July 11 2018 | Contributed by Kincaid | Mendes Vianna Advogados
On 8 November 2017 the 2nd Section of the Superior Court of Justice, which comprises the justices of the 3rd and 4th chambers of the court, unified the court’s understanding of the applicable time bar for a subrogated insurer to pursue a claim for damages which occurred during maritime transport. This is a highly important precedent, as it has resolved a long-standing divergence between the Brazilian courts.
The discussion concerned the nature of the contractual relationship between the owner of the cargo and the shipper – in particular, the court had to consider whether the relationship was a consumer relationship and thus justified the application of the Consumer Protection Code. In this regard, the Superior Court of Justice held that the company which owned the cargo could not be classified as a consumer, as the delivery of the cargo was only a phase of the company’s productive process.
The insurer had indemnified damages that arose from a contractual relationship entered into between a leading company in the medical sector and the carrier. The contract stipulated the delivery of cargo that would be used in the production of medicines. The subrogated insurer claimed compensation against the carrier for alleged cargo damage caused during maritime transport.
The Rio de Janeiro State Court decided that the applicable time bar for the subrogated insurer to seek compensation for the cargo damages was five years. This interpretation was based on the Consumer Protection Code, which was applied by the Rio de Janeiro Court of Appeals under the argument that the insured company was the final recipient of the cargo and should be treated as a consumer. As the insurer was subrogated to the insured’s position, the same protection was extended to the insurer, which thus had five years to seek compensation from the carrier.
The carrier filed a special appeal with the Superior Court of Justice, seeking the recognition of the one-year time bar set out in Article 8 of Decree-Law 116/1967, which regulates maritime transport. The special appeal was submitted to the 3rd Chamber of the Superior Court of Justice, which maintained the decision rendered by the Rio de Janeiro Court of Appeals using the same argument.
As there were divergent precedent cases in the 3rd and 4th Chambers of the Superior Court of Justice, the carrier filed a divergence motion – a type of appeal provided for under the Procedural Law with the specific purpose of unifying contradictory decisions rendered by different chambers of the court.
The 10 justices that were convened to analyse this case had to consider the applicability of either the Consumer Protection Code or Decree-Law 116/1967.
After a thorough analysis, where the voting justices highlighted the evolution of the understandings adopted in the court’s precedents, the 2nd Section of the Superior Court of Justice (which comprises both the 3rd and 4th chambers) unanimously decided that the Consumer Protection Code cannot be applied to maritime transport if the transported goods are to be used as industrial input in the consignee’s activities.
Therefore, none of the protective regulations set out in the Consumer Protection Code apply in such cases, which includes the extended time bar to seek compensation for damages.
In their decision, the justices highlighted that:
- the insured company could not be understood as vulnerable enough to justify the use of the Consumer Protection Code; and
- as the cargo was used in the insured company’s productive process, it could not be classified as a consumer.
For these reasons, the justices applied the one-year time bar set out in Article 8 of Law-Decree 116/1967.
The decision sets an important precedent, as it significantly limits the time that insurers have to pursue indemnity amounts paid for damages under maritime transport contracts. It also sends an important message to the market regarding doubts as to the applicability of the Consumer Protection Code and its protective measures, such as the extended time bar.
For further information on this topic please contact Iwam Jaeger Jr or Vynicius Guimarães at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email ([email protected] or [email protected]). The Kincaid | Mendes Vianna Advogados website can be accessed at www.kincaid.com.br.
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