The Third Panel of the Superior Court of Justice (STJ) ruled in a leading case that Brazilian courts may hear and decide annulment actions against foreign arbitral awards when the parties chose Brazilian law to govern the arbitral proceedings and selected a Brazilian forum for any annulment lawsuit. The decision was rendered in Special Appeal No. 2,224,272/SP, authored by Justice Nancy Andrighi, whose judgment was published on October 9, 2026. The ruling was unanimous and is the first by the Court on this matter.
The case
The dispute arose from an arbitration administered by the International Chamber of Commerce (ICC), seated in New York, stemming from a contract under which the sellers transferred the controlling interest in a Brazilian bank to a Chinese banking group. The agreement provided that the contract would be governed by Brazilian law (clause 9.8) and that the arbitration should comply with Brazilian laws (clause 10.6). It also designated the courts of the District of São Paulo for matters in which courts could be called upon, including the annulment action under article 32 of the Brazilian Arbitration Act (clause 10.12).
The sellers filed an annulment action before the São Paulo courts. The trial court recognized Brazilian jurisdiction but dismissed the annulment claim on the merits. On appeal, the São Paulo State Court of Appeals (TJSP) upheld a preliminary objection raised in the respondent’s brief and dismissed the case on procedural grounds, holding that the validity of a foreign arbitral award may only be reviewed by the STJ in recognition proceedings.
Upon reviewing the special appeal filed by the sellers, the STJ reversed that ruling, recognized Brazilian jurisdiction and ordered the case returned to the TJSP for further consideration. According to the judgment, the buyers reported having filed a request for recognition of the arbitral award before the STJ (HDE No. 8,716/US), which remains pending.
Grounds for the ruling
The main grounds of the decision are as follows:
- Control by the seat as the general rule: the Justice Nancy Andrighi stated that, as an expression of sovereignty, the review of the validity of an award falls to the courts of the place where it was rendered. Accordingly, as a general rule, Brazilian courts do not hear annulment actions against foreign arbitral awards (primary control), being limited to recognition proceedings (secondary control) (articles 34, sole paragraph, and 38, VI, of the Brazilian Arbitration Act).
- Brazilian procedural law as the Exception: the New York Convention allows refusal of recognition of an award annulled not only in the country of the seat, but also in the country “under the law of which” the award was made (article V(1)(e)). According to the Justice Nancy Andrighy, the expression refers to the law governing the arbitral proceedings (lex arbitri), not the law applicable to the merits. Thus, the choice of Brazilian law to govern the proceedings, even with a foreign seat, “opens the doors of the national courts to the annulment action.”
- Choice of forum and public policy: article 22, III, of the Code of Civil Procedure recognizes Brazilian jurisdiction when the parties submit to it, but the clause must be disregarded if it violates public policy, sovereignty or the rules on jurisdiction.
- Annulment and recognition are distinct controls: the annulment action operates on the plane of the award’s validity; recognition operates on the plane of its enforceability in Brazil. The rapporteur emphasized that refusal of recognition in Brazil does not prevent enforcement of the award in other countries. In a concurring opinion, Justice Ricardo Villas Bôas Cueva added that recognition is not a prerequisite for the annulment action and that annulment may affect subsequent recognition, not the other way around.
Impacts and next steps
There are few precedents worldwide on the annulment of a foreign arbitral award by courts of a country other than the seat under the New York Convention.
Although not binding, the precedent is likely to guide similar cases and may be persuasive even before courts of other countries, reinforcing the possibility for parties in contracts with arbitration seated abroad to combine the choice of Brazilian law as the procedural law (lex arbitri) with the selection of a Brazilian forum for the review of the award’s validity.
Cescon Barrieu’s Litigation and Arbitration team acts as one of the firms representing the plaintiffs in this case, monitors developments on this matter and remains available to address any questions.