The Brazilian Superior Federal Court (Superior Tribunal de Justiça – STJ) has recently decided that the jurisdiction of Brazilian courts can not be excluded in contracts executed in Brazil even if the contract contains a valid choice of venue and forum selection clause.
It should be noted that the Brazilian Supreme Court (Supremo Tribunal Federal – STF) generally recognizes the validity of contractual choice of venue and forum clauses.
According to the STJ’s recent ruling, a contractual choice of venue and forum clause will, however, only be valid if there was no disadvantage or damage to the defending party. In this case, the Court affirmed said disadvantage or damage because the choice of venue clause precluded jurisdiction of Brazilian courts and, consequently denied the Brazilian contracting party access to the Brazilian courts.
The court further ruled payments effected abroad irrelevant as long as the contract is effectively performed and executed in Brazil.
The Court’s decision stands in accordance with Brazilian law. Article 9 of the Introductory Law to the Brazilian Civil Code determines that any contractual choice of venue and forum clause in contracts determining jurisdiction of a foreign court constitute a violation of public policy if the contract is executed in Brazil. When drafting a contract with Brazilian business partners, choice of venue and choice of forum clauses should be drafted with care to avoid potential problems in the future.
We at Prado Garcia Advogados have extensive experience in drafting national and international contracts. Should you require any further information or have any questions please do not hesitate to contact us at advocacia@pradogarcia.com.br or by phone +55 11 3242 8799.