Law No. 13.105, of March 16, 2015, the new Brazilian Civil Procedure Code (Código de Processo Civil – CPC), which comes into full force and effect next year, on March 17, 2016, with immediate implementation to all cases (including outstanding processes), establishes the limits of Brazilian jurisdiction. The applicable provisions are outlined below.
As a general rule, the Brazilian judicial authority has jurisdiction to prosecute and judge lawsuits in which: (i) the defendant, regardless of his/her/its nationality, is domiciled in Brazil; (ii) the obligation must be fulfilled in Brazil; or (iii) the lawsuit is based on a fact occurred or an act performed in Brazil. Any legal entity that has a local agency, branch or subsidiary is deemed to be domiciled in Brazil (article 21 and sole paragraph of the CPC).
The Brazilian judicial authority has also jurisdiction to prosecute and judge lawsuits: (i) of alimony, when the creditor is domiciled or resident in Brazil or the defendant keeps links in Brazil, such as possession or ownership of goods, receipt of income or obtaining economic benefit in the country; (ii) those arising from consumer relations, when the consumer is domiciled or resident in Brazil; or (iii) whenever the parties expressly or tacitly submit to the Brazilian jurisdiction (article 22 of the CPC).
Furthermore, the Brazilian judicial authority has exclusive jurisdiction in the following cases: (i) to know lawsuits concerning real estate properties located in Brazil; (ii) in matters of hereditary succession, to proceed to the confirmation of private will and the probation and to the apportionment of assets located in Brazil, even if the plaintiff of the legacy is of foreign nationality or domiciled outside the national territory; and (iii) in divorce, legal separation of spouses or dissolution of stable union, to proceed to the sharing of assets located in Brazil, even if the holder is of foreign nationality or domiciled outside the national territory (article 23 of the CPC).
The lawsuit brought before a foreign court does not induce lis pendens and does not prevent the Brazilian judicial authority to dispose of the same cause and those related to it, except where the context requires otherwise as a result of bilateral agreements and international treaties in force in Brazil. The question pending before the Brazilian jurisdiction does not prevent the ratification of the foreign judicial sentence whenever such ratification is required to produce legal effects in Brazil (article 24 and sole paragraph of the CPC).
No Brazilian judicial authority is responsible for the processing and trial of the lawsuit when there is a choice of exclusive foreign jurisdiction clause in the case of international contracts. If this happens, the foreign defendant must raise the existence of this clause in its defense (article 25 of the CPC).
The parties may modify the jurisdiction on grounds of value and territory, choosing the contractual forum where the lawsuit will be proposed. The contractual forum will only produce legal effects when it is contemplated in a written instrument and refers expressly to a certain legal transaction, and it binds the heirs and successors of the parties. Before the summons, if the contractual forum is deemed to be an abusive clause, it may be declared ineffective by the judge, who will send the court files to the court of domicile of the defendant. When summoned, the defendant will have to claim in the defense that the contractual forum is abusive, under penalty of preclusion (article 63 of the CPC).
Therefore, the Brazilian jurisdiction is not applicable in the case of international contracts, when there is a choice of exclusive foreign jurisdiction clause. The new CPC expressly accepts the parties´ free will to contract and the choice of court agreements will be observed. In summary, as of March 17, 2016 the choice of exclusive foreign jurisdiction clause will not be admitted only when the Brazilian jurisdiction is mandatory (articles 21, 22 and 23 of the CPC).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.