Brazil: Shipping

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding Shipping in Brazil.

This Q&A is part of the global guide to Shipping.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/shipping

  1. What system of port state control applies in your jurisdiction? What are their powers?

    Brazil adopts the Latin American Agreement on Port State Control of Vessels.

    Department of Ports and Coasts (DPC) set forth all the internal regulations regarding Port State Control.

    The port control is performed by qualified naval inspectors accredited by the Department of Ports and Coasts (DPC), as per regulations set forth in the NORMAM-04.

    The DPC has, inter alia, the authority to contribute especially for the the control of the merchant marine, related activities in of national interests, the safety of of waterway traffic, the prevent of pollution by vessels and platforms.

    Otherwise, te port state control may prohibit vessels from sailing if there are any technical deficiencies affecting the safety of or exposing any risk to navigation, human life and the environment within Brazilian territorial waters. The Navy Authority may impose penalties and fines related to oil pollution.

    In addition, the Authority may prohibit the vessel from entering a national port or determine that it shall leave Brazilian waters.

  2. Are there any applicable international conventions covering wreck removal or pollution? If not what laws apply?

    Although The Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 and the Civil Liability for Oil Pollution Damage 1969, the SOLAS Protocol of 1978; the International Convention on prevention of pollution caused by ships - MARPOL (73- 78), OMI 1973; are in force, Brazil is not a signatory of the Nairobi Wreck Removal 2007 and The International Oil Pollution Fund 1971, the Civil Liability for Bunker Oil Pollution Damage 2001, and 1976 and 1992 Protocols.

    Notwithstanding Brazil is not party on these conventions, the domestic legal system provides about the applicable rules in case of oil and wreck pollution, especially on the Law no. 9.966/2000.

    As for wreck removal, the Law n. 7.542/1986 and the Navy Ordinance NORMAM-10 establish requirements and procedures regarding wreck removal permits and wreck removal orders.

  3. Are there any applicable international conventions covering collision and salvage? If not what laws apply?

    Brazil is not a signatory of the Hague Rules, Hague-Visby Rules, Hamburg Rules, International Convention for the Limitation of Liabilities on Maritime Claims (London 1976) and the Convention on Civil Liability due to Oil Pollution resulting from exploration and exploitation of subsea mineral resources (London 1977), many international conventions were signed.

    The signed conventions are:

    the Convention for the Unification of Certain Rules of Law relating to Assistance and Salvage at Sea (Brussels 1910);

    the Convention for the Unification of Certain Rules related to Limitation of Liability of Owners of Seagoing Vessels (Brussels 1924);

    the Convention for the Unification of Certain Rules relating to Maritime Liens and Mortgages (Brussels 1928);

    the International Convention of Private Law (Bustamante Code);

    the Convention for the Unification of Certain Rules relating to Immunity of State-owned Vessels (Brussels 1928);

    the International Convention on Load Lines (London 1966); the International Convention on Tonnage 1969;

    the International Convention on Civil Liability due to damages caused by Oil Pollution 1969;

    the International Convention for the Safety of Life at Sea (SOLAS 74);

    the SOLAS Protocol of 1978; the International Regulations for Preventing Collisions at Sea;

    the Convention on Facilitation of International Maritime Traffic;

    the International Convention on Maritime Search and Rescue; the International Convention on prevention of pollution caused by ships - MARPOL (73-78),

    OMI 1973;

    the United Nations Convention on Law of the Sea 1982;

    the Agreement to implement the United Nations Convention on Law of the Sea and the International Convention on Salvage 1989.

  4. Is your country party to the 1976 Convention on Limitation of Liability for Maritime Claims? If not, is there equivalent domestic legislation that applies? Who can rely on such limitation of liability provisions?

    Brazil is not party of the 1976 Convention on Limitation of Liability for Maritime Claims. However, Brazil ratified the 1924 Brussels Convention (1924 International Convention for the unification of certain rules relating to the limitation of the liability of owners of seagoing vessels) and the CLC-69 (International Convention on Civil Liability for Oil Pollution Damage).

    Furthermore, the Sao Paulo Court of Appeals recently recognised the applicability of the bill of lading’s limitation of liability. On that case, the contracting party had an opportunity to declare the cargo’s value, but had decided not to, possibly in order to obtain a lower freight cost. Therefore, in the absence of a declaration of the cargo’s value, the limitation clause was valid, as it had been voluntarily and consciously adhered to by the merchant.

    Otherwise, if the party declares the cargo’s value on the bill of lading, the article no. 750 of the Brazilian Civil Code provides that the carrier’s liability will be restricted to the value of the cargo.

    Nevertheless, it is possible under Brazilian law for the parties to limit their liability towards each other under a contract.

  5. If cargo arrives delayed, lost or damaged, what can the receiver do to secure their claim? Is your country party to the 1952 Arrest Convention? If your country has ratified the 1999 Convention, will that be applied, or does that depend upon the 1999 Convention coming into force? If your country does not apply any Convention, (and/or if your country allows ships to be detained other than by formal arrest) what rules apply to permit the detention of a ship, and what limits are there on the right to arrest or detain (for example, must there be a “maritime claim”, and, if so, how is that defined)? Is it possible to arrest in order to obtain security for a claim to be pursued in another jurisdiction or in arbitration?

    Brazil has not ratified the 1952 Arrest Convention nor the 1999 Convention. Currently only the 1926 Brussels Convention regarding Maritime Liens is in force, which, combined with the 1850 Brazilian Commercial Code, allows the arrest of a vessel when there is a maritime lien properly constituted, a credit related to an obligation in favour of the vessel.

    In the Brazilian legal system, the maritime lien is disposed on the 1850 Commercial Code, which provides that expenses related to the cost of the vessel, such as repairs, crew salaries, port expenses, taxes, are privileged credits (see question 7).

    Nevertheless, even if the plaintiff has a maritime lien properly constituted, the arrest order may not be granted if court understands that the order can be extremely harmful to the debtor, i.e. if the amount debt is low.

    Due to not having ratified the International Arrest Convention, the plaintiff cannot seek security in Brazil for a claim or arbitration that shall be submit to foreign jurisdiction.

    The arresting party will have to evidence that Brazilian courts detain jurisdiction to rule on the case. Thus, claimant will have to present judisction only for the arrest, but also regarding the merits of the claim.

    After the enforcement of an arrest order over a vessel, the arresting party will have thirty days to to file a main lawsuit before the Brazilian courts. Failing to do so, the lawsuit will be dismiss and the arrest lift. In additional, the shall be liable for court costs and fees, and liability for wrongful arrest.

  6. For an arrest, are there any special or notable procedural requirements, such as the provision of a PDF or original power of attorney to authorise you to act?

    In Brazil, all the documents presented by a lawyer in court are presumed legitimate, so that there is no need for an original power of attorney to be presented. If the proof of debt is not in the Portuguese language, it is preferable that the claimant bring a certified translation.

    Although recommended, some Brazilian courts have considered it unnecessary to present the translation of proof of debt. The thesis applied is that are common documents for both parties, so there would be no prejudice to the defence.

    In the case of the judge understands that the translation is necessary, the order of arrest can be given with another order, for the plaintiff, to present translated versions of the documents.

  7. What maritime liens are recognised?

    The Commercial Code and the 1926 Brussels Convention on Maritime Liens and Mortgages govern maritime liens in Brazil.

    The claims that give rise to maritime liens under Brazilian Jurisdiction are: federal taxes; legal costs and expenses; claims resulting from the employment of master and crew; indemnities due for salvage; general average contributions; obligations undertakn by the master outside the port of registry; indemnities due as a result of collisions, or any other maritime accident; ship mortgages; port dues, other than taxes; outstanding payments due for depositaries, storage and warehouse rentals and ship equipment; maintenance expenses at the port of sale; carto shortage & losses; debts relating to ship building; expenses incurred for repairs of the vessel and her appurtenances; and, finally.

  8. Is it a requirement that the owner or demise charterer of the vessel be liable in personam? Or can a vessel be arrested in respect of debts incurred by, say, a charterer who has bought but not paid for bunkers or other necessaries?

    The vessel can be arrested by debts incurred by charter if it is considered a Maritime Lien. Note that credits relating to ship suppliers out of the port of registry, included bunkers, are considered privileged by our local Law.

    Therefore, due to nature of such credits, they have in rem effects and follow the vessel, independent of who is the debtor.

    Thus, being possible to arrest the vessel if the bunker supply contract was entered with the charterer and not with the owner.

  9. Are sister ship or associated ship arrests possible?

    If there is a privileged debt upon a ship and the party who gave rise to the debt has other ships in the fleet, there is indeed a good cause for an arrest, specially if the “in debt ship” has left Brazilian waters and the party has no other properties in the country.

    Accordingly, to provision n. 391 of the Brazilian Civil Code the debtor responds with all his assets for a debt, so that include other ships who did not gave rise to the debt. There are no formal provisions dealing with arrest of sister ships in Brazilian law and the Creditor will have more likelihood on succeeding if the claim is in personam.

  10. Does the arresting party need to put up counter-security as the price of an arrest? In what circumstances will the arrestor be liable for damages if the arrest is set aside?

    The court can require a guarantee from the arresting party in order to grant the arrest. However, this will be at the judge’s discretion, usually depending on the evidence presented to the court concerning the credit and legal ground of the claim.

    Usually the court will request the guarantee to be set forth in a judicial bank account or letter of credit issued by a first-line bank.

    If an arrest is granted and, after the continuance of the proceedings the injunction is overturned or the claim is dismissed, the Civil Procedural Code allows the defendant to seek an indemnity for the losses suffered with the wrongful arrest. The indemnity can be asses in the same legal proceeding.

  11. How can an owner secure the release of the vessel? For example, is a Club LOU acceptable security for the claim?

    Judicial deposit are fully acceptable and usually the arrest order already states that a judicial deposit will result in the arrest being lift. Bank guarantee and insurance guarantees might be accepted if the guarantor has properties in Brazil.

    Letter of Undertaking (LOU) issued by a Protection and indemnity club are usually not recognised by the Brazilian courts, but may be admitted if it is accepted by the both parties.

    If the guarantee is not a judicial deposit, the judge will decide if it is acceptable. In affirmative case, the plaintiff will be summoned to demonstrate any reason for the guarantee not to be accepted. If there is any controversy, the judge will decide whether to lift the arrest order with the pledge.

  12. Describe the procedure for the judicial sale of arrested ships. What is the priority ranking of claims?

    Brazilian legal system allow the judicial sale of arrested ships.

    The judicial sale of vessels follows the same general rules as asset bidding. The public auctioneer conducts the publication, divulgation of the judicial sale and the bidding procedures. Usual costs are between 2 and 5 per cent of the sale amount.

    The judge will set the initial bid according with the evaluation of the ship. The vessel cannot be sold for an amount below the initial bid at the first auction. However, at the second auction, the vessel may be sold at any price that the court considers proper.

    Immediately after the auction, the highest bidder must deposit 20 per cent of the bid in cash or thought a certified check, with the balance to be paid within a certain deadline. If the residual amount is not paid, the vessel will be offered to the other bidder.

    After the judicial auction, a release order will be given by the judge, so that the bidder can register ownership before the Admiralty Court.

    The ranking order of claims will be according will be labour credits, tax credits, maritime liens, general privilege credits, and finally the unsecured creditors.

  13. Who is liable under a bill of lading? How is “the carrier” identified? Or is that not a relevant question?

    According to the article n. 750 of the Brazilian Civil Code, the carrier is liable from the moment of the receiving of the cargo until its delivery. Furthermore, according to the article n. 744 of the Brazilian Civil Code, the carrier of the operation is precisely who issues the Bill of Lading. Identifying the carrier is quite important, especially to verify the liability in case of damages or losses on the cargo.

  14. Is the proper law of the bill of lading relevant? If so, how is it determined?

    Brazil is not party of any international convention concerning Bills of Lading. All the regulation is disposed on the 1850 Brazilian Commercial Code, on the 2002 Civil Code, on the Multimodal Transport Law and in the Decree-Law n 116/1997.

    Brazilian Commercial Code states that the following information must be necessarily included in the bill of lading:

    Name of the issuer; number of the bill of lading; name of the carrier; name and flag of the vessel; port of loading and delivery port; name and head offices of the receiver of the cargo; description of the cargo; conditions and status of the cargo; value of freight and form of payment; and name and signature of the master.

    The absence of some of such information will not result in the in the annulment or invalidity of the bill of lading.

  15. Are jurisdiction clauses recognised and enforced?

    The Art. 25 of the Civil Procedural Code 2015 states that ‘no Brazilian judicial authority is responsible for the processing and trial of the lawsuit when there is a choice of exclusive foreign jurisdiction clause in the case of international contracts, if raised by the defendant in the defence’.

    Therefore, if a foreign jurisdiction has been elected, a lawsuit filed in Brazil will be extinguished, unless the mentioned clause is not considered valid.

    One of the main reason for such clause not being considered valid is its insertion in a contract of adhesion, in which there is no room for negotiation.

    In Brazil’s Arbitration Law (9.307/96), there is a special provision on Article 4º §2º, which states that “In adhesion contracts, an arbitration clause will only be valid if the adhering party takes the initiative to file an arbitration proceeding or if it expressly agrees with its initiation, as long as it is in an attached written document or in boldface type, with a signature or special approval for that clause”.

    Although such article is aimed at an arbitration clause, judges might make an analogy and apply it to foreign jurisdiction clauses in adhesion contracts.

  16. What is the attitude of your courts to the incorporation of a charterparty, specifically: is an arbitration clause in the charter given effect in the bill of lading context?

    The bill of lading verse must contain or refer the general terms and conditions of the charter party and should include the Arbitration clause.

    Usually when Arbitration Clause are not effective express in the wording of the Bill of Lading, only referring to an existing clause on the Charter Part, the courts will likely understand that arbitration will not be applicable. Mostly when receivers are different party from those from charter party.

    Necessary to note that the bill of lading may be considered an adhesion contract, if the issuer (shipowner) establishes its clauses without minimum negotiation cargo interest. Therefore, Jurisdiction or Arbitration clauses will only be binding in adhesion contracts if the contracting parties expressly agree on this specific clause, stating that same is accepted.

  17. Is your country party to any of the international conventions concerning bills of lading (the Hague Rules, Hamburg Rules etc)? If so, which one, and how has it been adopted – by ratification, accession, or in some other manner? If not, how are such issues covered in your legal system?

    Brazil has not yet signed any international conventions concerning bills of lading. All this matter is regulated by the Commercial Code and by the Law n 9611/1998 (multimodal transport law), the Decree-Law n 116/1997. Also, Article 749 of the Brazilian Civil Code states that the carrier must deliver the good in its destination in time and in good stated, taking all the caution necessary.

  18. Is your country party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? If not, what rules apply? What are the available grounds to resist enforcement?

    Brazil is party of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards since July 23rd 2002, when Presidential Decree 4.311 was signed.

  19. Please summarise the relevant time limits for commencing suit in your jurisdiction (e.g. claims in contract or in tort, personal injury and other passenger claims, cargo claims, salvage and collision claims, product liability claims).

    Brazilian Civil Code provides three years for filing claims relating to tort and personal injury. The Federal Decree No. 116/1967 provides a one-year time bar as of the date of discharge for filling cargo claims resulting from ocean carriage, similarly to the Law on Multimodal Transportation (Law No. 9.611/98).

    Salvage and collision claims can be present in five years, as per provision of law the Law n. 2.180/1954 and Law n. 9.873/99.

    As for passenger claims, the lawsuit must be present within five years as the matter is regulated by Brazilian Consumer Defence Code.

    The time-bar can be interrupted through a judicial notification. OnceOnce interrupted, the time bar is renewed for an equal period.