The Brazilian Arbitration Act 1996 (Law No. 9,307/1996), article 22, paragraph 4, provides:

Itarumã Participações S/A (Itarumã) and Participações em Complexos Bioenergéticos S/A (PCBIOS) concluded a joint venture agreement for the construction and operation of a power plant fuelled by renewable energy sources.

Disputes arose during the performance of the contract and PCBIOS applied for an interim measure to suspend its obligations under the joint venture agreement. It argued that Itarumã had breached the agreement and that this measure was necessary to secure the effectiveness of any future arbitral award.

The interim measure application was dismissed and Itarumã filed an appeal before the Rio de Janeiro State Court of Appeals, to which PCBIOS objected, on the grounds that the parties had already signed the terms of reference. PCBIOS also argued that the arbitration proceedings would cover the exact same subject matter and claims as the ongoing state court proceedings. PCBIOS then filed a Special Appeal before the Superior Court of Justice.

The Superior Court of Justice overturned the Rio de Janeiro State Court of Appeal's decision on the ground that it lacked jurisdiction. In a unanimous decision dated 12 June 2012, the Superior Court of Justice dealt not only with the question of state courts' jurisdiction over interim measures, but also the extent of their jurisdiction and whether it remains after the arbitration proceedings have commenced, that is, the arbitral tribunal had been constituted.

The Superior Court of Justice found that, by the time the Court of Appeals had passed its judgment, the arbitration proceedings had already commenced, and thus the case should be remitted to the arbitral tribunal, which had jurisdiction (since its constitution) to maintain or overturn the interim measure granted by the lower court.

Based on the principle of "supervening lack of jurisdiction of state courts", the Justice found that the best alternative was to have state courts immediately remit the case to the arbitral tribunal once constituted. She also stated that a party's request to a state court for an interim measure was only of a temporary nature and the state court's decision had to be ratified or overturned by the arbitral tribunal. In other words, although state courts have the power to issue preliminary decisions prior to the constitution of the arbitral tribunal, which may take months, they must not conduct proceedings in parallel with an ongoing arbitration.

This case is a breakthrough in terms of Superior Court of Justice case-law. In spite of the growing awareness of arbitration and its peculiarities by judges throughout Brazil, the effect of the constitution of an arbitral tribunal on pending state proceedings was still rather obscure in the eyes of the judiciary. This decision should serve as a guide to eradicate grey areas that may have once existed in the transfer of jurisdiction from courts to arbitral tribunals.