quinta-feira, 29 de novembro de 2012

A Roundabout Route To Brazill - Palisades Hudson Financial Group

A Roundabout Route To Brazil « Palisades Hudson Financial Group
by Larry M. Elkin, CPA, CFP® Palisades Hudson Financial Group.

CAMPINAS, Brazil – It took nine hours to fly from Newark International Airport to São Paulo, and another 90 minutes to drive to this city of 1 million for a brief post-Thanksgiving business trip. But my journey actually began weeks ago, in an office tower in downtown Miami.
My previous Brazilian visa had expired not long after my last trip, forcing me to go through the costly and cumbersome application process for the fourth time since I began visiting 15 years ago. (Brazil’s multi-entry tourist and business visas are typically valid for five years.)
First, I had to go to the consulate nearest my principal residence, in Fort Lauderdale, which is why I went to the consulate in Miami. Applications are accepted by mail, but the turnaround time is at least one month, which was too long for this trip. So I made sure to show up at the consulate at the requisite hour – applications are accepted only between 10 a.m. and noon on weekdays – with my U.S. passport, a set of recent photos, a letter from my firm explaining the purpose of my trip and $161 in cash. I fed the cash into an ATM-like machine in the consulate lobby. The machine regurgitated a receipt, which completed the necessary paperwork.
After dropping off the papers, I then had to wait five days before returning to the consulate, precisely in the designated time period of 3-4 p.m. on a weekday, to pick up my passport with the newly affixed visa.
The entire process is a pain in the tuchas, a word which, while neither English nor Portuguese, is understood by speakers of both. It would be easy to blame the Brazilians for this inconvenience. It would also be wrong.
My need for a visa, and the $161 price tag (less a $1 dollar service fee to the Banco do Brasil), is the result of policies rooted in Washington, not Brasília. If I were visiting Brazil from any European Union country, or from a long list of other nations including Israel, Romania, Russia and Turkey, I could have entered with no visa at all. The United States, however, has refusedto include Brazil in its own visa-waiver program, which allows leisure and business travelers to come to America for up to 90 days with only their home country’s passport, as long as they do not accept employment during their visit. Brazil’s visa policy is simply a mirror of our own. As soon as we drop our visa requirement for Brazilians, Brazil will open its borders to Americans.
From an American viewpoint, Brazil is easily the most politically compatible of the four rapidly developing BRIC countries. I have written here in the past about the corruption that remains prevalent in the other three: RussiaIndia and China. Brazil also has a Gross Domestic Product of $2.2 trillion, making it the sixth-largest economy in the world. But despite Brazil’s proximity compared to the growing Asian economies, the United States continues to hold the country at a diplomatic distance.
Our visa requirement is supposed to help us keep tabs on travelers who might illegally overstay their welcome in the United States. Brazilians, however, are not overly eager to put down roots in the north. As Paulo Sotero, director of the Woodrow Wilson Center’s Brazil Institute in Washington, told Time, Brazilians prefer their native soil when it comes to long-term residency. The United States “is considered a less attractive place for economic migrants in Brazil, which has almost full employment and a lot more economic opportunity,” Sotero said.
Brazilians come to America to spend money far more often than to make it. In 2010, 1.2 million Brazilians visited the U.S., putting Brazil fifth worldwide in terms of the number of tourists it sends to our shores. Those Brazilian visitors collectively spent $6 billion in the States.
Two years ago, I took my family along for my first vacation trip to Brazil. We had a memorable two weeks seeing the sights in Rio de Janeiro, enjoying the beaches near the northeastern city of Recife and exploring a bit of the Amazon rain forest. As our trip demonstrated, Brazilians and Americans have similar reasons for visiting each other’s countries: to sightsee, to relax, to shop and to dine in venues that can hold their own with rivals anywhere in the world.
When it comes to doing business, however, there are other obstacles that are even more of a hassle than the visa requirement: The U.S. has neither a tax treaty nor a free-trade agreement with Brazil. Both mechanisms play crucial roles in facilitating cross-border business in the 21st century.
Neither the U.S. nor Brazil is categorically opposed to such treaties. For trade, Brazil is a member of the Mercosur bloc (Mercosul in Portuguese) with its neighbors Uruguay, Paraguay, Argentina and Chile, as well as Venezuela. We are part of the North American Free Trade Agreement with Canada and Mexico, and we have a variety of bilateral trade treaties as well. On the tax side, Brazil has agreements with 28 countries, and the U.S. has even more. Many countries, including our NAFTA partners Canada and Mexico, have tax treaties with both the U.S. and Brazil. Brazil is, in fact, the only nation in the world with an economy of $1 trillion or more with which the U.S. lacks a tax treaty. But despite calls for stronger ties from the administrations of both President Obama and his Brazilian counterpart, Dilma Rousseff, no agreements have emerged.
Given our visa and tax treatment of Brazil, it is no surprise that as Brazil’s role in the world has grown, America’s role in Brazil has not. In 2009, China became Brazil’s top trading partner – a position Americans had previously held for eight decades. Meanwhile, the U.S. continues to impose tariffs on two key Brazilian exports: orange juice and ethanol. Brazil, in turn, has announced an array of investment and tax incentives to develop its domestic automobile industry, seeking to reduce the number of cars it imports and, by extension, to cut down on a key area of trade with the U.S. Even so, two-way trade between Brazil and the U.S. totaled $74 billion in 2011, making Brazil our eighth largest trade partner.
Brazil is not likely to ever account for as much of our foreign trade as countries such as Canada or China, nor is it likely ever to be as much of a political and military ally as countries such as the United Kingdom, Israel and Japan. It definitely will never be as physically close a neighbor as Mexico. But none of this means that we shouldn’t strive for a stronger, diplomatically closer relationship.
When it comes to deciding where to do business, shared fundamental values ought to be as important as economic potential. Brazil happens to offer a healthy measure of both.

sexta-feira, 23 de novembro de 2012

A comparative analysis of the patent systems of the BRICS countries

Nice presentation from the Brics Policy Center:


terça-feira, 20 de novembro de 2012

Brazil: A User’s Guide

This post is not the complete legal guide to doing business in Brazil (such thing does not exist and would be outdated in 24 hours if it did).

It is the deliciously humorous article published by Granta magazine, about what Brazil looks like from an extraterrestrial pespective.

It is very funny, specially for the foreigners who have lived or visited Brazil, and who will be able to understand all the jokes.


Following on from the first and second dispatches from the newly appointed Ambassador to São Paulo back to his home planet, Juan Pablo Villalobos offers a guide to surviving life in Brazil.

Identity crisis (1). São Paulo and Manaus are as similar as Wales and China. Comparing Rio de Janeiro and Palmas is like comparing a shoe with a rocket. Porto Alegre and Rio Branco like a frog to a cup of coffee. Belo Horizonte and Salvador like an Other-Human hair to a constellation. The sum of these differences is called Brazil.

Tips that can save your self esteem (1). You don’t want to play in that football game on the beach, believe me.

Bureaucratic stuff (1). The Brazilian banking system was created by a Czech writer called Franz Kafka.

Ways of saying Hi (1):
– Hi, all ok?
– All ok and you?
– All ok.
– Then it is ok.

Security controls. If you want to enter to a condominium, relax. Have you ever gone to Pluto with a Green Planet passport?

For the rest, go to Granta's website.


I suggest  a very good article by Mr. Noronha, an outstanding Brazilian lawyer, founder of Noronha Advogados, a Brazilian law firm with a truly international practice (they have office in London, Shangah and Lisbon, among other places).

 I had the honor to be a member of Noronha Advogados a few years ago.

The article comments on the Mensalão scandal.


Twenty five people have been found guilty earlier October 2012 by the Brazilian Federal Supreme Court (STF) in the trials of the accused of vote buying in the Brazilian Federal Congress. Amongst the defendants, there were some of Brazil's top politicians, such as José Dirceu, President Lula's chief of staff between 2003 and 2005, and José Genoíno, president of the Worker's Party. The 11 judge's members of the panel were in their majority appointed by President Lula, as was the General Prosecutor, responsible for pressing the charges.

Debt Collection in Brazil - Non Receipt of Overdue Payments

Note: This is a reply I've sent to a client many years ago.  The client sold DVD players to Brazil, but did not receive payment. 

The client neither elected arbitration in his agreement with the Brazilian party, nor asked for a negotiable instrument as an additional collateral for the payment.   Mortal errors to his claims.  

Dear Mr. Goodwill

 After going through your case, I'm happy to present you some considerations.

Please allow me to make a brief introduction to the relevant aspects of your case:

Had you a negotiable instrument signed by the importer, such as a promissory note, it would allow us to file a debt collection lawsuit (execução). This would take less time,  2-3 years maybe. But, unfortunately, this is not the case. 

In your case, we must file a lawsuit in order to obtain a judicial declaration of the debt, and only later move on to the phase of debt collection.

 Such court procedures in Brazil can, unfortunately, take long years to be completely settled. In the Sao Paulo State, above all, court procedures usually take at least 3 years, even the relatively simple ones. Usually, they will take no less than 5 years.

 Thus, I believe that the amicable composition is the best option right now. This can be achieved through negotiation, with the aid of some pressure mechanism made available by Law, such as the public registration of the company's debt before public notaries (Protesto).

 It should also be noted that many Brazilian companies have defaulted their import payments due to the Real (the Brazilian currency) devaluation before the dollar.  

 After all, the dollar appreciation causes the merchandise to become more expensive and makes the taxes due over the imports automatically become higher.

 This has lead many buyers to simply leave the goods at the port, unclaimed. 

 If this is the situation, the debt collection may be simpler, for we may obtain a warrant to seize the goods at the port.

 On the other hand, if the default has been made on purpose or due to financial difficulties, then the Judicial Claim of the debt may be the next necessary step.

 After the initial contact with the debtor, we will have a more clear definition of which situation they are in.  Even if we choose the amicable way as a starting point, your right to claim the debt before the courts remains unaltered.

 In case you have any other doubt, please contact me through e-mail or phone. 


Reader asks: Can a Foreigner be the administrator of a Brazilian company?


Bom dia. 

Can an American with a pedido de permanência (permanent visa request filed) and a carteira de trabalho (a Brazilian work document)  assinada (signed by and employer) open an S.A. in Brazil on behalf of an American company?

Jack Sparrow

Dear Jack Sparrow,

Thank you for the message.

You may be a partner (shareholder) of the company, or act as a representative to the foreign partners.
However, before your permanent visa is actually granted, you cannot act as an administrator (director) of the company.  (By the way, you also shouldn't be able to work before the visa is granted. How come you already have a work document ["carteira de trabalho"]?)

If your pedido de permanência were derived from marriage, the situation would be a little uncertain (the receipt of the request, in case of marriage, grants some special rights). But, being conservative,  I'd still say that you wouldn't be able to be an administrator until the permanent visa is definitively issued.
At the end of the day, I believe your worries are unfounded.

The most usual solution for this situation is to hire a local accountant, lawyer or executive (with a business major) to act as a provisional administrator, while you, as the foreign partner's representative, would retain the powers to approve the administrator's decisions on the most relevant subject.
Please share your plans with me, so that I can offer you better guidance.

 I stress that you need a lawyer or an accountant to help you with this operation, since the help of either of them is mandatory when incorporation a new company.

 Many foreigners are prone to doing things by themselves in Brazil, which is not always possible, and never advisable. (I know that this advice may seem a little biased, but you will have to trust the all the other foreigners writing about this at internet forums like gringoes.com, etc.)
Thanks.  However, I would be able to be hired as the general manager if I have work authorization in Brazil, correct?
Jack Sparrow

Dear Jack,

Not exactly.

Your work authorization is valid exclusively for the company that hired you first. You would have to apply for a change of employer before becoming the administrator of a company (this is my interpretation of the law. I do recognize that the Commercial Registry might miss this detail and end up allowing you as an administrator. But this could later be considered as reason to cancel your visa).

If the investment is of at least 600 thousand Brazilian Reais, you can obtain a Director's Visa, which is a kind of permanent Visa.  This route is faster and more certain.


Can the matrix company pay for the goods purchased by the Brazilian subsidiary/affiliated company?

One more of my series of e-mail replies:


I was doing a search on a type of tax in Brazil, and I came across your blog. It is very helpful-- thank you for sharing! I have a tax question that I can't seem to find the answer to, and I was hoping that maybe you knew the answer. I left this question as a comment to one of your blog entries, but I also thought I should email just in case.

I am trying to find out the tax consequences for the following scenario:

A U.S. company has a subsidiary located in Brazil. The subsidiary engages in some sort of sales transaction with a vendor (say, for office supplies), also located in Brazil. The goods purchased are to be used by the subsidiary located in Brazil, but the goods will be paid for by the U.S. parent company.

Do you have any idea what the tax consequences would be for the U.S. parent, Brazilian subsidiary, and vendor on this type of transaction? I am aware of taxes for a loan from a foreign company, but I need to know the tax consequences for a transaction like the one above that doesn’t involve a loan.

Thank you very much for your help!
Best Regards,



Dear Isolde,

Thank you for your comments.

I have replied your answer in the blog, but thought that a direct email would also be a good idea.

The right thing to do is to send the money directly to the Brazilian subsidiary. The money shall be declared before the Brazilian Central Bank either as capital or as a financial loan.

For a series of reasons, a local vendor in Brazil cannot receive foreign payment for goods sold inside Brazil. In this case, the vendor would be obliged to export the goods, which is not what you want.

I would be glad to help you with the capital registration.

By the way, what kind of subsidiary is that? A Brazilian company with foreign capital?

Warm regards,




The Brazilian company is a wholly owned subsidiary of a foreign parent. Does this answer your question? The foreign parent wishes to directly pay a vendor in Brazil who provides goods or services to the wholly owned Brazilian subsidiary. If this is not permitted, can you please explain why? 

Thanks again for your help!




Dear Isolde,

This is, how can I say, legally awkward due to tax declaration procedures.

In your example, the supplier in Brazil would be donating goods to a local company and receiving a payment from abroad.

Or, in other terms, the local supplier would receive payment from abroad with orders to deliver the goods to a local company.

The local supplier would have to issue an invoice. The invoice cannot be issued against the local company, because it is not the real buyer. It would have to be issued against the foreign company.

If the foreign company orders the delivery to be made in Brazil, then OK, this might work.  But it would indicate that the foreign company has an office in Brazil, which is not the case.

Also, how would the local subsidiary declare this in its books? As donation? It cannot be declared as foreign capital, because it has not come though the Central Bank.

On the other hand, declaring it as a donation is incorrect (not true), because I'm sure the matrix company will declare that this expense is an investment.

So, to sum it up: this might work to purchase 2 thousand dollars in office supplies once, but it is a completely irregular arrangement that cannot be used for regular operations, or at all.





I am just getting your emails. Thank you very much for your help.

I greatly appreciate it! I have forwarded this information to my boss, along with your contact information. Because there are many complications, I am not sure if he will decide to pursue the situation further, but if he does, he may be emailing you. 

Thank you again!

Take Care,

American passports must be delivered by the Brazilian official mail, not by Fedex

A Brazilian court has provisionally suspended the delivery of American passports from the Consulate to the Visa holders. The reason? It does not respect the Brazilian official mail ("Correios") monopoly over the delivery of letters.

Legally, I must say that is makes sense. But it is a total economic disaster that makes me ashamed. We are still in the era of monopolies... oh God, why?

So, no Foreign Direct Investment in the delivery of letters.

Before you ask: Fedex, UPS, DHL and others operate in Brazil, but they are restricted to the delivery of packages.


Here is another article that has been published at Alternative Latin Investor.  You may download it here. 

The Brazilian law on money laundry and the precautions investors must have when investing in Brazil

Brazil has recently altered its money laundering law. The new bill has tightened the government’s grip on most of the investment operations, and has significantly broadened financial institutions and investment brokers’ duties to report suspicious activities.

Since the report of suspicious activities may trigger an investigation, it is important for foreign investors to understand how they can, at the same time, keep their privacy and still benefit from the Brazilian market, specially the Brazilian stock market.

Know your customer way too much

On the year 2000, the Brazilian Monetary Council (CMN) published the Resolution 2.689, which regulated the investments made by nonresident in the Brazilian stock market.

On 2005, the Brazilian Stock Exchange Commission, known as CVM, issued the Instruction 419, which created the simplified registration of nonresident investors.

The aforementioned rules were balanced and adequate. They did ask for identification of the investor, but did not requested it to provide excruciating details about the origin of the funds or, in case of companies, the complete list of its shareholders or beneficial owners.
As from 2012, the scenario has changed dramatically.

On March, the Brazilian Central Bank (BACEN) has issued the Carta Circular n. 3.542. This regulation advanced a list of suspicious activities that banks should monitor in order to prevent money laundering by its clients.

Among an endless list of activities, one is certain to call the attention of Latin American investors: article 1, IX, paragraph a mentions that the simple fact of being located in a Tax Haven or in a country that enforces secrecy more vigorously is enough to characterize the investor as a potential money launderer.

That is to say: any investor who chooses to concentrate its pool of funds in any of the many Latin American tax heaves is automatically subject to scrutiny by Brazilian banks, who will treat him as a potential criminal.

In addition to it, item III, paragraph e of the same article prescribes that the beneficial owner of the investment must be identifiable at all times, otherwise the investment shall be characterized as highly suspicious. The beneficial owner, in this context, means the original owner of the funds, after any layers of corporate veils have been lifted.

In other words, the individual who own shares in a company that has a subsidiary in a tax haven cannot, in principle, invest through the tax haven bases subsidiary without identifying himself first.

Those rules sprung from similar provision of the Law 9.613 from 1998, the original money laundering bill.

Later on 2012, on July, the law 12.683 has been published, altering some provisions of the money launder bill.

In what concerns the foreign investor, which was already subject to the BACEN rules described above, the new money laundering provisions brought two very important implications:

First: From now on, any activity with the purpose of concealing money originated from any kind of felony or crime will suffice as ground for accusation of money laundering.

This is very drastic, because the expression “concealing” may have several meanings, among them: 

a)    take the money away from the banking system; 
b)    not offering funds to taxation; 
c)    detach the possession of the money from oneself, either through a chain of companies or through the use of proxies or representatives.

Also, since the origin of the money now must be 100% pristine, it is reasonable to fear that the incorrect collection of taxes or mistakes in the filling of tax forms might be used by the government as an excuse to taint the origin of the money, even when the underlying transaction is legitimate.

Second: The list of whistleblowers has been expanded. Now, any advisor that deals with financial transaction, including accountants and economists, is obliged to report suspicious behavior or activities to the government.

Moreover, brokers in real estate and other transaction (such as art, cattle or other auctions) must also keep records of their clients and report suspicious activities.

The only professionals that, theoretically, are exempt from this duty to report are lawyers (although other classes are currently discussing the issue in Brazilian courts)


In the current Brazilian scenario, the challenge is not to remain legal (that is, to make legitimate investments) but to look legal, to transpire transparency and credibility, in order to avoid investigations.

The best ways to do so is make initial contacts with brokerage firms, banks, etc, and explain the legitimate origin of the funds, as well as testify on the investment’s legitimacy.

Keeping sound records of the origin of the funds and of the payment of applicable taxes in Brazil is also a good way to protect oneself from future investigations.

In case of real estate investments, the investors should always select the broker with utmost care, and formalize all previous negotiations with him, stressing the legality of the funds. The same is true for contacts with stock brokers.

And, above all, hire a good lawyer and trust him.  He will act as your ambassador before the Brazilian financial system.

Adler Martins has teamed up with Alternative Latin Investor (ALI) to contribute to their cutting edge coverage of Latin America .  ALI’s newest issue, August/ September 2012, takes a look at the retail sector in Latin America.
Click here to read Adler’s article “Software Importation by End Users in Brasil” in Alternative Latin Investor:  
About Alternative Latin Investor: ALI is the first digital and print publication to offer highly coveted information and actionable analysis regarding alternative investments in Latin America. Topics include Wealth Advisory, Commodities, Forex, Private Equity, Wine, Art, Regulation, Philanthropy, Hedge Funds, Agribusiness, Renewable Energy, Emerging Markets and Real Estate.
For more information, contact – Tiffany Swenson – tiffany@alternativelatininvestor.com or visit Http://www.alternativelatininvestor.com

Taxation of software importation by end users in Brazil

Update from July, 2014: Rules have changed. Please read    Reduction in the Brazilian taxation of imported services - if you are from the right country


One of the questions I have been receiving a lot lately is how to sell/import software to Brazil.

I have published an article about that at Alternative Latin Investor, an excellent magazine.

I hope it helps you to understand at least part of the regulations. You will find a link to download the article at the end of the post.
NOTE: After I wrote the article, the government has granted a partial exemption on the PIS/COFINS tax for some kinds of software licensing agreements. If you need a more updated information, please write me at adler@adler.net. br.

Adler Martins has teamed up with Alternative Latin Investor (ALI) to contribute to their cutting edge coverage of Latin America .  ALI’s newest issue, August/ September 2012, takes a look at the retail sector in Latin America.

Click here to read Adler’s article “Software Importation by End Users in Brasil” in Alternative Latin Investor:  

About Alternative Latin Investor: ALI is the first digital and print publication to offer highly coveted information and actionable analysis regarding alternative investments in Latin America. Topics include Wealth Advisory, Commodities, Forex, Private Equity, Wine, Art, Regulation, Philanthropy, Hedge Funds, Agribusiness, Renewable Energy, Emerging Markets and Real Estate.
For more information, contact – Tiffany Swenson – tiffany@alternativelatininvestor.com or visit Http://www.alternativelatininvestor.com

Europeans may come to Brazil without a visa

Brazil has just published a decree that officially adopts a treaty with the European Union, by virtue of which European citizens from the Schengen Area are exempt from the need of Visas when making short trips to Brazil.

For visits up to 3 months out of every 6 months of the  year, entrance is free.

So, please come!

Brazil among top 5 investment destinations

Ernst & Young has published a new report, called " Capital Confidence Barometer October 2012 - April 2013", in which you can see that Brazil remains among the top 5 places to invest. It is right after China, US and India, and ahead of Germany.

You may check the report here. 

Brazil to raise tax on foreign currency exchange. Oh really?

It is like a game.

I wake up, check the dollar rate, then I take a look at the Industry's federation website (in fact, I'll check like a dozen news websites, in 3 or 4 languages,  but let's not talk about my obsessions...).

After that, I pretty much can say if the government is or not going to raise the tax on foreign currency exchange -IOF-  (it's like groundhog day).

Today, as it turns out, with the dollar at about 2 Brazilian Reais (not bad), FIESP website calm, inflation is not so bad, and only the Brazilian economy outlook not being so good, I thought: humm, it is tempting to try to prevent a future dollar increase through a law... Definitively the government will try something.

And you have all heard about it: Mr. Mantega, our Ministry of Treasury, has assured that Brazil will raise the IOF if the dollar even threatens to go up. This is, according to him, to protect Brazilian economy.

Well, I'm not here to convert you to the doctrine that says that controlling the exchange rate does no good (Brazil certainly should have learned that lesson. But, again, Argentina suffered even more from it and did not quit. Is it addictive?)

Now, regarding law, which indeed is my business, here is what you must now:

-Assume that the dollar exchange rate in Brazil is never determinable. IOF can, theoretically, change more than once a day. It has changed wildly, up and down, in the last 12 months;

-Add clauses to your agreements that protect you from changes in the IOF. Position the burden to pay taxes on the Brazilian party, and;

-Always set for the net values;

Don't be naive. Brazil is great for business, but you must take precautions.

Brazilian medical device market regulator calls off strike

Dear readers,

I share with you some news brought to me by Emergo Group, specialized in medical regulations throughout the world:

ANVISA, Brazil’s medical device market regulator, has ended a months-long strike that had complicated foreign manufacturers’ importation and commercialization efforts in the country. Resumption of normal regulatory procedures will provide more stability for medical device companies participating in Latin America’s largest medical device market.

Agency employees officially returned to work on 3 September, following a meeting of ANVISA’s executive board to relax certain requirements in order to address backlogs of medical equipment imports at Brazil’s ports, airports and border stations.

Suspension of Some Imported Product RequirementsAlthough ANVISA has resumed full operations, the agency’s executive board has suspended certain provisions of RDC No. 81/2008 in order to stabilize inventories of medical supplies; those inventories fell considerably during the ANVISA strike, and the board has argued that suspending precautionary measures in RDC No. 81/2008 will enable faster importation of bottlenecked devices and equipment into Brazil without compromising public safety.
Specific provisions of RDC No. 81/2008 that have been amended include the following:
  • Suspension of licensing for pre-boarding health products
  • Suspension of authorization of legal documentation for health products being imported (the document that authorizes ships to moor at Brazilian ports)
  • Suspension of permits for customs transit
Reallocation of ANVISA StaffAlong with amendments to RDC No. 81/2008, ANVISA is positioning staff and resources in ports and border stations where backlogs of medical supply imports is most acute in order to expedite entry into and distribution of products in the country.

Bottom Line: Market StabilityWhat does the resolution of the ANVISA strike—as well as the easing of importation requirements—mean for medical device manufacturers already active or interested in the Brazilian market? First and foremost, the end of the strike provides a more stable and predictable regulatory environment in terms of registration of medical devices and quality system inspections. Importation challenges for foreign manufacturers brought about by the strike should also abate now that ANVISA is back to work. 
As always, we will continue to keep you updated on important regulatory changes in Brazil and other global markets. 

Best Regards,
Stewart Eisenhart
EMERGO GROUP | Regulatory Edito

English Law for contracts with Brazil

Note: You might also want to read Choice of venue and applicable law in Brazil.

Finishing the blogging about my European tour, I have decided to take a shot at English Law and my complicated relationship with it. I will handle 3 subjects: good faith, financial contracts and UK law x CISG.

The English good faith

Brazilian Law – and I dare say every civil Law jurisdiction – maintains the principle of good faith as one of the cornerstones of its contract law.

Present as a tool of interpretation of contractual provisions and as a threshold for the conduct of parties in a contractual relationship, good faith holds its importance for ultimately being the way out for parties facing forms of injustice that were crystallized by the unfortunate wording of a contract or by the misconduct of the other party.

For a Brazilian lawyer such as myself, imagining contract law without the good faith principle is rather odd. Such uneasiness, however does not affect my fellow British common lawyers, who are used to the non-existence of the principle in their system.

The general and traditional reluctance of the English Courts to entertain the notion of good faith rests on two main arguments: its irreconcilability with freedom of contract (once the parties have agreed the terms of their agreement there is no necessity to imply an obligation of good faith), and secondly, that a duty of “good faith” would be vague and not easily defined, which gives room to uncertainty.

(Keep in mind I’m not an English lawyer, so this might be a very biased evaluation)

In spite of that, I hear the English Court of Appeal stated that English Law has developed piecemeal solutions in response to demonstrated problems of unfairness.

Also, where good faith clauses in contracts are able to define a sufficiently certain obligation, English courts have accepted its enforceability, even though not accepting the concept in general.

Finally, it seems that some contractual terms implied by statute, such as the goods being free and, under some business circumstances, of suitable quality, are acceptable and even mandatory, what is similar to say that some of the obligations usually associated with good faith are making its way into English law.

But I’m suspicious. That is why, whenever I’m dealing with English law, I will go the extra mile to describe all the obligations that a Brazilian would consider implicit in any agreement.

Financial Agreements

Well, this is going to be a short one: The English banks own the money, so the English law usually applies.  The Brazilian debtor usually lacks leverage to revert this.

English law x CISG

According to Brazilian Law, the parties may not freely choose the Law applicable to their contract. Brazilian jurisprudence is rather strict on the binding character of the Brazilian Conflict of Law Rules.
With the development of arbitration in the country, however, a window opened from such strict application of the Conflict of Law Rules. It has been understood that, in contracts with arbitration clauses, the parties are free to choose the applicable law.

In such a context, English Law has been the traditional option for international contracts; particularly the ones involving international trade of goods, for the English courts have centuries of head start in the development and consolidation of such rules.

A rising option, though, is the CISG (Vienna Convention of 1980), ratified by 78 States and currently under appreciation by the Brazilian Senate for ratification. Even though not as developed and consolidated as English Law, the CISG is especially attractive as a choice of law because of its international character and combination of civil law and common law features.

Both having their specific advantages, it is hard to say which would be the best option in general
Here is my usual dilemma: when to choose one over the other?

I have reached some specific conclusions, but a broad answer still eludes me.

Would my readers have any comments?