Partner, Lawyer, Industrial Property Agent
Marcelo has been working for almost 20 years in the intellectual property field. He is Vice-President of Intellectu[...]read +
by Marcelo Mazzola
November 13, 2020
A recent ruling by the Supreme Federal Court (STF) has confirmed the possibility of ratifying a foreign decision without the need for a Brazilian company to be served with process in the lawsuit by letter rogatory – an instrument to communicate between Judiciaries in different countries. The STF upheld the ruling of the Superior Court of Justice (STJ), releasing an American company from this obligation once and for all.
In the period from 1 January 2015 to 30 September this year, the STJ judged 3,576 requests to ratify a foreign ruling. Of these, 3,318 granted the order. The justices of the Supreme Court held that the STJ judgment is well-founded and duly supported by the infra-constitutional legislation (ARE 1137224). In practice, the ruling affords greater legal certainty to foreign investors who come to execute agreements with Brazilian companies, which can attract capital to the country.
In the specific case, a decision by a New York court ordered Latin Stock Brasil Produções – a copyright distributor – to pay USD 362.74 thousand to the American provider of images, videos and music Shutterstock. However, in order to be effective in Brazil, the Judiciary must ratify the foreign decision.
In a landmark ruling, the STJ accepted the use of service of process by post, as agreed by the parties in a contractual clause. In the agreement, the companies acknowledged that, if there were any kind of litigation, it would be resolved in the New York Court, where process can be served by the Post Office. With the agreement and the acknowledgment of receipt attached to the lawsuit, the STJ ratified the American ruling (2016/0305869-7).
According to lawyer Marcelo Mazzola from the firm Dannemann Siemsen Advogados, who represents Shutterstock in the lawsuit, following the endorsement by the STF, the ruling can be used as case law by any company in the same situation. “Now that companies have seen it is possible to establish another method, which is much cheaper and faster, of serving process in an international agreement, from now on companies with international agreements will want to include this type of clause”, he says.
Mazzola states the justices of the STJ recognised that another method of serving process had been agreed, which is in accordance with Brazilian and American laws. “The justices held that if the Brazilian company signed an agreement setting forth this different type of service of process, it is correct.”
The Brazilian company had alleged that the American decision could not be ratified because it had not been served with process by letter rogatory. According to Paulo Lanari, from the firm Lanari Advocacia Societária, who represents Latin Stock in the lawsuit, one day the company received a document from the United States, which was communication of the court ruling. “As there was no letter rogatory, since it is a relationship with a company from another country, the ruling is invalid”, says Lanari.
Latin Stock’s lawyer states that, in 2015, the Code of Civil Procedure (CPC) relaxed formalities, such as allowing law firms themselves to deliver service of process. But despite the foreign decision having been ratified in 2017, Latin Stock was served with process in 2014. “In the specific case, an agreement was made that was not applicable at the time. Following the change in the CPC, the argument that the legislation does not authorise it no longer exists”, he says.
As Latin Stock filed for bankruptcy in 2019, according to Lanari, there will now be a conversation with the judicial administrators. “Because this generates a credit that must be claimed in the bankruptcy,” says the lawyer.
By operation of the procedural legal transaction, instituted in the Code of Civil Procedure (CPC) in 2015, today it is more evident that if a party agreed that the service of process by post would be sufficient, it could not later allege that this method is not valid, says lawyer Flávio Pereira Lima, a specialist in litigation and arbitration at Mattos Filho Advogados. “The ruling honours the agreement between the parties. Justice must interfere less and less with what has been agreed”, he states. The measure would not be valid, he adds, if the company had not received the service of process.
For Lima, rulings like this provide greater legal security for foreigners in international business. “On the other hand, a Brazilian party that enters into an agreement of this type needs to be aware of the clauses because what has been agreed must be accepted”, he says.