Enforcement of Judgments 2022

Last Updated August 02, 2022

Brazil

Law and Practice

Author



CFGS – Correia, Fleury, Gama e Silva Advogados is a dispute resolution boutique specialising in strategic court litigation, mediation and arbitration, which provides advice on litigation strategy, preparation and settlement, and conducts judicial, administrative or arbitration proceedings. The firm is based in São Paulo, South America’s largest city and Brazil’s foremost financial and industrial centre, and has extensive experience in handling complex judicial and arbitration cases all over the country. It has assisted heavyweights from the retail, finance and construction sectors in strategic disputes related to stockholder disputes, infrastructure and construction contracts, financial services and stockholders' agreements. Clients include major banks and construction companies, large retailers, well-known real estate developers, some of the world’s largest private equity firms and international investors from the USA, Europe and the Middle East. The team is composed of 20 lawyers with vast experience in dispute resolution.

Brazilian law provides for multiple options to identify assets in the possession of another party.

Public Registries

In Brazil, the ownership of real estate property and vehicles in general is registered with public registries, which are widely available to the public for consultation. The ownership of shares and securities is also registered with certain public registries and/or government agencies.

Therefore, the first available option to identify the asset position of another party is to search the public registries and/or government agencies, such as the Real Estate Public Registry, the Trade Board, etc. Receivables under concession contracts with the Public Administration are also made public by Brazil’s Regulatory Agencies and can be easily assessed on the Agencies’ websites.

Search and Seizure of Assets as a Precautionary Measure

The Brazilian Federal Code of Civil Procedure (Federal Law No 13.105/2015) (the CCP) provides for the possibility to search and seize another party’s assets to secure satisfaction of monetary judgments or payment obligations set forth in enforceable instruments.

The requirements for applying for a precautionary search and seizure order are provided by Articles 300 and 301 of the CCP and involve the following:

  • proving that the plaintiff holds a monetary judgment or a negotiable instrument against the defendant, establishing an obligation to pay a liquid and certain sum of money to the plaintiff on a specific due date; and
  • proving that the plaintiff is under risk of irreparable harm (periculum in mora) because the defendant is selling, transferring or in any way diverting its assets and/or is at risk of insolvency and, therefore, the plaintiff cannot wait for the attachment of the defendant’s assets in further enforcement proceedings.

Seizure of Assets Prior to Service of Process in Enforcement Proceedings

Article 830 of the CCP also provides for the seizure of the defendant’s assets as a precautionary measure at the early stage of enforcement proceedings, when the court clerk in charge of serving the defendant with process fails to find said defendant. The seizure of assets must be confirmed and converted into attachment once the defendant is located and eventually served with process.

Research of Attachable Assets in Due Course of Enforcement Proceedings

The CCP entitles creditors holding monetary judgments or negotiable instruments (including contracts providing for payment obligations, executed by the debtor and two witnesses) to file enforcement proceedings (payment actions) against debtors.

One of the first stages of enforcement proceedings involves the attachment of any assets owned by the debtor. Plaintiffs are entitled to freely search for any attachable assets and appoint them to the court. Court clerks are also allowed to attach any assets owned by the defendant, located at the defendant’s domicile or registered in the name of the defendant in Real Estate Registries or other Public Registries.

If the court clerk fails to find attachable assets or the plaintiff is not aware of any attachable assets in the possession of the debtor, the plaintiff is entitled to request a court search before the Public Registries. Once granted by the court, such court search consists of the issuance of a court notification to Public Registries in general, such as the Real Estate Registry, the Registry of Vehicles and the Commercial Registry (trade board), requesting information on potential assets owned by the debtor.

These Public Registries must comply with court notifications so cannot refuse to disclose information on the existence of assets registered in the name of the debtor.

Creditors may also rely on the Judiciary Asset Search System, known for its acronym SISBAJUD, which is an electronic platform specifically developed for the search and seizure of debtors' assets. Such platform is connected to Brazil’s Central Bank and all private banks in the country. One of its functionalities is that it allows for the seizure of assets in any and all bank accounts linked to the debtor’s name at once.

Breach of Bank Secrecy and/or Tax Secrecy

Banks have a legal duty to protect all information concerning their clients. Brazil’s Federal Revenue is also prevented from disclosing information on the revenues, wealth and assets of taxpayers. Bank secrecy and tax secrecy are general principles set forth in Brazil’s Federal Constitution and in multiple laws and regulations.

However, if there is a suspicion of fraud and/or wilful intention to divert assets to avoid the satisfaction of payment obligations, the courts can breach bank and/or tax secrecy and request information from banks and the Federal Revenue on the revenues and assets possessed by a given person or corporation named as the defendant in enforcement proceedings. A breach of bank and/or tax secrecy is corroborated by several precedents, but is still regarded as an extreme measure, applicable only after there have been unsuccessful attempts to find attachable assets within the due course of court enforcement proceedings (execution actions).

The CCP provides for the following types of domestic judgments, which are usually available in civil law jurisdictions:

  • order of payment;
  • order of specific performance;
  • declaratory relief;
  • interim measures; and
  • injunctive relief.

The CCP also allows partial awards on the merits, by which the court resolves part of a given dispute in a definitive manner, when part of the litigated matter is already mature for judgment.

The content of a judgment may vary its nature, which is relevant in order to determine which form of appeal is applicable. For example, a final judgment on the merits of the case may be challenged by appeal. However, a partial award on the merit of the case is an interlocutory decision, which may be challenged by an interlocutory appeal.

Finally, there are also cases in which determination made by the judge does not hold any decision content. In such circumstances, the determination cannot be appealed, as it theoretically has no legal effect in the procedure.

Many judgments are self-enforcing under Brazilian law, such as judgments declaring the existence of a legal relation or annulling a contract. Other judgments may require the losing party to pay a specified amount of money or to complete, perform or undo some act. In these cases, the winning party shall commence court enforcement proceedings, regulated by Articles 513–538 of the CCP.

Requests for bankruptcy are not originally designed to enforce domestic judgments but are usually used as a last and extreme resource to put pressure on a debtor and encourage the satisfaction of monetary judgments of payment obligations under negotiable instruments. Court precedents corroborate the use of requests for bankruptcy as an indirect form of enforcing domestic judgments only if all legal requirements for filing for bankruptcy have been met (basically, the absence of sufficient assets to satisfy the debtor’s overdue payment obligations).

In some cases, a final award may not be directly enforced and must go through a calculation process – for example, when a final award on the merits recognises a breach of contract but the damages are not specified, so the amount of damages must be determined before the order of payment can be granted. The Brazilian Civil Code of Procedure allows for this two-step approach in favour of procedural economy, since there are no damages to be calculated if it is decided that the plaintiff's claim holds no ground.

There is also a growing trend in favour of allowing for the extrajudicial enforcement of judgments and orders of payment.

One of the main purposes of the CCP was to speed up the pace of court proceedings and create a balance between effectiveness and predictability, time/cost reduction and legal certainty.

Under the amended Code, enacted in 2015, enforcement proceedings for the accomplishment of domestic judgments take approximately two to three years to be concluded (longer if the losing party is insolvent). The costs associated with the enforcement of domestic judgments are essentially as follows:

  • court fees (filing fees), which may vary from state to state, but are usually fixed at a low rate (1% to 2%) over the value of the judgment;
  • expert fees for the court appraisal of a debtor’s assets;
  • costs associated with a public auction for the sale of a debtor’s assets; and
  • loss of suit fees, varying from 10% to 20% of the amount at stake, if the plaintiff loses in total or in part the debtor’s motion for halting the enforcement proceedings.

Roughly speaking, the total costs associated with the enforcement of domestic judgments usually vary from 2% to 5% of the amount of the enforced judgment.

In the enforcement of judicial awards, the losing party is responsible for any outstanding costs that may arise in order to comply with the judgment rendered.

General Overview of Enforcement of Judgments

The enforcement of judgments is prescribed by Articles 513–522 and 778–925 of the CCP. There are many different methods available to the judgment winner to enforce judgments. Each method has its own peculiarities, but most enforcement proceedings have some rules in common.

Courts will most commonly order the judgment loser to pay a certain amount of money to the judgment winner. The enforcement of this kind of judgment enables the court to seize and sell the debtor’s assets in order to satisfy the judgment debt and costs and the cost of the enforcement.

Once the judgment becomes enforceable, the creditor must apply for enforcement, within a lower court (generally, the same court that rendered the first-instance judgment). The debtor is then summoned to comply voluntarily with the judgment. If the judgment is satisfied, enforcement proceedings are terminated and the case is closed. However, if the debtor does not comply with the judgment, the court will issue an order of attachment or seizure of the debtor’s assets.

Moreover, the CCP provides for penalties if the party does not voluntarily comply with the order of payment within the specified deadline. In the enforcement of judicial awards, a 10% fine and another 10% of the lawyer’s fee is applied on top of the amount owed.

Seized assets must be evaluated by an officer of the court or an expert of the court and transferred to the creditor or sold in a public auction, with the proceeds being used to pay the judgment. If the seized assets are not sufficient to satisfy the judgment, the proceedings will continue, with the seizure of additional assets until the judgment is completely paid. On the other hand, any excess proceeds resulting from the public sale of the debtor’s assets will be returned to the debtor.

There is also the possibility for the court to determine the seizure of credits. For example, if the debtor is the plaintiff in another legal proceeding and is expected to receive a given amount of money, that credit must be transferred to the creditor if it comes to fruition.

Court-Ordered Search of Defendant's Assets

If the court clerk fails to find attachable assets or if the plaintiff is not aware of any attachable assets in the possession of the debtor to satisfy a monetary judgment, the plaintiff is entitled to request a court search of the Public Registries. Once granted by the court, such court search consists of the issuance of a court notification to the Public Registries in general, such as the Real Estate Registry, the Registry of Vehicles and the Commercial Registry (trade board), requesting information on potential assets owned by the debtor. These Public Registries must comply with court notifications, so cannot refuse to disclose information on the existence of assets registered in the name of the debtor.

It should be noted that the judicial platform for the search and seizure of assets is one of the most useful instruments for the enforcement of orders of payment. As already mentioned, these electronic platforms allow the court to seize assets in any and all bank accounts registered under the debtor’s name at once.

Enforcement of Injunctions or Specific Performance

In cases where the judgment is an injunction or an order for specific performance, the judgment winner must apply for enforcement before the same lower court that rendered the first-instance judgment.

This type of determination may be granted by judicial courts and arbitral tribunals. Although an arbitral tribunal does not have powers to force parties to act or perform a certain conduct, there are ways through which it can indirectly enforce its decisions, with the aid of the judicial system. This way, the court determines the enforcement of the arbitral tribunal’s decision, completing the co-operation between the systems.

The judgment loser is summoned to voluntarily comply with the injunction or perform the specific act. If the judgment loser fails to do so, the judgment winner can move to hold the loser in contempt of court. If so held, the loser may be fined until the judgment is completely satisfied. If the loser refuses to comply with the judgment even after being fined, the injunction or the specific performance order may be converted into damages, and so enforced as described in 2.2 Enforcement of Domestic Judgments.

Enforcement and Appeals

Under Brazilian law, the enforceability of a judgment will depend on the absence of an order to stay the effects of the judgment. In general, the filing of appeals against a judgment stays the effects of the judgment, according to Article 1.012 of the CPP and, consequently, prevents the party from enforcing it.

However, there are some exceptions, provided by Article 1.012 of the CPP and by other laws. In sum, a judgment may become enforceable as follows:

  • immediately after the first-instance award (rendered by the judge who sits alone on the lower court), in the cases prescribed by Article 1.012, paragraph one, items I–VI of the CPP;
  • immediately after the second-level judgment (rendered by the appellate court, in the second instance), when the filing of a special appeal to the Superior Court of Justice or an extraordinary appeal to the Supreme Court has not been followed by a decision staying the effects of the judgment; or
  • after the constitution of res judicata.

Motion to Stay Enforcement Proceedings

Once an award becomes final and unappealable, the defendant is no longer entitled to challenge the merits of the judgment within the course of the enforcement proceedings (the merits of the award shall be challenged by the applicable appeals). For example, the defendant may not challenge the obligation of payment set forth in a final judgment for a specified amount of money.

However, the defendant is entitled to file a motion to stay the enforcement proceedings, in which the defendant is allowed to raise a limited set of defences, essentially related to procedural flaws (lack of proper service of process, improper attachment of unattachable assets, etc), lack of jurisdiction, or an excessive amount charged by the plaintiff. Motions to stay the enforcement of judgments are regulated by Articles 525 and 535 of the CCP.

The motion to stay does not hinder the plaintiff's right to enforce the final judgment, unless the requirements for injunction relief are met. The judge may also require the debtor to provide a guarantee of payment for the amount owed in order to grant the motion of stay.

Third-Party Motion to Stay Execution

Articles 674–681 of the CCP deal with motions filed by third parties whose assets have been improperly attached under the enforcement proceedings of judgments against another party. These motions are usually filed by spouses, buyers or homonymous persons/legal entities who have been mistakenly affected by attachment orders issued against the debtor. These affected third parties are basically required to prove ownership of any given asset unduly affected by a court attachment order, in order to obtain the release thereof and recover possession.

Challenge of Judgments Rendered by Arbitral Awards

Brazil is an arbitration-friendly jurisdiction, with the business community fully embracing arbitration after the enactment of the Brazilian Arbitration Act (Law No 9.307/96) (BAA) in 1996. In 2001, the Supreme Court recognised the constitutionality of arbitration, and Brazilian jurisprudence has since adopted a pro-arbitration approach. In 2015, a bill reforming the BAA was approved, making important amendments to clarify controversial issues and deal with matters not previously regulated. The amendment confirmed that state entities can submit disputes to arbitration, restating what had already been authorised by many specific laws.

Arbitration awards are not subject to appeals or to judicial review on the merits, and are enforceable as the equivalent of judgments rendered by courts of law.

An arbitration award may be set aside under limited circumstances.

According to Article 33, paragraph 1, of the BAA, a party may apply for the setting aside of an arbitral award up to 90 days from the notification of the award or the notification of the decision regarding a request for clarification of the award. Such lawsuit does not stay the enforcement proceedings. Article 32 of the BAA provides for very narrow circumstances in which an arbitral award shall be set aside, as follows:

  • the arbitration agreement is null;
  • the award was rendered by a person who could not have served as an arbitrator, in accordance with Brazilian law;
  • the award did not meet the mandatory formal requirements set forth in Article 26 of the BAA;
  • the award was rendered outside the scope of the arbitration agreement;
  • the award was rendered as a result of corruption;
  • the award was rendered after the time established in the arbitration agreement and the arbitrator did not cure the delay after being notified; or
  • the tribunal disregarded the due process, equal treatment of the parties, the impartiality of the arbitrators or the freedom of decision of the arbitrators.

Actions for setting aside arbitration awards should be filed within the limitation period of 90 days from the notification of the award or the notification of the decision regarding a request for clarification, as per Article 33, paragraph 1, of the BAA. Once this limitation period has passed, the parties will be barred from challenging the award.

The competent court to hear actions for setting aside arbitration awards is the court of the place where the arbitration was seated, if the parties have not provided otherwise in the arbitral convention.

Judgments suspended by pending appeals are not enforceable, as explained in 2.5 Challenging Enforcement of Domestic Judgments.

There is no central register of court judgments in Brazil, but most judgments (especially monetary judgments) can be recorded on real estate registers, registers of deeds or registers of vehicles, for the purpose of making third parties aware of the judgment rendered against the owner of such assets, pursuant to Article 828 of the CCP. These records are important to avoid any undue transfer of assets to third parties to avoid the satisfaction of court awards.

Transfers of assets after monetary judgments are presumably illegal and ineffective against the judgment creditor in the absence of any assets remaining to satisfy the judgment, and if the third-party buyer or assignee of such assets was made aware of the judgment prior to the transfer, as per Article 828, paragraph 4, of the CCP.

The Superior Court of Justice is the only court in Brazil that has jurisdiction to recognise foreign decisions, as per Article 105, I, “I”, of the Brazilian Federal Constitution. According to Article 961 of the CCP, foreign judicial decisions will only be given effect in Brazil after the recognition process under the Superior Court of Justice. Article 216-A, paragraph 1, of the Superior Court of Justice Internal Rules also provides that any judicial or non-judicial foreign decision that bears the same effects as a court judgment under Brazilian law may be subject to recognition before the Superior Court of Justice.

Article 963 of the CCP sets forth the requirements for ratification. In sum, a foreign judgment shall be ratified if:

  • it was rendered by an authority with proper jurisdiction;
  • it was preceded by suitable service of process, even if such judgment was rendered by default (trial “in absentia”);
  • it is effective in the country where it was rendered;
  • it does not violate a Brazilian res judicata decision;
  • the application for ratification produces an official certified translation of the award; and
  • it does not violate public policy.

Brazil is a signatory party to the following international treaties and conventions:

  • the New York Convention (UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958);
  • the Geneva Protocol on Arbitration Clauses 1923;
  • the Inter-American Convention on the Extraterritorial Validation of Foreign Judgments and Arbitral Awards 1979;
  • the Panama Convention (Inter-American Convention on International Commercial Arbitration 1975);
  • the Las Leñas Protocol (MERCOSUR Protocol on Jurisdictional Assistance and Co-operation Regarding Civil, Commercial, Labour and Administrative Matters 1992); and
  • the MERCOSUR Agreement on International Commercial Arbitration 1998.

Under Brazilian law, all foreign judgments are subject to the same rules and requirements for ratification prior to enforcement, except for foreign judgments of consensual divorce and requests for ratification of a foreign judgment based on a specific permissive law or convention. The foreign judgment of a consensual divorce is effective in Brazil regardless of recognition before the Superior Court of Justice, as per Article 961, paragraph 5, of the CCP. The CCP also exempts requests based on permissive law or conventions from the recognition procedure, as per Article 961.

According to Article 963 of the CCP, the following foreign judgments cannot be ratified, and, consequently, are not enforceable:

  • those that were not rendered by an authority with proper jurisdiction;
  • those that were rendered in a clear and material violation of due process (lack of valid service of process);
  • those that are not effective in the country where they were rendered; and
  • those that violate public policy in Brazil.

Foreign judgments rendered by foreign jurisdictions when the Brazilian courts have exclusive jurisdiction on the matter according to Brazilian law cannot be ratified, and, therefore, are not enforceable, pursuant to Article 964 of the CCP.

Article 23 of the CCP establishes the matters over which Brazilian courts have exclusive jurisdiction, as follows:

  • litigation over real estate located in Brazil;
  • procedures related to succession by inheritance and the division of common assets located in Brazil; and
  • cases of divorce or legal separation, succeeded by the division of assets located in Brazil.

A foreign judgment for the purpose of tax foreclosure shall be ratified only when provided for by a treaty or by a promise of reciprocity made to the Brazilian authority. In the absence of such treaty or promise, this type of judgment cannot be ratified and, therefore, is also not enforceable.

In Brazil, foreign judgments are not automatically enforceable before the local courts and must first be recognised by the Superior Court of Justice. After recognition, foreign judgments are considered res judicata, and are consequently enforceable in the same manner as any domestic judgment. In sum, the following steps need to be taken to enforce a foreign judgment:

  • filing an application for the recognition of the foreign award before Brazil’s Superior Court of Justice, following the requirements set forth in Article 105, I, “I” of the Brazilian Federal Constitution and Articles 960–964 of the CCP;
  • once the judgment has been ratified by the Superior Court of Justice, the judgment creditor shall commence the enforcement proceeding before a federal court, presenting the original or a certified copy of the recognised foreign judgment, accompanied by a certified translation into Portuguese, pursuant to Article 965 of the CCP; and
  • enforcement proceedings will follow the rules set forth in Articles 522 and 778–925 of the CCP, applicable to the enforcement of domestic judgments, as detailed in 2.2 Enforcement of Domestic Judgments, 2.3 Costs and Time Taken to Enforce Domestic Judgments, 2.4 Post-judgment Procedures for Determining Defendants’ Assets and 2.5 Challenging Enforcement of Domestic Judgments.

The costs associated with the enforcement of foreign judgments can be summarised as follows:

  • court fees at the Superior Court of Justice, which are fixed independently from the amount in dispute and vary according to inflation rates, pursuant to Resolution STJ/GP of 1 February 2017;
  • court fees relating to the enforcement proceedings, which must be paid by the requesting party as soon as the proceeding is filed (1% to 2% of the value of the judgment);
  • costs associated with evaluation and public auction of the judgment debtor’s assets; and
  • loss of suit fees, which shall be fixed at between 10% (the minimum established by the CCP) and 20% of the total amount of the judgment, if the debtor’s motion to stay the enforcement proceeding is granted.

The mandatory process for recognition of the foreign judgment before the Supreme Court of Justice takes approximately six months or longer, depending on the complexity of the award and the nature of the legal issues discussed within the ratification process (such as violation of public policy, lack of proper jurisdiction, etc). The enforcement of a foreign judgment takes the same time as the enforcement of a domestic judgment – from two to three years.

The enforcement of a foreign judgment can be challenged at two different levels or stages.

The judgment debtor must be served with process and named as a party in the ratification process that takes place before the Superior Court of Justice, thereby becoming able to raise all available challenges against the ratification of the foreign award set forth in Article 963 of the CCP (such as violation of public policy, lack of proper jurisdiction, etc).

Once ratified, the foreign award can no longer be challenged on its merits or validity, but the judgment debtor is still entitled to file a motion to stay the enforcement proceeding if any of the circumstances falling within Article 525 of the CPP apply, as follows:

  • the lack or nullity of the service of process;
  • the lack of standing of the party;
  • the unenforceability of the award;
  • the incorrect levy of execution or erroneous appraisal;
  • the excessive execution or undue accumulation of executions;
  • the lack of jurisdiction of the execution court; and
  • any cause that modifies or discharges the obligation, such as payment, novation, compensation, settlement or prescription, provided it supervenes the judgment.

Third party motions to stay execution under Articles 674–681 of the CCP are also available for third parties who have been unduly affected by the attachment of their assets within the course of the enforcement of foreign judgments.

Under the BAA and Article 515, VII, of the CCP, arbitral awards rendered in Brazil have the same effect as court judgments and are immediately enforceable, but they are not subject to appeals.

Arbitral awards may be challenged under extremely limited circumstances. The action to set aside an arbitral award is subject to a 90-day limitation period, as detailed in 2.5 Challenging Enforcement of Domestic Judgments (Challenge of Judgments Rendered by Arbitral Awards).

Arbitral awards rendered abroad must first be recognised before the Superior Court of Justice so that they become enforceable in Brazil, according to Articles 35 and 36 of the BAA.

Articles 960–964 of the CCP and the Superior Court of Justice Internal Rules govern the ratification proceedings. All these provisions follow the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards structure (which was incorporated as an internal Brazilian legal act by means of Decree 4.311/2002).

Finally, Article 34 of the BAA determines that the recognition of foreign arbitral awards shall comply with the treaties that are in effect in Brazil, which are:

  • the New York Convention (UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958);
  • the Geneva Protocol on Arbitration Clauses 1923;
  • the Inter-American Convention on the Extraterritorial Validation of Foreign Judgments and Arbitral Awards 1979;
  • the Panama Convention (Inter-American Convention on International Commercial Arbitration 1975);
  • the Las Leñas Protocol (MERCOSUR Protocol on Jurisdictional Assistance and Cooperation Regarding Civil, Commercial, Labour and Administrative Matters 1992); and
  • the MERCOSUR Agreement on International Commercial Arbitration 1998.

The approach to enforcement in Brazil does not vary for different types of arbitral awards.

Foreign arbitral awards are not enforceable in the following circumstances, according to Article 963 of the CCP:

  • if they are rendered by a sole arbitrator or an arbitral tribunal with proper jurisdiction (outside the limits of the arbitration clause of the arbitral convention);
  • if they are rendered in clear and material violation of due process;
  • if they are not effective in the country where they were rendered (eg, when set aside by the court of the seat of the arbitration); or
  • if they are rendered in violation of public policy in Brazil.

Foreign arbitral awards are also not enforceable in cases where the Brazilian courts have exclusive jurisdiction according to Brazilian law, pursuant to Article 964 of the CCP.

Moreover, in accordance with the New York Convention, Article 38 of the BAA provides that recognition shall be denied when the defendant proves that:

  • the parties to the arbitration agreement lacked legal capacity;
  • the arbitration agreement was not valid under the jurisdiction to which the parties have submitted it or, lacking such indication, under the law of the country in which the arbitral award was rendered;
  • the defendant was not informed of the appointment of the arbitrator or the existence of the arbitral procedure, or there was a violation of the due process of law, inhibiting the defendant’s right to the fullest possible defence;
  • the arbitral award was rendered exceeding the scope of the arbitration agreement, and it has not been possible to separate the exceeding part from that submitted to arbitration;
  • the implementation of the arbitration is not in accordance with the arbitration clause or the submission agreement; or
  • the arbitral award has not yet become binding on the parties, has been set aside, or has been suspended by the judicial organ in which the arbitral award was rendered.

Article 39 of the BAA also provides that the Superior Court of Justice may deny recognition, unprovoked, if:

  • the subject matter of the dispute was not able of being settled by arbitration under Brazilian law; or
  • the arbitral award violates public policy.

Once ratified, foreign arbitral awards are enforceable in the same manner as any domestic judgment. The steps that need to be taken to enforce a foreign arbitral award are the same as apply to foreign judgments – see 3.4 Process of Enforcing Foreign Judgments.

The costs associated with the enforcement of foreign arbitral awards are as follows:

  • court fees at the Superior Court of Justice, which are fixed independently from the amount in dispute and vary according to inflation rates, pursuant to Resolution STJ/GP of 1 February 2017;
  • court fees relating to the enforcement proceedings, which must be paid by the requesting party as soon as the proceeding is filed (1% to 2% of the value of the judgment);
  • costs associated with evaluation and a public auction of the judgment debtor’s assets; and
  • loss of suit fees, which shall be fixed at between 10% (the minimum established by the CCP) and 20% of the total amount of the judgment, if the debtor’s motion to stay the enforcement proceeding is granted.

The mandatory process for recognition of the foreign judgment before the Supreme Court of Justice takes approximately six months or longer, depending on the complexity of the award and the nature of the legal issues discussed within the ratification process (such as violation of public policy, lack of proper jurisdiction, etc). The enforcement of a foreign arbitral award takes the same time as the enforcement of domestic judgment – from two to three years.

Like foreign judgments, the enforcement of a foreign arbitral award can be challenged at two distinct levels or stages.

The judgment debtor must be served with process and named as a party in the ratification process that take place before the Superior Court of Justice, thereby becoming able to raise all available challenges against the ratification of the foreign award set forth in Article 963 of the CCP (such as violation of public policy, lack of proper jurisdiction, etc).

Once ratified, the foreign arbitral award can no longer be challenged on its merits or validity, but the judgment debtor is still entitled to file a motion to stay the enforcement proceeding if any of the circumstances falling within Article 525 of the CCP apply, as follows:

  • the lack or nullity of the service of process;
  • the lack of standing of the party;
  • the unenforceability of the award;
  • the incorrect levy of execution or erroneous appraisal;
  • the excessive execution or undue accumulation of executions;
  • the lack of jurisdiction of the execution court; and
  • any cause that modifies or discharges the obligation, such as payment, novation, compensation, settlement or prescription, provided it supervenes the judgment.

Third party motions to stay execution under Articles 674–681 of the CCP are also available for third parties who have been unduly affected by the attachment of their assets within the course of the enforcement of foreign judgments.

CFGS Advogados – Correia, Fleury, Gama e Silva Advogados

Rua Hungria, 514
5º andar
CEP 01455-000
São Paulo
SP
Brazil

+55 11 5180 5702

andre@cfgs.com.br www.cfgs.com.br
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CFGS – Correia, Fleury, Gama e Silva Advogados is a dispute resolution boutique specialising in strategic court litigation, mediation and arbitration, which provides advice on litigation strategy, preparation and settlement, and conducts judicial, administrative or arbitration proceedings. The firm is based in São Paulo, South America’s largest city and Brazil’s foremost financial and industrial centre, and has extensive experience in handling complex judicial and arbitration cases all over the country. It has assisted heavyweights from the retail, finance and construction sectors in strategic disputes related to stockholder disputes, infrastructure and construction contracts, financial services and stockholders' agreements. Clients include major banks and construction companies, large retailers, well-known real estate developers, some of the world’s largest private equity firms and international investors from the USA, Europe and the Middle East. The team is composed of 20 lawyers with vast experience in dispute resolution.

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