Brazil: Superior Court Of Justice (STJ) Waives Brazilian Jurisdiction In International Contract
The Fourth Chamber of Superior Court of Justice (STJ) decided unanimously to waive the Brazilian jurisdiction in the event of contractors having previously elected to settle contractual issues in another country.
In the 90's, the relation between a foreign subsidiary of a Brazilian oil company and another Brazilian company specialized in engineering services in the oil and gas industry executed contractual agreements concerning the conversion of several rigs.
During the development of the contractual relation, companies had disputes, which resulted in lawsuits proposed in London (UK), since that was the contractually elected jurisdiction (through jurisdiction clause) to settle any dispute arising from the contracts.
After being defeated in London (UK), the engineering company proposed a declaratory action in Brazil requiring the upholding of credits claimed based in the contracts. Moreover, requested an in limine order seeking the suspension of the enforceability on credits previously recognized by the Justice in London, as well as the refrain by the subsidiary company of any coercive measures, in Brazil or abroad, aimed to ensure the credits in dispute which was granted by the trial court judge.
The subsidiary company then filed an interlocutory appeal, which was granted by the Rio de Janeiro's State Court of Appeals (TJ-RJ), in order to dismiss the lawsuit due to lack of Brazilian jurisdiction.
Dissatisfied with the court decision, the engineering company filed a special appeal to the Brazilian Superior Court of Justice (STJ) [Special Appeal number 1.090.720 – RJ (2008/0209397-3)], which unanimously rejected by the Court.
In the trial session, the Superior Court of Justice's Fourth Chamber recognized the existence of "concurrent jurisdiction" in the dispute (as per the terms of article 88, line I of the 1973's Brazilian Code of Civil Procedure), but also understood that the companies abdicated from the Brazilian jurisdiction by participating in the lawsuit filed in London (UK), being clear and definitive the intention to litigate in London (UK).
It was also highlighted that the engineering company could not intent to seek the Brazilian Justice for its own convenience because of its defeat in the London Court, solely under the argument of existence of "concurrent jurisdiction", since the principles of good faith in contractual relationships and jurisdictional security must be respected also in the international level. Thereby, the Superior Court of Justice's judges decided to sustain the dismissal of the lawsuit due to lack of Brazilian jurisdiction.
The court decision also highlighted that the 2015's Code of Civil Procedure honors the private initiative and the good faith principle, determining in its article 25 that "the Brazilian judicial authority is not competent for the processing and judgment of a lawsuit when there is a exclusive jurisdiction clause resulting from an international contract, which must be brought out by the defendant in the defence".
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