Shipping 2024 Comparisons

In Brazil, there is no general rule for maritime and shipping courts. The Brazilian legal system is a state-court system, in which each state has the authority to organise and define the matters that will be dealt with in each of its courts. For example, in the state court of Rio de Janeiro, there are seven first-instance courts that have jurisdiction over commercial matters such as insolvency, bankruptcy and maritime disputes, which sit apart from other civil matters. However, there are no specialised courts in most states, and maritime matters are ruled by regular civil courts. Federal courts will have jurisdiction in some circumstances, such as if a state-owned vessel or a federal interest is involved.

In the above-mentioned judiciary system, the most common claims include charter-contract disputes, demurrage claims, cargo claims, arrest of vessels and indemnity claims for accidents involving vessels.

It should also be noted that Brazil has an Admiralty Court, located in Rio de Janeiro. This court has nationwide jurisdiction to rule on maritime accidents and facts of navigation, and its main goal is to find the causes of the incident and the parties responsible for it, and to apply the administrative penalties set forth in Law 2.180/54. This court is not part of the judiciary system, but is an administrative tribunal subordinated to the Ministry of Defence/Navy Command. The Admiralty Court adjudicates a wide variety of cases involving maritime accidents and facts of navigation, with the most common cases involving machine failures, collisions and other accidents.

Brazil follows the resolutions of the International Maritime Organization (IMO) on Port State Control and is a signatory to the Latin American Ship Control Agreement by the State of Porto (Viña del Mar Agreement), committing itself to maintaining an effective system of inspections of foreign vessels and aiming to ensure compliance with the international requirements applicable on board.

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

The DPC has the authority to contribute to:

• the guidance and control of the merchant marine and related activities in the interests of national defence;
• the safety of waterway traffic;
• the prevention of pollution by vessels, platforms and the support stations thereof;
• the formulation and enforcement of national policies relating to the sea;
• the implementation and inspection of laws and regulations at sea and inland waterways; and
• the qualification and certification of personnel for merchant marine and related activities.

The DPC may also:

• prepare guidelines;
• regulate pilotage services, establish pilotage zones where the use of that service is obligatory and specify the vessels exempted from the service;
• establish the safety crew of vessels, giving the interested parties the right to appeal when in disagreement with the established complement;
• establish the equipment and accessories that must be approved for use on-board vessels and platforms, and establish the requirements for homologation – ie, approval;
• establish the minimum requirements for safety equipment and accessories for vessels and platforms;
• establish the limits of interior navigation;
• establish the requirements relating to safety and pollution prevention for vessels, platforms or support installations thereof;
• define maritime and interior areas for the construction of temporary refuges where vessels can anchor or beach for performance of repairs;
• execute surveys, either directly or through delegation to specialised entities;
• support the Admiralty Court and the Special Navy Prosecutor’s Office regarding inquiries into navigational accidents or facts;
• manage the Maritime Professional Education Development Fund;
• organise and maintain the Maritime Professional Education System;
• exercise the functional supervision of the port captaincies and river captaincies, and their respective offices and agencies; and
• maintain exchanges with public or private entities, both domestic and foreign, and represent the navy at gatherings related to matters under its responsibility.

For example, port state control may stop vessels from sailing if there is any risk to navigation, life or the environment. It should also provide assistance to the Port Authority and Environmental Agencies in environmental matters.

Wreck removal is regulated by Federal Law No 7,542/1986, which grants the Brazilian maritime authorities, or any other authority with delegated powers, the power to order wreck removal by the responsible party if a wreck is deemed to be a danger or an obstacle to navigation, or to threaten damage to third parties or the environment. Navy Ordinance NORMAM-10 also establishes the requirements for obtaining a permit for a wreck removal.

In Brazil, there are two types of registrations for vessels: the ownership registration and the Special Brazilian Registry (REB). Registration in the Brazilian Vessel Ownership Registry is mandatory for all Brazilian vessels that have 100 or more gross tonnage employed in any kind of navigation. For vessels below this threshold of tonnage, the Ownership Registry is not handled by the Admiralty Court but by the port captaincy with jurisdiction over the vessel.

Law 7.652/88 is the main legislation applicable to ship registration in Brazil, together with the ordinances from the Admiralty Court.

The Brazilian registry is only available to Brazilian nationals and companies incorporated under Brazilian law. There is an exemption to this rule, related to the registration of yacht and leisure vessels, which could be registered under the Brazilian registry even if they are not owned by Brazilian citizens or Brazilian companies. Although it is not possible to register ownership over a hull, it is possible to register a vessel under construction at the REB, which is used mostly to grant tax benefits to the hull’s construction.

Temporary registration is allowed for foreign-flagged vessels under bareboat charter to Brazilian shipping companies that hold the necessary tonnage, with temporary suspension of the flag of origin.

Dual registration of Brazilian vessels is provided for under Brazilian law.

Therefore, Brazilian law authorises those vessels that are genuinely Brazilian to fly the Brazilian flag, as well as foreign vessels that are bareboat-chartered into Brazil with suspension of their original flag.

Registration of the ship finance agreements is not mandatory in Brazil, but encumbrances over the vessels, such as mortgages, must be issued as a deed by a notary (a maritime notary if available in that jurisdiction) and further registered before the Admiralty Court, if related to a Brazilian flag vessel, in order to be considered valid and in effect in Brazil.

In order to be considered valid and in effect under Brazilian law, all maritime mortgages over Brazilian-flagged vessels must be constituted through a public deed and registered with the Admiralty Court. The information required to register a mortgage through a public deed is as follows:

• the amount of credit – an estimate or maximum amount thereof;
• the term established for repayment;
• the rate of interest, if applicable;
• the vessel’s specifications, such as gross tonnage, deadweight tonnage and other identifying data; and
• the certificate of insurance of the vessel.

Information related to ownership and encumbrances over vessels can be obtained by any third party through certificates issued by the Admiralty Court. Information related to financing documents and other types of guarantees is usually registered in the Titles and Deeds Registry, and would also be available through a request for certificates.

Brazil is not a signatory to the International Convention on the Removal of Wrecks, but has ratified the following maritime conventions related to pollution:

• the International Convention on Oil Pollution Preparedness, Response and Co-operation, 1990 (OPRC/1990);
• the International Convention for the Prevention of Pollution from Ships (MARPOL) 73/78;
• the International Convention on Civil Liability for Oil Pollution Damage, 1969 (CLC/69); and
• the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, 2004 (CCAIMO).

Brazil has several domestic laws that regulate liability in the case of wreck removal and pollution.

Brazil has signed the following international conventions regarding the liability of ship-owners and carriers in relation to collisions and salvage:

• the International Convention of Private Law (Bustamante Code), executed in 1928;
• 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 relating to the Immunity of State-owned Vessels (Brussels 1928);
• the Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels (Brussels 1924);
• the International Convention for the Safety of Life at Sea (SOLAS 1974);
• the SOLAS Protocol of 1978;
• the International Convention on Regulation for Preventing Collisions at Sea, 1983;
• the International Regulations for Preventing Collisions at Sea, 1972;
• the United Nations Convention on Law of the Sea, 1982; and
• the International Convention on Salvage, 1989.

However, Brazil is not a signatory of the Hague Rules, the Hague–Visby Rules or the Hamburg Rules.

Brazil also has domestic regulations on salvage (Law No 7.203/1984), which are related to liability in the case of accidents.

Brazil is party to the 1924 International Convention for the Unification of Certain Rules Relating to the Limitation of the Liability of Owners of Seagoing Vessels and the 1969 International Convention on Civil Liability for Oil Pollution Damage. However, it is not a signatory to more recent and relevant conventions that exclude or minimise the liability of owners, such as the Hague–Visby Rules, the Hamburg Rules and the 1976 Convention on Limitation of Liabilities for Maritime Claims.

The general rule in Brazil, as set forth in the Brazilian Civil Law, is that anyone who causes damage to the other party shall fully compensate the damages caused. As Brazilian law does not provide for punitive damages, compensation is generally limited to the direct damages suffered by the party, including the actual losses and loss of profit. Indirect losses are generally excluded, unless otherwise agreed.

Moreover, Article 750 of the Brazilian Civil Code establishes that the carrier’s liability is limited to the value inserted in the bill of lading.

As a general rule, liability could be limited under a contract. There have been some cases where the limitation of liability was tested, and judges accepted the validity of that limitation. Nevertheless, if the contract is considered a “contract of adhesion”, the limitation clause might be considered null and void by Brazilian courts.

Brazil is not a member of the International Oil Pollution Compensation Funds.

The Maritime Labour Convention is applicable in Brazil, together with domestic labour laws.

Brazil is not a signatory to the international conventions concerning bills of lading. Law No 9,611/98 regulates the multi-modal transport of cargo in Brazil and sets forth the rules for the issuance of multi-modal bills of lading and the rights and obligations of the multi-modal transport operator. In addition, there are a number of domestic commercial laws dealing with sea transport and the bill of lading, such as the 1850 Commercial Code, the National Tax Code and, mainly, the 2002 Brazilian Civil Code, which is the most complete and important legislation in terms of private and commercial law in Brazil.

All parties to the contract of carriage represented by the bill of lading have title to sue, such as the consignee, the shipper or the carrier, who are entitled to file a claim in the case of a breach of the contractual obligations. The subrogated underwriters of the cargo are also entitled to a recovery lawsuit against the carrier under the bill of lading.

The general rule in Brazil, set forth in the Brazilian Civil Law, is that anyone who causes damage to the other party must fully compensate the damages caused. As Brazilian law does not provide for punitive damages, as a rule indemnity is limited to the direct damages suffered by the party. Indirect losses are generally excluded, unless otherwise agreed. Moreover, Article 750 of the Brazilian Civil Code establishes that the carrier’s liability is limited to the value inserted in the bill of lading. Liability may also be limited by the parties under a contract. However, if the contract is considered a “contract of adhesion”, the limitation clause might be considered null and void by Brazilian courts.

While there is no specific rule regulating liability for the misdeclaration of cargo in Brazil, general liability rules would apply in such a situation. Therefore, a carrier that suffers damages due to the misdeclaration of cargo by the shipper would, in principle, have a claim against the shipper.

In general, a three-year time bar applies to indemnity and civil lawsuits related to unlawful acts, as prescribed by the Brazilian Civil Code. Specifically in relation to cargo claims resulting from sea carriage, Federal Decree No 116/1967 provides a one-year time bar from the date of discharge, similarly to the Law on Multi-modal Transportation (Law No 9.611/98) and the Law for Inland Carriage (Law No 11.442/2007). A time bar may be interrupted once at court, through a judicial notification. Once interrupted, the time bar is renewed for an equal period. It is not possible to extend the time limit by agreement between the parties, as this is a question of legal certainty that cannot be changed by the will of the parties.

Brazil has not ratified the International Convention relating to the Arrest of Sea-Going Ships, 1952, nor the International Convention on Arrest of Ships, 1999. However, Brazil is part of the 1926 Brussels International Convention for the Unification of Certain Rules of Law Relating to Maritime Liens and Mortgages, which, despite not providing rules for the arrest of ships, establishes additional credits that will be admitted under Brazilian law to give rise to an arrest.

Usually, arrests are requested in Brazil following the rules prescribed by the Brazilian Civil Procedural Code, which sets out the possibility to request injunctions to seize assets, such as an arrest of a vessel. The Code determines some requirements to be met, such as to show the probability of the right and that there is an element of urgency – eg, the vessel may attempt to leave Brazilian waters.

Maritime liens in Brazil are governed by the Commercial Code and the 1926 Brussels Convention on Maritime Liens and Mortgages. Based on a joint interpretation of both of these, the following claims can be considered to give rise to maritime liens:

• federal taxes;
• legal costs and expenses;
• claims resulting from the employment of Master, crew and ship personnel;
• indemnities due for salvage;
• general average contributions;
• obligations undertaken by the Master outside the port of registry for actual maintenance needs or continuation of the voyage;
• 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;
• expenditure for the upkeep of the ship and her appurtenances, and maintenance expenses at the port of sale;
• short delivery and cargo losses;
• debts arising out of the construction of the vessel;
• expenses incurred for repairs of the vessel and her appurtenances; and
• the outstanding price of the vessel.

If the arrest is in rem, the creditor shall have the privileged credit properly constituted, according to Article 1 of the 1926 Brussels Convention. If the arrest is filed in personam, the claimant shall demonstrate the requirements previously mentioned that are applicable to injunction requests as determined by the Procedural Code.

The personal liability of an owner or demise charterer is not required when attempting a ship arrest based on claims that attach to the vessel (in rem). However, the creditor must have the privileged credit properly constituted.

According to the Brazilian Commercial Code and the 1926 Brussels Convention, credits arising out of ship suppliers out of the port of registry, including bunkers, are considered privileged. Therefore, due to their legal nature, those credits have in rem effects and will attach to the vessel, making it possible to arrest the vessel even if the bunker supply contract was entered into with the charterer and not with the owner.

In order to initiate an arrest claim in court, parties must be represented by lawyers, the appointment of which requires a power of attorney (POA). The POA must be signed by a representative of the company, duly empowered as per its by-laws or certificates. Such documents must also be duly notarised/legalised or apostilled (if the country in which the document is signed is a signatory of the Apostille Convention). In the case of urgency measures, such as an arrest, the Brazilian Civil Procedural Code grants the party 15 days to present the POA to the case records after the filing of the claim. This deadline can be extended for an additional 15 days.

All foreign documents that are relevant to the claim must be translated into Portuguese by a sworn translator. If it is not possible to translate them before the filing of the arrest application, it is possible to request the judge to grant an extension for the presentation of these documents. However, it is recommendable for all documents to be presented upon the filing, as there is a risk of the judge understanding that said documents were necessary for the analysis of the arrest request, thereby delaying the decision of the arrest.

In states where the courts have electronic proceedings, scanned copies of the documents may be sufficient.

Finally, it should be highlighted that Brazil is a signatory to the Apostille Convention, which helps to avoid the time and costs with legalisation and consularisation procedures.

The arrest of bunkers is not a common practice within the Brazilian jurisdiction and there is no specific legislation providing for this possibility. However, it would be possible to request the arrest of bunkers based on the general rules set forth in the Civil Procedural Code. The general rules provide that a party may request an arrest of assets or security in general if that party is able to demonstrate both the liquidity of its credits and that there is a risk that the debtor and its assets may disappear in the near future.

It should be noted that the arrest of bunkers may involve logistic difficulties for the arresting party, as the claimant will be obliged to nominate a fiduciary agent to be responsible for the bunker and arrange a licensed facility to receive the bunker when it is eventually arrested.

Brazil is not a party to the arrest conventions and the Brazilian legal system does not provide a specific regulation regarding the arrest of sister-ships. If the claim is based on privileged creditors with effects in rem on the vessel, the claimant would be unlikely to obtain the arrest of another vessel of the debtor’s fleet. However, if the arrest is in personam, in principle it may be possible to file a precautionary lawsuit against the ship-owner to arrest a sister-ship and request security.

The Brazilian Civil Procedural Code establishes other forms of measures and injunctions sought to obtain security and/or the compliance with a judicial order, the most common of which are the attachment of values and the seizure and constraint of assets, either liquid or illiquid.

In order to release an arrested ship, the ship-owner will have to request the release from the court and simultaneously provide a guarantee to replace the arrested vessel, plus the legal and attorneys’ fees.

The most common type of guarantee is a judicial deposit or a letter of credit issued by a first-line bank headquartered in Brazil.

Protection and indemnity insurance (P&I) club letters of undertaking are not recognised by the Brazilian courts but may be accepted by the judge if they are accepted by the opposing party.

The judicial sale of vessels in Brazil follows the same general rules of asset bidding. The auctions are conducted by the public auctioneer in the course of a judicial proceeding, who will adopt all necessary formalities to conduct the auction and sell the vessel under a commission.

An evaluation of the asset will be made by the court and the public auctioneer will publish a Public Call announcing the auction for any interested party, which will contain a description of the object to be sold, the minimum price for the bid, the conditions of payment and the place where the auction will take place, among other details. The Public Call must be published at least five days prior to the auction date. As a rule, the Public Call must be made available on a webpage to be determined by the judge. However, the judge may also determine the Public Call to be fixed on a local customary place and published in a newspaper of wide circulation.

The types of bonds required are as follows:

• to act ex officio – the Brazilian legal system does not oblige a bond constitution in order to sell a vessel extrajudicially;
• for vessel arrest – a guarantee may be required by the judge from claimants requesting an arrest to compensate eventual losses sustained by the vessel’s interest in the case of a wrongful arrest, while the Brazilian Civil Procedural Code also establishes that a guarantee must be presented by foreign claimants with no assets in Brazil in order to ensure payment of legal court costs and attorney fees;
• to lift arrest – the Brazilian legal system does not provide a specific list of bonds to be presented – usually, the bond would be a judicial deposit in cash or a letter of credit by a first-line bank, while P&I club letters of undertaking may be accepted, mainly depending on whether the other party accepts them; and
• for judicial sales – if the vessel holds a maritime lien, the Brazilian Commercial Code establishes that an amount sufficient to guarantee the payment of maritime lien creditors must remain deposited until it is time-barred or until it is shown that it was paid, unless a guarantee is presented.

Furthermore, regarding the position of the mortgage in relation to other maritime claims, it should be noted that, based on the application of the Brazilian Commercial Code and the Brussels Convention, the priority of each credit is as follows:

• federal taxes;
• legal costs and expenses;
• claims resulting from the employment of the Master, crew and ship personnel;
• indemnities due for salvage;
• general average contributions;
• obligations undertaken by the Master outside the port of registry for actual maintenance needs or continuation of the voyage;
• 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;
• expenditure for the upkeep of the ship and her appurtenances, and maintenance expenses at the port of sale;
• short delivery and cargo losses;
• debts arising out of the construction of the vessel;
• expenses incurred for repairs of the vessel and her appurtenances; and
• the outstanding price of the vessel.

The primary legislation governing insolvency and restructure proceedings in Brazil is Federal Law 11.101/2005 (the Brazilian Business Insolvency Act), which incorporate UNCITRAL Model Law on Cross-Border Insolvency to assist states with cases where the insolvent debtor has assets in more than one country or where some of the creditors of the debtor are not from the country where the insolvency proceedings are taking place.

Regarding a possible order of arrest and judicial sale of a vessel before the competent bankruptcy court, it should be noted that an asset cannot be arrested if it is considered essential for the preservation of the company’s activity. Furthermore, the decision of the essentiality of the asset is a matter only for the bankruptcy court. If the interest is in the sale of the vessel, this must be previously requested from the bankruptcy court, as determined by Article 66 of Law 11.101/2005.

The Civil Procedural Code allows the defendant of a wrongful arrest to seek an indemnity and compensation for all losses suffered as a result of the wrongful arrest. That compensation can be assessed and liquidated in the same legal proceedings as the arrest.

Brazil is not a signatory to the Athens Convention or its protocols. While being transported or on cruise trips, Brazilian and foreign passengers have their rights supported by both the Brazilian Civil Code and the Brazilian Consumer Code, which establish the right to full reparation to the passenger or consumer, plus non-material damages.

The time bar to file a claim based on the Brazilian Consumers Act is five years.

The Brazilian Procedural Code expressly recognises forum selection clauses as valid and binding, so such clauses should be complied with. In relation to bills of lading specifically, there are some court decisions considering the bill of lading as an adhesion contract, when the issuer (ship-owner) establishes its clauses without negotiation with the other party and the other party is considered not to have expressly agreed. However, it will be very important to verify whether the party adhering to the contract had or should have had knowledge of what it was accepting with the contract.

As mentioned in 6.1 Enforcement of Law and Jurisdiction Clauses Stated in Bills of Lading, if the contracting parties expressly agree on a specific arbitration clause, that clause shall be binding.

Brazil has ratified the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The enforcement of foreign judgments and awards in Brazil depends on an exequatur, to be obtained through a procedure regulated by the internal procedural rules of the Superior Court of Justice and by the provisions of the Civil Procedural Code of 2015. The exequatur is the authorisation granted by the Superior Court of Justice for all procedures requested by a foreign judicial authority to be validly executed in the jurisdiction of the competent Brazilian judge. The Superior Court of Justice recognises foreign judgments and awards if they are not contrary to the Brazilian legal order, public policy, national sovereignty or good moral conduct. When the exequatur is granted, the award is forwarded to the federal judge of the state in which it will be enforced.

Brazil has not ratified the International Convention on Arrest of Ships. According to domestic legislation, in order to request an arrest in Brazil, Brazilian courts must also have jurisdiction over the relevant claim. It is not permissible to file an arrest simply as a precautionary matter to secure a claim that will be attempted in another jurisdiction, although it is possible to seek a precautionary order prior to an arbitration.

Brazil has domestic arbitral institutions with arbitrators specialised in maritime matters, such as the Brazilian Center for Mediation and Arbitration (CBMA), the Ciesp/Fiesp Chamber of Conciliation, Mediation and Arbitration, the Center for Arbitration and Mediation of the Chamber of Commerce Brazil–Canada (CAM-CCBC), the Brazilian Center of Maritime Arbitration and the Mediation and Arbitration Chamber of the Getúlio Vargas Foundation.

The CBMA, for instance, has a specialised commission to deal with maritime and port-related disputes, comprised of competent and qualified practitioners and arbitrators with the expertise to address the growing number of disputes in this sector.

Arbitration is an increasing practice in Brazil, following the arbitration law (Law No 9,307/96), the ratification of the New York Convention in 2002, the ratification of the CISG in 2013, the enactment of a mediation law in 2015 and the reform of the Arbitration Act in 2015 and the Civil Procedural Code of 2015, which provides for a mandatory mediation procedure prior to judicial disputes.

The defendant should challenge the court’s jurisdiction when presenting its defence by alleging that a foreign court or arbitration clause should be observed. Therefore, if a lawsuit is filed in breach of an arbitration or foreign jurisdiction clause, the case can be extinguished in accordance with the Brazilian Procedural Code, as long as the defendant invokes that clause.

Brazilian tax legislation provides for a zero withholding tax (WHT) rate reduction on the payment of charter hire abroad, unless the beneficiary is located in a “low-tax jurisdiction”, in which case WHT is triggered at 25%.

For charter-hire payment, credit or remittances in the so-called “split contract structure” applied to oil and gas exploration and production (E&P) and regasification activities, there are maximum charter ratios vis-à-vis the total charter and service contract for purposes of qualifying for the WHT zero rate reduction.

Hires exceeding these ratios will be subject to WHT at 15%, or at 25% for beneficiaries who are located in “low-tax jurisdictions” or subject to a “privileged tax regime”.

As of 1 January 2018, the maximum charter ratios are as follows:

• 70% for vessels with floating production, storage or discharge systems;
• 65% for rig vessels for the drilling, completing and maintenance of wells; and
• 50% for other types of vessels.

The maximum charter ratios do not apply to vessels used in offshore support services.

Brazil has been adapting its accounting rules to the International Financial Reporting Standards (IFRS) standards, and Brazilian charterers have been required to comply with the so-called “CPC 06” (IFRS 16) on operational leases since 1 January 2019.

Occasional changes will not affect the taxes to be paid in Brazil pursuant to the IRS Normative Ruling 1889/2019.

In Brazil, shares have been nominative since the 1990s. There have been no recent changes in the corporate legislation concerning the matter.

There is no specific legislation in Brazil relating to the liquidation of assets outside the country, nor relevant time requirements; the standard liquidation rules are to be followed.

It is important to bear in mind, however, that the Brazilian legislative house has just enacted a new Tax Reform (Constitutional Amendment 132), changing several rules regarding the taxation on services and goods. The new tax regime will enter into force when a federal law regulating the new system is approved by both the Lower House and Senate, and also if not vetoed by the President, which is expected to happen sometime this year (2024).

Brazilian law defines force majeure as any necessary and unavoidable event enabling the protection of parties from liability in the event of delays or prevention of performance, as well as excluding liability for the breach of contract, as per Article 393 of the Brazilian Civil Code. In addition, the Brazilian Civil Code allows the parties to freely allocate the risks for force majeure events in the contract, with reasons for why it is necessary to analyse each contract to verify the possibility to claim force majeure due to the pandemic.

Brazilian courts tend to consider unpredictable events or predictable events with unpredictable consequences as force majeure. To rely on force majeure, the party seeking to invoke the argument must demonstrate:

• that there has been a force majeure event; and
• how this event relates to the specific contract and the impossibility to comply with a contract obligation.

In relation to the COVID-19 pandemic specifically, courts have had different understandings, depending on the circumstances of the case and the wording of the contracts.

As a signatory country of the International Convention for the Prevention of Pollution from Ships (MARPOL), Brazil implemented national measures to meet with the guidelines of the IMO 2020 Regulation (IMO 2020). In view of this, the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (ANP) undertook a review in its normative resolutions and, in 2019, enacted Resolution No 789/2019, imposing a cap of 0.5% sulphur content of any oil used on vessels. Despite the limit, the resolution allowed a 3.5% sulphur cap for vessels using exhaust gas cleaning systems (scrubbers), as long as the equipment is approved by a Classification Society and the scrubbers carry an approved plan for compliance with the guidelines set forth in IMO 2020.

In 2020 and 2021, the ANP enacted new resolutions seeking the improvement of the use of biofuels and the control of the fossil fuels used. As an example, producers and importers of marine fuel must submit a sample of the fuel to be marketed for analysis in order to obtain the “Quality Certificate”, a document detailing the composition of the fuel. Most recently, in November 2022, ANP issued Resolution No 903, further detailing the quality and sulphur levels allowed in bunker fuel and marine fuel, as well as quality procedures and allowing for the vessels with emissions control system to fuel with higher sulphur levels.

For any violation of the ANP’s resolutions, administrative sanctions provided for by law shall be applied. These may vary from a mere application of a fine to the suspension or cancellation of activities in Brazil. In addition to administrative sanctions, civil and criminal liability may be attributed to a party that violates the ANP’s resolutions. In accordance with the ANP’s regulations concerning the sulphur limit for marine fuel, the DPC also issued a normative resolution with the guidelines of IMO 2020 (Circular 7/2019). The DPC is responsible for supervising vessels and verifying if the fuel complies with IMO 2020, representing the Brazilian maritime authority.

Brazil has not incorporated international trade sanctions as part of its domestic law. However, as many large Brazilian companies are listed in the US and/or UK, it is not unusual to see references to sanctions clauses in contracts.

Although Brazil exports commodities and imports a substantial quantity of fertilisers, sometimes connected with the regions at war, normally those carriages and contracts are subject to English law and there are no relevant cases dealing with legal aspects related to the war in Ukraine.

On 7 January 2022, Congress enacted Law 14,301/2022, which amends the rules applicable to cabotage transportation (ie, maritime transportation between Brazilian ports) and creates the so-called “BR do mar” regime, updating the former regulatory framework of 1997.

For decades, the use of foreign-flagged vessels in Brazil in domestic trade was only admitted where:

• Brazilian-flagged vessels were not available; or
• the shipping company owned Brazilian tonnage.

This regime has been substantially changed by the new law, which now allows more flexibility for foreign-flagged vessels to trade within Brazilian cabotage.

One of the main changes is the possibility for Brazilian shipping companies to time-charter vessels from foreign wholly owned subsidiaries (or from a foreign wholly owned subsidiary of another Brazilian shipping company) in the following cases:

• fleet expansion;
• the replacement of vessels being constructed in Brazil or abroad;
• vessels under repair;
• for engagement in long-term contracts; and
• for use in so-called “special cabotage operations” (ie, those intended to transport cargo of a type, route or market that does not yet exist or that has not yet been consolidated).

The new law also provides for a gradual increase in the number of foreign vessels that can be bareboat-chartered with suspension of the original flag to Brazil by Brazilian shipping companies without the ANTAQ’s prior approval or correlation with Brazilian tonnage. The allowance applies to at least one vessel currently, and one vessel per year can be added until 2026, when no limitations on the quantity of vessels will apply for demise and bareboat charters.

Although these changes are amongst the most significant for cabotage restrictions in the country, the new law also changed provisions relating to additional freight, financing, the possibility to create investment companies in shipping, and other matters.