As part of São Paulo Arbitration Week, TozziniFreire Advogados hosted the international event “From Tariffs to Tribunals: The Legal Impacts of U.S.–Brazil Trade Disputes on Contracts and Conflict Resolution”, organized by the CPR Institute and the Brazilian Advisory Board of CPR.
Amid growing trade tensions between Brazil and the United States, the event brought together renowned experts to discuss the practical impacts of these disputes on transnational contracts and conflict resolution mechanisms. Topics included legal strategies to mitigate risks, dispute prevention clauses, robust arbitration and mediation frameworks, and contract practices adapted to the dynamics of global trade.
The event featured Sofia Kilmar, partner at TozziniFreire and co-chair of CPR’s Brazilian Advisory Board, and Knar Nahikian, representing the CPR Institute. The discussion was opened and moderated by Michelle Grando, from the U.S. law firm White & Case, who provided legal and economic context for the commercial concerns between the two countries. She highlighted the decision by former U.S. President Donald Trump to invoke emergency powers under the International Emergency Economic Powers Act (IEEPA) and Section 301 of the Trade Act of 1974, imposing a 40% tariff on Brazilian imports, along with a 10% reciprocal tariff on U.S. exports to Brazil. These measures were justified on grounds of national security, foreign policy, and economic interests. Michelle also noted that the U.S. Supreme Court is set to review the legality of Trump’s tariff measures, with oral arguments scheduled for the first week of November.
Guilherme Carneiro Monteiro Nitschke, partner at TozziniFreire, addressed the concept of unforeseeability and contractual hardship, presenting the legal interpretation under Brazilian law. He explained that the unforeseeability of an event is a central requirement for invoking the theory of excessive burden or impossibility of performance. "In Brazil, such an event must be objectively unforeseeable — meaning not what the parties actually foresaw, but what they reasonably could not have foreseen. “While Brazilian law offers more flexible mechanisms to deal with unforeseeable events and excessive hardship, Anglo-American law requires more robust evidence of impossibility or frustration of contractual purpose,” Guilherme emphasized.
International arbitrator Alex Wilbraham discussed how Brazilian and foreign companies can manage contracts affected by trade tariffs, especially when governed by U.S. or U.K. law. He stressed that risk allocation must be clearly defined in such contracts. “If the contract was signed before the imposition of tariffs and lacks specific clauses on how to divide that burden, renegotiation can be extremely difficult. That’s why, when drafting contracts today, it’s essential to include clear risk allocation mechanisms and adaptation clauses — especially in international contexts where political and commercial changes can directly impact contract performance,” he stated.
André Cavalcanti, in-house litigation counsel at Shell Brasil, shared his practical experience in navigating this scenario. He believes there will be a growing incentive to use arbitration as a final dispute resolution method. “Even before Trump’s election, it was possible to argue that trade tariffs were unforeseeable. However, as he began imposing tariffs on several countries, including in Latin America, the risk became real and imminent. For companies that negotiated contracts after this context, failing to include specific risk allocation clauses or resolution mechanisms can lead to significant difficulties,” André explained.
At the end of the discussions, participants had the opportunity to continue their conversations in a more relaxed setting during a closing cocktail reception. The moment fostered networking among professionals from the legal and business sectors, strengthening connections and exchanging insights on the challenges and solutions discussed throughout the event.
