The Baldy Center Podcast

The Baldy Center for Law and Social Policy at the University at Buffalo
Podcast Season 4, Episode 24
Podcast recording date: November 1, 2021
Host-producer: Edgar Girtain
Speaker: Daniel Brantes Ferreira
Contact information: baldycenter@buffalo.edu

Podcast transcript begins.

Edgar: Hi, I'm Edgar Girtain, and welcome to season four of The Baldy Center for Law and Social Policy podcast, which is produced by the University at Buffalo. Now I'd like you to take a moment with me and imagine that you've been ripped off betting on a sports game on a legitimate sports betting website. You're owed something. But what would you do when you find out that the website where you placed that bet is hosted in a foreign country? What if there's no one to receive your complaint that spoke your language? Or what if taking a website to court meant that you'd have to wait up to ten or even fifteen years to reach a settlement?

Enter Dr. Daniel Brantes Ferreira. Daniel is an arbitrator at the CBMA, which is short for the Brazilian Center of Arbitration and Mediation, which is one of the largest and most prestigious firms of its type in Brazil. He's also a professor in law at the Universidade Cândido Mendesa, a partner at the Bruno Freire Law Firm, and president of the Rio de Janeiro section of the Brazilian Bar Association's Legislative Affairs Commission. Also, Daniel is a UB alumni and a current research fellow here at the Baldy Center. Without any further ado, here is Daniel Brantes Ferreira.

Thank you so much for coming on today and agreeing to speak with me. I'm really glad that you're here. I'm glad we can get you on the podcast. Dr. Brantes, should I call you?

Daniel: Daniel, please. Just Daniel.

Edgar: Okay. Daniel.

Daniel: There's no doctor here.

Edgar: Okay. Very good. So you had sent me some articles, it seems you're very focused on arbitration in sports betting. And kind of before we get into that, I was wondering if you could tell me what kind of political philosophies underpin the idea of arbitration?

Daniel: Well, actually, to correlate, arbitration and philosophy and legal philosophy or something like that, it's always a thing that I create [unclear]. Because when you research in the arbitration field or general in the ADR field, because I also research mediation and other types of alternative dispute resolution, you need to be some kind of empirical. You need to gather data. Because people own the field in the ADR field. And ADR stands for alternative dispute resolution or adequate dispute resolution. They want data. They want to know how it works.

So even though I teach legal philosophy and I study a lot of philosophy. But as a researcher, I separate both areas. I don't think you can interrelate them. Of course, when you go to the origin of arbitration or ADR, you go to the individual autonomy. The autonomy is really important. Arbitration and the other ADR methods, they started to develop after people realized that it's on their autonomy to decide how to decide their conflicts.

So they don't need to trust only the judiciary, they can trust in themselves to resolve their disputes. So that's kind of related to philosophy or political philosophy. But if we're talking about politics, that only started after governments started to subside this kind of conflict solutions. For example, we have the UNCITRAL Model Law from 1985. And we have today 118 jurisdictions that adopted the UNCITRAL Model Law. It's a Model Law, it's a soft law. And the country can adopt it or not.

For example, the Brazilian Arbitration Act is from 1996 and it was inspired by the Spanish Arbitration Act from 1988, which is not even the law, the Spanish law. There are new laws from 2003, but we expand ourselves from there. And after 2001, our law's from '96 and after 2001, our Supreme Courts considered the Arbitration Act constitutional. So the area started to develop here in Brazil really strongly after 2001 only. And in South America also, I would say in the 90s and the early 2000s were really important.

And now we have most South American courts supporting arbitration. And so they approve the habitual tribunal decisions and things like that. So basically at the end of the day, it's kind of a political option of the government to subside and to support alternative dispute resolutions. Philosophically speaking, I would say that autonomy is the most important thing here. So you can decide, Edgar, how to solve your own conflicts. So if you cannot, you go to arbitration or the judiciary, the legal system.

Edgar: So who typically benefits from arbitration processes, specifically in sports betting?

Daniel: Well, in sports betting, the paper that I wrote was about the sports betting websites. So what I did was I took the nine most used sporting websites in Brazil. Because sports is really big here in Brazil, but not sports betting, let's just put it that way. It's not as big as in the US or in the UK. I think the UK is kind of crazy, they bet in everything. What's going to be the name of the princess? They bet on that kind of stuff. But in Brazil, we're really soccer fans. We are the soccer country, even though we consider we are in bad shape.

But I took the nine most used websites by Brazilians of sporting bets. And I'm actually addicted to analyze the terms and conditions of use, the contracts of the websites or any online service or anything. And I look at the dispute clauses. If a dispute, if a conflict starts, how am I going to solve it? That's basically what it says. Because all these websites, they are hosted internationally. They're not hosted in Brazil. And that's a problem because we have an act already for online sports gambling, but it's not valid yet, it's going to be valid only 2022. So we don't have any websites hosted here.

So when I analyze the dispute clauses of the websites, I discovered that some of them make you solve the conflict at a Caribbean random country judiciary like Curacao, or something like that. And most of them, four or five, they make you decide, you go to a UK arbitration or mediation chamber, ADR provider. And I actually reached the mediation provider, which is called eCOGRA. And they're basically regulated by the UK Gambling Act from 2006, if I'm not mistaken. And there's a huge regulation, just so I have an idea. This eCOGRA, most of their employees, they are former big four employees, so they know how to audit. So they are really serious on that.

And I asked the guy, I said, "Can you give me the data? How many people are reaching you and everything? Do you know any Brazilian that actually reached your service, because you are here in four major websites of sports betting here.” And he said, "Oh, I've been here for 10 years. If 12 Brazilians reach us, it's too many." And I said, "Okay, so this conflict clause actually doesn't work, because Brazilians don't speak English, or they don't see it." Because what I claim is that one of the biggest lies in the world is I read and I accepted terms of use, that's one of the biggest lies.

Edgar: Right? And we were all born on January 1st, 1900.

Daniel: Yeah, that's it, people just don't read it, they just accept it. And I always read the conflict clause. How am I going to solve it? Because that diminish the risk perception of the business. You have to know who you are going to look for if you have a problem. And you know, Edgar, I'm not the reality here in Brazil. A lot of Brazilian speaks good English, but not most of them. Imagine if you can read the dispute provider and then you have to be on a tax base, solve your conflict, writing and good English, probably. So it's not easy to do. That was my conclusion actually, in this paper.

Edgar: Yeah. One of the things that I think might be a mystery to many of our listeners is, who are the people that are involved with sports betting? Because at least in New York, as I understand it, online sports betting is illegal. So, maybe could you give us kind of an idea, paint us a picture of who is the typical sports better in Brazil? What is their age? What is their gender? What is their socioeconomic background? You know, what do they look like?

Daniel: Well, most of them, usually Brazilian's bet in soccer, that's one preliminary thing that I should say. Brazilian's only bet soccer, they're not going to bet any basketball, or we don't have baseball here, no ice hockey or something like that. So it's all about soccer. Brazilians are all about soccer. So it's the regular Brazilian that bets, that use their online bets websites.

And for example, I was having lunch this week in a restaurant and the waiter were saying, "Oh, this team must win because I bet on it in this website." So it's the regular Brazilian, not the rich one, but the regular daily basis worker that bet. And it's really popular here. And just so the listener knows, it's still illegal in Brazil, online sports betting, it's still illegal. We have an act that's going to make it possible, but only in 2022, not now. It's still illegal and it has been since then. That's why the websites are hosted internationally, not in Brazil. So they are not regulated by Brazilian law. So that's why the dispute clauses are completely random and crazy. You have to solve your problems anywhere else, not in Brazil. If you sue them here, you cannot because it's not recognized by Brazil.

Edgar: Yeah. I read in the paper that there was a clause in there that says that it's the user's responsibility to determine whether or not betting is legal in their country. It's a really kind of a laissez faire situation, it seems. So what kind of disputes are common between a user and a sports betting website? What are the kind of conflicts that might arise that would require alternative dispute resolution?

Daniel: Basically fairness. If he thinks the website paid less than it should have paid, or bonuses, or things like that.

Edgar: Well, everyone that loses is going to think that, right?

Daniel: Mostly, but one important fact is, there are two institutions in the UK that treat that. The arbitration one is the IBAS. And the mediation one is the eCOGRA, two ADR providers. They are basically online, but they work mostly for online casinos. So sports betting are not their major concern. They also function for that, but online casinos have a lot of more problems than sports betting. Because with sports betting mostly, okay, the team won or they had a tie game. You can't discuss it too much, but sometimes bonuses and if the guys scored goal that way, not this way. Because they can bet in a series of manners. Not only in the win, or in the tie, or in the loss of the field. They can, if the guy scores a goal at the last minutes or something like that, they can do some kind of bet in that way. Depends on the website, but they can argue that. But basically it's bonuses and the amounts paid. So that's the major discuss.

Edgar: So for someone who's looking to get into online sports betting, because now everyone that's listening to this I'm sure is they're going to go and read the fine print in the end user agreement, what makes a good dispute clause and what is a, kind of a, not good one?

Daniel: First of all, good dispute resolution clause is a clause that shows you who to look for easily. Do you know who you need to contact if you have a problem? That's the first question you need to ask. And if it's open, for example, all the conflicts from these contracts are going to be solved by arbitration. Okay, by arbitration. But who am I going to need to look? You don't know who, so that's what we call an empty clause, so that's not a good clause.

Or if they say you're going to have to reach another country’s judiciary legal system, that's not good. If you're in the US, you need to go to Cypress to sue someone, that's not gonna to do it. So yeah, that's not definitely a good clause. And you need to see the website certifications. So as I said, UK Gambling Act gave to this institution, especially eCOGRA, it certificates the website. So you can see the stamps, if it has the fairness seal or something like that. So you see it's a good website, it's not a biased website. Because when you are betting, you don't want anyone biased. You want to have a fair and square chance, so that's basically it.

Edgar: So then, from where is the push coming for a wider acceptance of ADR? Is it coming from the side of the companies, or the side of the government, or is it more of kind of like a grass root, user-end driven?

Daniel: You're talking only about sport betting only, or in general?

Edgar: Maybe you could first answer for sports betting and then answer for urban conflict?

Daniel: About sports betting, conflicts arise when we have users. And it's a growing market here in Brazil. Two years ago, I think it was one or two billion reais, this is our currency here in Brazil. And after the approval of the sports online betting act, they're prospecting an eight billion marketing per year. So it's huge. It's going to be huge here in Brazil after it's legal. And I see common guys, everyday guys, workers, betting a lot. I don't because I don't like to spend my money, I'm basically American, that sense of way, you know. I just not going to throw away my sweat money. I've sweat, I've worked a lot for it, so I'm not going to go throw it away. But it's a growing market here. I could say that. So the more people use it, the more conflicts are going to arise. And that's the truth.

And as ADR in general, Brazil is today an ADR friendly country. We have a Mediation Act from 2015, an Arbitration Act from 1996. We have our courts using mediation and supporting arbitration, especially our Superior Court of Justice, which is our highest court for non-constitutional matters. It's called STJ. And we have huge and serious ADR providers growing here in Brazil. I'm the CEO of one of them. I'm the CEO of the Brazilian Center for Mediation Arbitration here in Rio de Janeiro. We're top four, I would say.

But the biggest ones are in Sao Paulo because you need to understand Brazil politically. Brazil is like the US in some kind of way. New York is the financial capital and DC is the political capital. So Brazil, San Paulo is the financial capital, is where the stock market is, so it's where the money is. And Brazil is - in the center of Brazil is the political capital, it's where corruption is, I can say that. Actually corruption, unfortunately, is everywhere in Brazil. Just so people have an idea politically in Brazil.

In Rio de Janeiro, our five former governors were in jail or are in jail in Rio de Janeiro. So it's kind of crazy here and they enjoy the pandemia, and still a lot more, and that's proven, I'm not saying that out of my mind, it was proven. So that's kind of crazy here in Brazil. But ADR is growing a lot, especially for big businesses. At CBMA, where I'm the CEO, we are the review court for arbitration in soccer. The Brazilian Confederation of Soccer, CBF, they have arbitration in the first instance there, and then it goes for us if they appeal. So I see a lot of soccer cases and big money involved, like, five million cases, ten million dollar cases, and that's in soccer. So it's a huge market here in Brazil, and it's a growing market, and that's arbitration.

Edgar: So why arbitrate instead of litigating?

Daniel: Actually soccer here in Brazil, they cannot go to the judiciary. It's a kind of special justice. They can if it's a labor law related issue. But usually they avoid to put soccer issues in the market, because they can have as sanctions from FIFA, from the International Federation of Soccer and things like that. So it's kind of a special justice. But let's just put it this way: two disciplinary matters, like one player hit another player or got a red card or something like that - for disciplinary matters, we have a special court here, which was created a by constitution. So for state competitions, you have one kind of tribunal. And for national competitions, we have STJD it's for Copa do Brasil, the Brazilian cup, and the Brazilian championship, which are two national championships.

So STJD decides the disciplinary matters for this, if a player is going to be suspended or something like that, okay? But when we're talking about money involved, we have arbitration. So CBF has the National Chamber of Dispute Resolution and we are the appellate court, CBMA is the appellate court, the review courts for that. So we get a lot of cases. And when I talk about money, it’s like disputes between players and clubs, between managers, and things like that. So we don't decide disciplinary issues, just basically contract issues.

Edgar: Civil matters.

Daniel: Yeah. Mostly. Yeah. Yeah. Don't say civil matters, but yeah. And it gets bigger and bigger. Just so you know, last week we received six new appeals at CBMA between clubs, and players, and things like that. And we have to decide really quickly. And basically that's why people choose arbitration. It's a lot quicker. In commercial disputes between companies not in sports, for example. Disputes stays in the judiciary, lasts for like seven, eight years, at least. If it's big, it's fifteen years or something like that. In arbitration, we can decide that in two years, between 24 and 30 months. So it's a huge advantage.

Plus we have confidentiality, which for companies is really an advantage. Plus you can choose the arbitrators. You choose people that are going to judge your case, an arbitrator case, there are really specialists in that field.

Edgar: Who chooses?

Daniel: The parties. So usually it's a tribunal, when it's not fast track arbitration. Because arbitration depends on the arbitration rules of the chamber. And it varies. It's like a mini civil procedure code, but the rules, the procedure, inside the chamber. So in our chamber, for example, fast-track arbitration, which is supposedly faster, it's for cases up to six million reais. So after that, you need to have a tribunal, which is three arbitrators. One party appoints one arbitrator, the other party appoints the other arbitrator, and both of these co-arbitrators, they appoint a president for the tribunal. So we have a tribunal formed by three arbitrators. And that's the rule around the world.

Edgar: And how does the process of arbitration actually work in these kinds of cases?

Daniel: What sports, or commercial, or any one of them?

Edgar: Sticking with sports. Are the proceedings the same for every case? Or do they change on a case per case basis?

Daniel: Yeah, mostly the same, but we have specific regulations, specific rules for ordinary sports arbitration and appellate sports arbitration. We have different rules for that. And another set of procedural rules for commercial arbitrations. But it's the same logic. You appoint the arbitrators, and then the procedure starts, you have the initial allegations of the parties, and then the procedures go on. And we have people inside the arbitration chamber that are responsible for the proceedings, actually. So we have the case manager that stays there and look at the proceedings, and communicates with everyone, with the arbitrator tribunal, with the parties, and with anyone out there is necessary with. For example, the experts, things like that.

Edgar: Okay, very good. Thank you very much. Is there anything else that you'd like to add, some that I missed?

Daniel: I'm always here seeing Buffalo pictures and UB pictures. And I can say that I'm - I'm UB pride, I will always will be pride, let's just put it that way. And it's a great university, and I really miss you guys, and I hope I can be in Amherst. And US, you have my heart, Buffalo, Amherst, you have my heart. Thank you.

Edgar: Have a wonderful day. That was Dr. Daniel Brantes Ferreira, a current research fellow at the Baldy Center. And this has been The Baldy Center for Law and Social Policy podcast, produced by the University at Buffalo. Let us know what you thought about this conversation on our Twitter @BaldyCenter. You can also learn more about the center on our website, buffalo.edu/baldycenter. The theme music for this season was composed by University at Buffalo department of music, PhD student, Mattias Omar. My name is Edgar Girtain, and on behalf of Te Baldy Center, we appreciate you listening to our program today. Thank you and take care.