Brazil: Legislation Applicable To Air Transportation Contracts In Brazil

Certainly, an examination of litigations arising out of the breach of international air transportation contracts, quite commonly, makes reference to discussions on the opinion of jurists and the case law on the legislation applicable to the case. This is so because there is a series of international treaties addressing the subject, which are adopted and followed by several countries in the world.

However, in view of other specific legislations in Brazil, as the Civil Code and the Consumer Protection Code, several Courts do not apply the international treaties ratified by Brazil and apply the Brazilian legislation, what causes certain astonishment and recklessness to foreign companies established in the country to provide their services, as it is the case of airline companies.

As known, the Federal Constitution provides that international treaties to which Brazil is a signatory must be strictly complied with, pursuant to the rules in article 5, paragraph 2 and article 178, with its wording given by Constitutional Amendment no. 7, of 1995.

The Warsaw Convention and subsequently, the Montreal Convention, signed and ratified by the signatory countries, Brazil included, sought to build a uniform and standardized regulation at international levels on air traffic, especially in regard to the setting up of parameters for damages, limitations of liability, among other significant aspects deriving from the air transportation.

In summary, the International Conventions represented a significant step towards unified rules governing the international air transportation, bringing certainty to both passengers and companies operating in this market and providing a consonant development to the sector.

Well, although the Conventions are in effect under the Brazilian Law, the fact is that after enactment of the Consumer Protection Code (CDC), their application to consumer relations started to be rejected by the case law.

In other words, a consumer relation will always be established whenever there is a product or service supplier on the one side, and a person, whether an individual or a legal entity that purchases the product or service as the end recipient on the other side. To this effect, the airline company is considered a legal entity that offers air transportation services, while the passenger is considered an individual who purchases the transportation services as the end recipient thereof.

The Consumer Protection Code determines that the civil liability has a strict nature, that is, the law determines that irrespective of fault, the supplier shall be held liable for redressing the damage suffered by consumers as a result of a defective service provision or error in information. The supplier is released from any liability only upon proof that: (i) it did not place the product in the market, (ii) there was no defect or failure in the service provided, or (iii) the fault is exclusively on the consumer or a third party.

Moreover, it is important to take into account that the law allows judges to revert the burden of proof to the benefit of the consumer whenever they consider that the allegation is credible or further, the consumer is at a disadvantage in relation to the supplier. This legal provision is automatically applied to consumers' claims against companies offering services in general (airline companies, banks, credit card companies, telephone companies, etc.)

Amid such disputes, it is important to take into account the considerations presented by airline companies, which argue that the resolution of disputes calls for the required application of international treaties ratified by Brazil, as it happens in all other signatory countries. Such treaties have the nature of contracts, thus represent perfect legal transactions provided with constitutional guarantees.

Airline companies further argue that even if the CDC addresses the consumers' means of defense in a general manner, it does not have the power to revoke a previous law. Under this context, the CDC does not specifically regulate the subjects addressed in conventions and, as there is no conflict between such regulations, the Consumer Protection Code does not revoke them; consequently, the Montreal Convention, applicable since 2006, is still in full effect.

The main reason for the argument that the CDC revoked the Montreal Convention to be considered a mistaken argument lays exactly on the constitutional rule that provides for the full effectiveness of international treaties included in the Brazilian legal system.

However, the argumentation above not sufficing, the wording in article 732 of the Civil Code calls for attention, as it expressly regulates passenger transportation contracts and even provides for the validity and application of international treaties and conventions. Such provision is not in conflict with the rules in the Warsaw and Montreal Conventions. Further, the National Civil Aviation Agency (ANAC) itself provides for the application of the Warsaw Convention in cases of lost baggage.

It should be stressed that the discussion on the applicable legislation has become more frequent in the Courts and involve not only litigations arising out of passenger transportation, but also cargo transportation.

Recently, the Superior Court of Justice (STJ) decided to apply the Brazilian legislation rather than the Warsaw Convention in a case of cargo loss even without the characterization of a consumer relation, what changed the STJ's case law. According to such decision, the damages listed in the Warsaw Convention are "absolutely inapplicable" even in cases where there is not a consumer relationship between the parties. The decision also states that the limit to the damages under the Warsaw Convention was defined to protect an industry still under development in the early 20th century, which is no longer the case, and further, it is in conflict with the right to full redress of the unfair pecuniary damage, which the Constitution defines as a fundamental right.

This is a new position followed by the STJ, which will be used as a precedent in similar cases and may even have an impact on insurance amounts, as the application of a full refund will possibly allow the negotiation of lower rates.

In cases of passengers' lost baggage, that is, involving a consumer relation, there is already an established opinion and the STJ's justices apply the CDC to determine the payment of full damages.

Therefore, in view of the precedents at all levels involving international air transportation of passengers indiscriminately, there is a clear trend by the Court, as previously mentioned, of applying the Brazilian law, more specifically the Consumer Protection Code.

In view of the prevailing applicability of the CDC, it is fundamental that the aggrieved passenger or the company prove the alleged loss resulting from the service provided. Otherwise, it will be a difficult task for the judges to set the amount due as damages, and in such event, the application of the Conventions as a guideline to assess the damages may be highly valuable.

Thus, each case must be specifically analyzed and the judges must examine the evidence needed to determine the alleged damage and also apply the legislations considered applicable, as they are all provided with validity and effectiveness under the Brazilian system of laws. 

Unquestionably, the discussion on the legislation applicable to litigations arising out of transportation contracts raises concerns and uncertainties to foreign companies providing services in Brazil.

In view of this scenario, legal practitioners have the mission of informing and advising companies properly for them to be aware of the relevance and effects that certain Court decisions may have on the airport market.

 

Having the proper information and advice, airline companies may define their action strategies to prevent their activities, which consist in the exploitation of the domestic market, from being impacted by the controversial discussion on the legislation applicable to transportation contracts.

Lastly, considering that Brazil has a significant weight in the international scenario, especially as regards the air traffic, it is important that, whichever the legislation applicable to litigations arising out of air transportation contracts, the decisions be grounded on principles of reasonability and proportionality in order to safeguard the interests of the parties and impose penalties on those effectively liable for the contract breach.

Only then will it be possible to ensure the required legal certainty for companies to keep investing in the airline industry and in Brazil.

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.

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