Jurisdiction clauses are, in general, a very common contractual
provision. They aim to avoid or minimize conflicts of laws,
promoting greater security for contractors in what comes to the
procedure and the location where disputes arising from that
document will be resolved. However, this clause is not mandatory.
It is a faculty of the contractors, and the freedom of contract to
exercise this power is legitimized by Precedent No. 335 of the
Supreme Court, which provides: "Choice of forum clauses are
valid for lawsuits arising from the contract". This provision
is especially important with regard to international
Brazilian law determines the concurrent jurisdiction between
Brazilian and foreign courts. In other words, in addition to the
competence of the Brazilian jurisdiction to handle the disputes
arising from an international contract, an eventual action could
also be filled before foreign courts.
However, in spite of the choice of forum having always been a
legal possibility, Brazilian courts have held a position so far in
the sense that, in certain cases of agreements between Brazilian
and foreign companies, the Brazilian forum could not be excluded by
the will of the parties. That is, the parties might not elect the
foreign court exclusively.
This understanding was based on certain fundamentals and
principles that oppose to the principle of freedom of contract and
challenge the effectiveness of the jurisdiction clauses, such as
the principles of National sovereignty, Social function and
Adherence. Those principles have been understood as applicable in
This position, which was reaffirmed in a recent decision,
determined that the Brazilian forum could not be excluded if the
contractual obligations had been fulfilled in Brazil and the
parties had domicile in the country, even if the parties expressly
agreed to it in the jurisdiction clause. In the same position,
there are a large number of other decisions, including decisions of
the Supreme Court.
However, the New Brazilian Code of Civil Procedure, which
entered into force on March 18, 2016, included an express provision
about the choice of foreign forum in international contracts that
has no correspondence in the previous code.
Article 25 of the New Brazilian Code of Civil Procedure
establishes explicitly that the Brazilian judicial authority is not
competent to judge the matter if the international contract
contains exclusive choice of foreign jurisdiction. As an exception
to this disposition, the first paragraph of the same article
provides that it does not apply to the hypothesis of Brazilian
exclusive international jurisdiction, which are, cases related to
real estate and inventory of assets located in Brazil.
Furthermore, the forum selection clause can be reputed
ineffective if considered abusive by the judge, who can determine
the jurisdiction of the defendant's domicile, even if it is not
an adhesion contract.
Thus, despite the new Civil Procedure Code still provides for
the concurrent jurisdiction of the Brazilian jurisdiction in the
cases when the defendant is domiciled in Brazil, the obligation is
fulfilled in Brazil or the action's foundation is fact or act
occurred in Brazil, it is likely that we see a modification of the
prevailing precedents considering the law reform with the inclusion
of Article 25 of the New Brazilian Code of Civil Procedure.
Even though we need to wait for the enforcement of the New Code
to know for sure how the legal provisions on forum choice in
international contracts will be construed, the inclusion of Article
25 in the New Brazilian Code of Civil Procedure represents a major
advance in contractual matters, since it aims to guarantee that
forum choice and dispute resolution clauses are effective and
enforceable rather than only ink on paper. This is of great value
for freedom of contract, with a consequent enhance to contractual
relations between foreign and Brazilian companies.
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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On August 30, 2016 the Brazilian Securities and Exchange Commission issued CVM Instruction No. 578, which modernizes the rules on the incorporation, functioning and administration of Private Equity Investment Funds.
The Executive Branch began a process to modernize the procedures that precede the registration of corporations and limited liability companies in the corresponding sections of the Public Registries Office.
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