Contribution by: Rodrigo Dalhe and Gabriela Paoliello – Kincaid Mendes Vianna Advogados – Brazil
Bills of Lading generally bring a provision that establishes that any dispute arising out of it shall be determined by the judicial system of a specific country, with the exclusion of the jurisdiction of the courts of any other countries, being governed by and construed in accordance with a specific jurisdiction and law.
Despite the Bill of Lading provision, Brazilian Courts usually did not apply the foreign jurisdiction clause. However, since the enactment of the new Code of Civil Procedures in 2015, the situation has started to change.
This can be seen from a recent decision issued by the State Court of São Paulo, dismissing a claim filed in Brazil and recognizing the validity of the foreign jurisdiction clause provided in the BL.
Facts:
The case involved an indemnity claim filed by a shipper, in which it alleged that the Bill of Lading was issued with an error and that this mistake had prevented the consignee from withdrawing the cargo in the port of Mundra/India.
As a consequence of the impossibility of releasing the cargo, Plaintiff alleged that the goods were declared lost, which caused damages to the shipper.
Carrier’s defence argued, preliminarily, that Brazilian Courts did not hold jurisdiction to rule this claim, considering the bill of lading provisions establishing that any disputes would be conducted by English High Court of Justice.
The first instance court rejected the claim and acknowledged that the parties had agreed with the choice of any disputes being carried out before the English High Court of Justice. The grounds for such decision was article 25 of the 2015 Brazilian Code of Civil Procedure, which provides that “it is not up to the Brazilian judicial authority the processing and judgment of the action when there is exclusive foreign jurisdiction clause in an international contract, argued by the defendant in the defence”. This express rule did not exist in the old Civil Procedural Code.
The Court also ruled that even if the bill of lading be considered an adhesion contract, such provision would not be abusive, as it is recognised by national law.
Cargo shipper filed an appeal which is currently pending to be decided at the court of appeals. However, the decision is likely to be upheld in as much as the reporting judge assigned to decide such appeal has already rendered previous similar rulings accepting the validity of the foreign jurisdiction clause in the BL, based on the rules of the new Civil Procedural Code.
Comments:
In international contracts, the choice of jurisdiction is always a sensitive topic. Most of the precedent cases rendered by Brazilian Courts used to reject the applicability of the aforementioned clause, challenging its validity by arguing that the Bill of Lading is adhesion contract and that there would still be general jurisdiction of the Brazilian courts for the cases.
However, such understanding is most often based in contracts that were entered during the time when the old Civil Procedural Code was in force. After the enactment of the 2015 Civil Procedural Code, an express provision was inserted therein (article 25), given strength and recognition for “exclusive foreign jurisdiction clause in an international contract”.
Now that 5 years have passed after the enactment of the new code, the number of decisions based on the new law is becoming more solid, foreign jurisdiction clause tend to be more and more accepted.
This recent decision is one example of many others that started to be adopted by the Brazilian courts and provides greater legal certainty, reinforcing that Brazilian courts should uphold the validity of the terms and conditions established in contracts of carriage.