rule of freedom of choice of law, as was recently proposed in a bill to partially abrogate the LINDB and create a General Private International Law Act.[1]
So far, the freedom of choice of law in arbitration encountered limited exceptions, for example, in cases involving public entities (the Federal Union, States and Municipalities, as well as State-owned public entities). These entities can only submit their disputes to arbitration by law, and not ex aequo et bono (Art. 2, para. 3, BAA). In some strategic sectors, such as ports, roads, rails, waterways and airports, arbitration involving public entities shall mandatorily apply Brazilian substantive law (Art. 3, II, Decree 10,075/2019). These exceptions may be justified by the public nature of the entities and the public interest involved in the aforementioned sectors.
However, Brazil is now faced with another exception to party autonomy in choice of law — and one with direct consequences to international disputes: the mandatory application of Brazilian law in insurance arbitration.
II. The new Insurance Contracts Act: overview of arbitration related novelties
On December 10th, 2024, Brazilian Congress promulgated Law no. 15,040 (“Insurance Contracts Act” or “ICA”), which entered into force on December 11th, 2025. The new law, spanning over 134 articles, regulates insurance, reinsurance and retrocession contracts. The ICA abrogated the 45 articles of the Brazilian Civil Code that dealt with insurance contracts, and created several new specific rules relating to contract formation, interpretation, and evidence, as well as rules on claim adjustment procedures, premiums, risk, statute of limitations, among others.
The ICA also establishes rules related to arbitration in insurance contracts, which have been received with skepticism by practitioners. This paper focuses on one specific provision of the ICA, Article 129, which reads as follows:
“In insurance contracts subject to this Law, the parties may agree, by means of an instrument signed by the parties, to alternative dispute resolution methods, which shall be conducted in Brazil and subject to Brazilian law, including in arbitration.” (emphasis added)
This article establishes two new rules that severely limit party autonomy in arbitration: the mandatory choice of Brazil as a seat — the “arbitration equivalent” of the newly affirmed exclusive jurisdiction of Brazilian courts for insurance disputes (Art. 130 ICA) — and the mandatory application of Brazilian substantive law (also provided for in Art. 4, para. 1, ICA).
Legislative history clarifies the three policy reasons behind the recently imposed limitation on party autonomy to choose the applicable law: (i) Brazil’s historic rejection to party autonomy in the choice of law applicable to contracts;[2] (ii) prevention of a purported “evasion through arbitration”, which could allegedly impair regulatory oversight by the competent agencies and lead to avoidance of the ICA;[3] and (iii) the public policy interest contained in the regulation of the insurance business,[4] including the need to “provide legal certainty” irrespective of any asymmetry of power between the contracting parties.[5]
These provisions apply irrespectively of the nature of the transaction, of the amounts involved, or of the domestic or international character of the insurance contract. In fact, Article 4, para. 1, ICA extends its application to “insurance contracts executed by an insurer authorized to operate in Brazil; when the insured or the proponent has their residence of domicile in Brazil; or when the goods over which the insured interests fall upon are in Brazil.” Thus, for example, an insurance contract underwritten by a foreign company and a Brazilian insurer to cover risks related to an industrial plant in Brazil shall fall within the scope of the law.
The only exception to the mandatory application of Brazilian law, as stated in Article 4, para. 1, ICA, are for some types of foreign insurance contracts, allowed only for “covering risks for which there is no offer in the country; covering risks abroad when the insured is a natural person resident in the country, and which period is restricted exclusively to when the insured is abroad; insurance that is the object of international treaties; insurance that has already been procured abroad when this Law comes into effect” (Art. 20 of Complementary Law 126 of 2007). Legislative history also clarifies that they do not apply to reinsurance and retrocession contracts,[6] although this is not clear from the text of the law.
III. An overbroad limitation to party autonomy
As mentioned, Article 129 ICA was received with skepticism by practitioners. Two commentators pointed that they “see no reason to restrict parties’ autonomy and prohibit the application of a foreign law” in cases where parties are “savvy, sophisticated, and have knowledge of how arbitration works and its potential benefits.”[7] Another commentator criticized the ICA for its choice to “directly regulate some aspects of arbitration within the ICA [in contrast] with the choice of the Civil Code and the Concessions Act, which make reference to the BAA,” highlighting the ICA risk of “creating fragmented sectorial regulations with potential for internal contradictions.”[8] We subscribe to these criticisms.
We also disagree with the three policy reasons highlighted by Congress’s working groups tasked with analyzing the law. First, we disagree that Brazilian law rejects party autonomy in the choice of law applicable to contracts. In arbitration, this has been the rule under the BAA since 1996, with very few exceptions when proceedings involve public entities. In litigation, although the 1942 LINDB does not expressly say so, case law by the Superior Court of Justice, the highest court dealing with federal matters, has upheld choice-of-law clauses in international contracts, even in matters considered of public policy under Brazilian law, such as statute of limitations.[9]
Second, the “evasion through arbitration” argument is hollow. It unjustly demonizes the application of a foreign law instead of the ICA, and wrongfully considers arbitration a lesser form of dispute resolution. Even if the ICA’s purpose would be to protect vulnerable consumers from litigating under foreign law (with all its associated costs), there is no reason to extend the prohibition to business-savvy parties, especially when there is an international element to the transaction. Nor is there a reason to believe that arbitration hinders regulatory oversight. In fact, regulatory agencies (Superintendência de Seguros Privados — SUSEP and Conselho Nacional de Seguros Privados — CNSP) have adjusted their regulations to the particularities of arbitration proceedings, and take no issue with this alternative dispute resolution mechanism.
Third, although there might be a public policy interest (or “economic public policy”, as mentioned) in regulating the insurance business, it should not go as far as to prohibit the choice of law applicable in arbitration — at least, not in B2B insurance contracts, nor in insurance for large risks. These contracts are usually the result of a thoroughly negotiated bargain, which may include, for the benefit of both parties, the submission to a foreign law considered more attractive for that specific type of insurance. In some fields, such as maritime insurance,[10] this is even more true, as some jurisdiction have well developed rules stemming from centuries of deciding disputes on the sector.
During the legislative process, Senate mentioned countries, like Belgium and Peru, that prohibit arbitration altogether in support of the bill’s (allegedly) less restrictive approach to arbitration. However, a closer look at these countries’ legislation shows that both of them have exceptions that allow for arbitration outside of mass risks insurance, whether by listing specific insurance contracts (Belgium’s case)[11] or by stating a threshold amount to which the prohibition applies (Peru’s case).[12]
Even the United States has, in recent years, shifted towards a pro-arbitration approach in regard to international insurance contracts. In fact, many Circuit Courts have recognized that, despite the reverse pre-emption powers against “Acts of Congress” granted to the States under the McCarran-Ferguson Act,[13] State law forbidding arbitration agreements in insurance contracts does not preclude the validity of arbitration agreements in international insurance contracts, which are governed by Article II of the New York Convention,[14] and not by the Federal Arbitration Act (and, therefore, not by an “Act of Congress”).
This shows a tendency of other legal systems to distinguish between domestic, mass risk insurance contracts and international, high-value, particular risk insurance contracts. Brazil’s newly-enacted ICA seems to miss this point completely by creating overbroad rules (which include, as seen above, the mandatory choice of seat in Brazil) that apply irrespective of the underlying insurance contract’s particularities.
IV. Conclusion
In attempting to modernize its insurance regulation, the ICA went too far and meddled with rules of arbitration that had been established in Brazil for almost 30 years. Article 129 ICA represents a significant departure from the choice-of-law regime established by Article 2 BAA, which has long recognized party autonomy in arbitration, even before the discussion surrounding the modernization of the LINDB.
More so, it isolated Brazil as one of the few countries in the world that do not provide ample space for party autonomy in choosing the law applicable to the merits in international commercial arbitration between business parties. This creates special hurdles for companies wanting to operate in Brazil, whether as insureds or insurers, or with business ties to Brazil.
It shall be up to the courts to decide whether these limitations are as rigid as they seem at face value or if sophisticated parties, especially in an international context, shall be allowed to deviate from them without risking the enforceability of future arbitral awards that do not strictly comply with the ICA. We shall hope for the latter, for the sake of Brazil’s reputation as an arbitration-friendly jurisdiction.
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Enrico Mazza is an LL.M. candidate at NYU School of Law. He earned his first law degree from the Pontifical Catholic University of Rio de Janeiro — PUC-Rio and holds a Masters degree in Private Law from the University of São Paulo. Before joining NYU, he worked as an associate at FCDG Advogados, a leading Brazilian law firm specializing in dispute resolution.
[1] Thiago Marinho Nunes, Reforma do DIPR e coerência com a arbitragem internacional (Private International Law reform and coherence with international arbitration), Migalhas (Oct. 19, 2025), https://www.migalhas.com.br/coluna/arbitragem-legal/444968/reforma-do-dipr-e-coerencia-com-a-arbitragem-internacional.
[2] Comissão de Constituição, Justiça e Cidadania (Committee on Constitution, Justice and Citizenship), Parecer (Report) no. 11, of 2024, Brazil (Federal Senate, Apr. 10, 2024), 18-19; 27-28.
[3] Id.
[4] Id, 41-42.
[5] Comitê de Assuntos Econômicos (Committee for Economic Matters), Parecer (Report) no. 54, of 2024, Brazil (Federal Senate, June 18, 2024), 19-20.
[6] Comissão de Constituição, Justiça e Cidadania, supra at note 1, 27.
[7] Márcia Cicarelli Barbosa de Oliveira & Laura Pelegrini, Considerações Iniciais Sobre o Novo Marco Legal de Seguros e Seus Reflexos na Arbitragem, in Arbitragem e Mediação no Direito Privado e no Direito Público: Estudos em Homenagem a Selma Ferreira Lemes 239 (Vera Cecília Monteiro de Barros & Giovanni Ettore Nanni eds., vol. I, Quartier Latin 2025), at 253.
[8] Vera Cecilia Monteiro de Barros, #9. A arbitragem nos contratos de seguro e os desafios interpretativos do artigo 129 da Lei nº 15.040/2024, Boletim do CBAr (Nov. 26, 2025), https://comitebrasileirodearbitragem.substack.com/p/9-a-arbitragem-nos-contratos-de-seguro.
[9] STJ, REsp 1.280.218/MG, Rap. J. Min. Marco Aurélio Bellizze, 21 June 2016, DJe 12 Aug. 2016.
[10] José Augusto Fontoura Costa & Orlando José Guterres Costa Junior, Arbitragem em seguros: operações internacionais no Novo Marco Legal (Insurance arbitration: international transactions under the new law), JOTA (Jan. 17, 2025), https://www.jota.info/opiniao-e-analise/artigos/arbitragem-em-seguros-operacoes-internacionais-no-novo-marco-legal
[11] Article 90, para. 1, of the Insurance Act of 4 April 2014 prohibits arbitration agreements in insurance contracts, except for those specified in underlying regulation. Article 1 of Royal Decree of 24 December 1992 lists the exceptions to the general prohibition, including property insurance, civil liability insurance, construction insurance, among others.
[12] Article 40 of Peruvian Law 29946 prohibits arbitration agreements in insurance contracts. Article 46 creates an exception for this rule in insurance contracts above a certain threshold amount, fixed by the banking authority at above 20 UIT (unidades impositivas tributarias), which currently amounts to approximately USD 31,900.00.
[13] 15 U.S.C. § 1012(b).
[14] Certain Underwriters at Lloyds, London v. 3131 Veterans BLVD LLC, 136 F.4th 404 (2d Cir. 2025); Green Enters., LLC v. Hiscox Syndicates Ltd., 68 F.4th 662 (1st Cir. 2023); CLMS Mgmt. Servs. Ltd. P’ship v. Amwins Brokerage of Ga., LLC, 8 F.4th 1007 (9th Cir. 2021); ESAB Grp., Inc. v. Zurich Ins. PLC, 685 F.3d 376 (4th Cir. 2012); Safety Nat’l Cas. Corp. v. Certain Underwriters, 587 F.3d 714 (5th Cir. 2009). See S. I. Strong, The Special Nature of International Insurance and Reinsurance Arbitration: A Response to Professor Jerry, 2015 J. Disp. Resol. (2015).