Bill of lading jurisdiction clauses are accepted by Brazilian courts
Lucas Leite Marques
Partner, Kincaid Mendes Vianna Advogados, Brazil
Frederico Mendes Vianna F Cardoso
Lawyer, Kincaid Mendes Vianna Advogados, Brazil
frederico.cardoso@kincaid.com.br
Bill of lading clauses are valid and accepted by Brazilian courts.
Initially, such a statement should not seem so relevant taking into consideration that when two parties establish a contractual relationship, the contractual provisions agreed therein should apply.
However, considering Brazil as a cargo-friendly jurisdiction and with a past history of sometimes disregarding some bill of lading (BL) provisions in claims brought by cargo interests against ocean carriers, it is in fact interesting to highlight that in recent years the understanding from the courts has been changing.
Be it a limitation of liability clause, an arbitration clause or even a foreign jurisdiction clause, which is the one we would like to highlight here, those should all be applicable in Brazil.
In relation specifically to the foreign jurisdiction clause, it should be effective to, if not prevent, a judicial proceeding in Brazil, at least lead to the dismissal of a certain lawsuit, if one is brought before a Brazilian court.
The 2015 New Code of Civil Procedure brought a new provision (section 25) establishing that: ‘No Brazilian judicial authority is responsible for processing and judging a lawsuit when there is a choice of exclusive foreign jurisdiction clause in the case of international contracts, if raised by the defendant in the defense’.
Since then, Brazilian courts have departed from their previous approach, which accepted jurisdiction in Brazil and disregarded foreign jurisdiction clauses established in bills of lading.
Nowadays, it is a standard approach of the Brazilian courts, at all levels, to recognise the validity of foreign jurisdiction clauses in bills of lading and dismiss a claim in Brazil, as illustrated by the precedent below:
‘As per Article 25 of the CPC, a foreign forum selection clause can be raised by the defendant in the defence. Clause 17 of the maritime transport contract (fls. 499) clearly states that any claim, dispute, or lawsuit related to this Bill of Lading shall be governed by German law and subject to the exclusive jurisdiction of the courts of Hamburg. The next step is to determine if this clause can be deemed abusive, which would render it ineffective. The case under review arises from a commercial relationship, involving a company importing products for resale. Therefore, there is no consumer relationship, nor can there be said to be vulnerability of one party over the other. These are legal entities that habitually enter into such contracts and are equally strong within this balanced legal relationship. Therefore, the foreign forum selection clause is valid and effective. In such cases, the most recent jurisprudence has recognised the exclusion of the Brazilian judiciary’s international jurisdiction to affirm the validity and enforceability of the procedural agreement entered into by the parties. As observed: […]. 1. Under Article 25 of the CPC/2015, "the Brazilian judicial authority has no jurisdiction to process or judge an action when an exclusive foreign forum selection clause is included in an international contract and raised by the defendant in defence." 2. In this case, the originating court observed that the international contract clearly and expressly provides that all issues arising from the agreement shall be addressed in the foreign forum chosen by the parties, excluding any court from other countries, which triggers the application of Article 25 of the CPC/2015. 3. […]. (AgInt in AREsp n. 2.008.580/PA, Reporting Minister Raul Araújo, Fourth Panel, ruling on 9/5/2022, published on 10/6/2022). In line with this Court of Justice’s jurisprudence: Civil procedural law. International jurisdiction. Case regarding damages due to alleged breach of obligations arising from an international cargo transport contract. Existence of an exclusive foreign forum selection clause invoked by the defendant in defence. Validity of the clause, which is included in an international contract and cannot be considered abusive. Exclusion of Brazilian judiciary’s international jurisdiction […]. (0081028-19.2022.8.19.0000 – Interlocutory Appeal. Judge Alexandre Antonio Franco Freitas Câmara – Ruling on 30/01/2023 – Second Civil Chamber) […] It is clear, therefore, that the parties have agreed on an exclusive foreign forum selection, which excludes the possibility of Brazilian jurisdiction in the case. The consequence is the dismissal of the case without consideration on the merits. […] (TJRJ, Case No. 0043840-57.2020.8.19.0001, Reporting Judge Elisabete Franco Longobardi, 5th Business Court, ruling on 13/07/23).’
This position acknowledges the autonomy of the contracting parties and a reputable judge in Brazil, who is an expert in maritime matters, normally emphasises that the Brazilian Government should not babysit the parties that did not negotiate their contracts well or did not give proper importance to the contractual clauses, meaning that such party cannot later challenge the validity of those clauses at court and seek the protection of the Brazilian judicial system to change what has been agreed.
Such understanding also applies to a subrogated cargo insurer as, in the words of the court ‘subrogation in the rights of the insured also means adhering to the terms of the contract which should have been observed by the insurer when contracting, given that the exercise of said right is conditioned to the terms agreed on by the insured.’
Needless to say, such a position represents a development to help introduce more legal certainty to cargo carriages and contractual relations that have any ties with Brazil.