Choice of venue and applicable law in Brazil

From time to time, I will post some interesting conversations I have had with readers. Content is true, names, maybe.

Mr. Martins,

I am a law student at the University of Gotham in the United States.

I'm doing class research on accepting Brazilian law as the governing law for a contract between an American software company and a Brazilian telecommunications company, and was wondering if you had any insight. 

I am also researching how to establish Brazil as the jurisdiction or venue for any disputes that may arise during the course of this contract.

I read your article on electronic contracts posted on February 11th, and it was helpful (though I can't read the Portuguese article you linked to).

However, I was wondering if it would apply to a paper contract that would be mailed back and forth between the two companies.

Thank you in advance for any help you can provide.

Sincerely,

Bruce Attman Wayne

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Dear B. Attman,

Thank you for your message. It is always a pleasure to help readers of my blog.  

What is the contract about? Brazil has a regulatory agency for Telecommunication issues, called Anatel, which issues a considerable number of regulations: http://www.anatel.gov.br/Portal/exibirPortalInternet.do .

However, if the subject is related only to software, the American company may be able to skip these regulations. 

Brazil accepts choice of venue clauses, generally speaking (not to be confuse with choice of Law clauses. Those are only applicable in case of arbitration).

So, you won't have a problem with that, unless the agreement deals with real estate or inheritance. In these cases, the Brazilian venue shall generally apply. 

The same rules regarding electronic contracts apply to paper ones mailed back and forth (the law applicable to the agreement is the law of the country where the final proposal has been made).

The regulations are contained in articles 427 to 435 of the Brazilian Civil Code.  However, since the acceptance is not instantaneous, the contract will be reputed as celebrated once the acceptance is received by the offeror, or declined if an acceptance fails to reach the offeror within reasonable time. 

Adler

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Mr. Martins,

Thank you for your quick response.

The contract covers the sale of software services to the telecommunications company.  Would the American software company still need to comply with the Anatel regulations?

Glad to hear about the choice of venue clause and the contract does not cover real estate or heritages.  What about the governing law of the contract (and any disputes that may arise)?  Are there any issues with creating a contract that is governed by Brazilian law?

I will look at those sections of the civil code and thanks again for your help!

B. Wayne

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Master Wayne, 

Sorry for the late response this time. 

It looks like only the Telecommunication company should worry about Anatel's regulations. But I'd have to take a closer look to be sure. 

About the governing law: Brazilian courts will always use Brazilian conflict of law rules to determine the applicable law, regardless of the choice of the parties, unless the parties choose arbitration. 

Regarding the Brazilian law, if the contract is to be executed directly in Brazil, it might be the safest bet.

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Mr. Martins,

Thanks again for your response and your willingness to talk to a student about an obscure (dark) Brazilian contract law problem.

You've been a great help and if I have any further questions, I will definitely email you back.

By the way, the company is called Wayne Enterprises.