Upon the simplification of the customs regulation and greater opening of the market, Foreign Trade operations in Brazil became accessible to small and medium sized companies. Naturally, litigations involving the default of commercial liabilities tend to increase. Some cares need to be taken by the foreign exporter, in order to make credit recovery easier in Brazil.
Since 2020, Brazil has bet in the debureaucratization and simplification of the rules regulating the foreign trade, significantly reducing the bottlenecks that made the foreign market inaccessible to small and medium sized companies, given the colossal volume of rules, documents, permits, and demands provided for in the system.
On 05/07/2020, upon the publishing of the Regulatory Instruction of the Brazil’s Federal Revenue Service (“IN RFB”) number 1946/2020, more than 122 regulatory instructions published between 1970 and 2019, which addressed matters connected with the foreign trade and made more difficult the import and export operations in the country, were revoked. On the other hand, on 10/21/2020, the Joint Administrative Ruling number 22.091/2020 was published, which revoked non-statutory rules having the same nature. The idea is to reduce the difficulties so as to further the economy growth.
Another important landmark to such effect was the project created by Banco Central, converted into Law, which makes the use of the Brazilian currency easier in international transactions, further to provide more legal security and flexibilization to foreign exchange contracts.
Such correct measures speeded up the growth of the international business environment and enhanced the market possibilities to a number of Brazilian companies. As a consequence thereof, the increase of litigations involving the default of liabilities is natural, so that it becomes necessary to take some actions to make the credit recovery process easier.
It is important that operations are preferably formalized through agreement, mainly when they involve expressive amounts or are recurrent, for a better legal protection to the parties. In practice, we know that the concretization of transactions through invoices is usual, which requires some cares.
The Brazilian law acknowledges the invoice as a credit instrument capable of grounding an execution proceeding, provided that it is accompanied by the delivery receipts for goods. Similarly, the bill of lading (BL), also known as sea transportation bill, is also considered as an out-of-court enforceable warrant, provided that its formal requisites, demanded by specific Brazilian laws, are fulfilled.
Other out-of-court enforceable warrants, such as trade note and agreement signed by two witnesses are also sufficient to ground an execution proceeding, provided that they meet the legal requisites. Otherwise, it is possible to seek a judicial measure for recovering assets, even without a credit instrument, which shall be done through declaratory judgment action.
In an execution proceeding, further to the out-of-court enforceable warrant, it is necessary to comply with the demand in paragraph 3, of Article 794, of the Code of Civil Procedure, that is, the creditor is the one to demonstrate the compliance with the requisites for constituting the warrant, required by the law where it was entered into, and when Brazil is indicated as the location where the liability is to be complied with.
In such respect, the exporter / creditor needs to pay attention to the laws of the country where the instrument had its origin, and whether the local law acknowledges it as a credit instrument. The Maritime Code of the People’s Republic of China, for instance, provides, in its Article 73, for the requisites for a bill of lading (BL) to be issued, which meets the requisite in Article 794, paragraph 3, of the Brazilian code of civil procedure. On the other hand, the pro forma invoice, commonly used in international operations, is not a document required in China, and could not be enforced in Brazil.
Differently from what is imagined abroad, the judicial proceeding in Brazil has become more and more agile and open, mainly upon the beginning of the judiciary digitalization process introduced by the Law no. 11.419/2006, which was quite intensified in the latest years. Foreign companies can file actions aiming at the performance of liabilities in a very simple way, and they can even be released from posting bonds before courts, depending on the country of origin.
Brazil’s greater opening to the foreign trade brings in itself challenges that the national legal system is ready to cope with, so that foreign companies must pay attention to the local rules for making the satisfaction of credits easier in the case of resolution of disputes.
To such effect, our staff can advise clients both in the formalization of instruments, for them to be valid as out-of-court enforceable warrant in Brazil, and in the stipulation of guarantees capable of permitting the satisfaction of credits arisen from international operations.
Hélvio Santos Santana, CEO of our office.
