Takeaway: The 3rd Panel of the Brazilian Superior Court of Justice (STJ) unanimously stayed an indemnity lawsuit against an insurer, citing external prejudice due to a pending arbitration. The panel found that the court case depends directly on the outcome of the arbitration between the principal (contractor) and the insured (project owner), which is determining liability for the project’s failure.

The dispute involves a performance bond (seguro-garantia) issued to secure the construction of emission-reduction units. The contractor was already in financial distress when the project began. After the project owner terminated the main contract and the insurer denied coverage, the policy beneficiary sued in court. Meanwhile, the parties commenced arbitration under the contract’s dispute resolution clause to determine responsibility for the project’s failure.

According to the court, the outcome of the court case directly depends on the arbitral tribunal’s findings regarding the liability of both the contractor and the insured for the project’s failure, which will impact claims adjustment and any potential indemnity payment.

The decision keeps the court case on hold until the arbitration ends, ensuring consistent rulings and avoiding conflicting outcomes. The measure reinforces both the binding effect and the jurisdictional nature of arbitration.

The case is under seal. The official court release is available here.

The MAC Advogados team has deep expertise in high-stakes disputes involving arbitration clauses and contractual guarantees. We deliver strategic, results-driven representation in both court and arbitral proceedings to protect our clients’ interests.