Enforcement in Brazil of a title issued abroad

The internationalization of commercial and property relations has made it increasingly common for contracts, debt acknowledgments, promissory notes, court decisions and arbitral awards to be entered into or rendered outside Brazil.

When default occurs and the debtor holds assets or is domiciled in Brazil, the possibility arises of seeking satisfaction of the credit before the Brazilian courts. The procedure, however, depends on the nature of the title.

The first necessary distinction is whether the foreign document is a court decision, an arbitral award or an extrajudicial enforcement title. Each category has its own requirements and procedural avenues.

Foreign court judgments and foreign extrajudicial titles

As a rule, a judgment rendered by a foreign court cannot be enforced directly in Brazil. Its recognition by the Superior Court of Justice (STJ) must first be obtained.

An extrajudicial enforcement title issued abroad, in turn, does not generally depend on recognition by the STJ. It may be used directly in an enforcement action, provided it meets the requirements set out in Brazilian law.

The Code of Civil Procedure establishes this difference in articles 784, paragraphs 2 and 3, and 960 to 965.

Enforcement of a foreign court judgment

A foreign decision produces effects in Brazil only after recognition by the STJ, unless a treaty or Brazilian law provides otherwise.

The action for recognition of a foreign decision is normally filed before the Superior Court of Justice itself, by means of an electronic petition signed by an attorney. The STJ conducts a delibation review, verifying whether the decision meets the requirements necessary to produce effects in Brazilian territory.

The Court does not act as a further instance to reexamine the merits of the case decided abroad. The analysis focuses mainly on the formal regularity of the decision, on the jurisdiction of the foreign authority, on the validity of the service of process and on the absence of any violation of Brazilian public policy.

Among the requirements set out in article 963 of the CPC are:

• a decision rendered by a competent authority;
• regular service of process on the party, even if it remained in default;
• effectiveness of the decision in the country of origin;
• absence of any offense to Brazilian res judicata;
• official translation, unless waived by treaty;
• absence of any manifest offense to public policy;
• absence of any conflict with a case of exclusive jurisdiction of the Brazilian courts.

The STJ explains that recognition is necessary for a foreign judgment to produce effects in Brazil.

The best-known exception is the foreign judgment granting a simple or pure consensual divorce, dealing solely with the dissolution of the marriage. This exception does not apply, however, to a foreign judgment ordering someone to pay a debt, damages, attorney’s fees or any other patrimonial obligation.

Enforcement of a foreign arbitral award

An arbitral award rendered outside Brazilian territory must also be recognized by the STJ before it can be enforced in the country.

The rule is set out in articles 34 and 35 of Law No. 9,307/1996, the Arbitration Law.

The application for recognition must be accompanied, among other documents, by:

• the original arbitral award or a certified copy;
• the arbitration agreement or arbitration clause;
• proof that the award has become binding;
• documents evidencing the regularity of the notification given to the party;
• apostille or legalization, depending on the country of origin;
• sworn translation into Portuguese.

Recognition may be refused if there is, for example, incapacity of the parties, invalidity of the arbitration agreement, absence of adversarial proceedings, a decision exceeding the limits of the arbitration, an award that is not yet binding, or an offense to national public policy.

The existence of a foreign arbitral award, therefore, does not automatically authorize the creditor to commence enforcement in Brazil. The recognition decision of the STJ must first be obtained.

Direct enforcement of a foreign extrajudicial enforcement title

Article 784, paragraph 2, of the CPC provides that extrajudicial enforcement titles originating in a foreign country do not depend on recognition in order to be enforced in Brazil.

The following may fall into this category, as the case may be:

• loan agreements;
• purchase and sale agreements;
• debt acknowledgments;
• promissory notes;
• checks;
• public deeds;
• public documents signed by the debtor;
• private instruments;
• agreements secured by mortgage, pledge or guarantee;
• other documents to which the law attributes enforceability.

The waiver of recognition does not mean that any document signed abroad may be enforced directly. The creditor must still demonstrate that the document has enforceability and represents a certain, liquid and due obligation.

Requirements of the foreign title

Certain, liquid and due obligation

Under articles 783 and 786 of the CPC, enforcement must be based on an obligation that is:

• certain, as to the existence of the duty;
• liquid, as to the amount or the possibility of determining it;
• due, as to maturity and the absence of any pending suspensive condition.

An agreement that merely establishes future obligations, depends on supplementary documents or does not allow the amount owed to be identified may not suffice for immediate enforcement.

The need for simple arithmetic operations does not eliminate liquidity. In such a case, the creditor must submit a detailed calculation statement indicating interest, monetary correction, penalties, partial payments and currency conversion criteria.

Formal validity in the country of origin

Article 784, paragraph 3, of the CPC provides that a foreign title will have enforceability only if the formation requirements demanded by the law of the place where it was executed are met.

This means that the analysis must consider the foreign law applicable to the formation of the document. It will be necessary to verify, for example:

• the capacity of the contracting parties;
• the validity of the signatures;
• the powers of representation;
• notarial formalities;
• the requirement or waiver of witnesses;
• the validity of electronic signatures;
• specific requirements for promissory notes or other negotiable instruments.

The validity of the agreement in the country of origin, however, does not eliminate the need for it to be compatible with the Brazilian procedural system.

Brazil as the place of performance of the obligation

The same article 784, paragraph 3, requires that Brazil be indicated as the place of performance of the obligation.

This requirement is especially important in international agreements. The mere existence of the debtor’s assets in Brazil may not suffice to make up for the absence of a provision for performance in Brazilian territory.

For this reason, international agreements must clearly indicate:

• the place of payment;
• the bank account or payment institution;
• the competent forum;
• the possibility of enforcement in Brazil;
• the applicable law;
• the currency of the obligation;
• the effects of default.

STJ case law recognizes that, when the agreement allows the creditor to choose Brazilian jurisdiction, the enforcement must follow the procedure set out in Brazilian procedural law, including with respect to the objections filed by the debtor. (STJ, Case Law Bulletin No. 807)

Foreign documents and translation

Documents written in a foreign language must be accompanied by a Portuguese version signed by a sworn public translator, except in the specific cases provided for in treaties.

Article 192 of the CPC provides that foreign documents may be filed in the proceedings only with a translation into Portuguese made by a sworn translator, through diplomatic channels or by the competent central authority.

It will also be necessary to assess the international authentication of the document. Depending on the country of origin, the following may be required:

• apostille under the Hague Convention;
• consular legalization;
• notarial authentication;
• certification of the signature;
• proof of the authority that issued the document.

The apostille attests to the formal authenticity of the public document, but it does not replace the sworn translation and does not, by itself, turn a document into an enforcement title.

Jurisdiction for enforcement

The enforcement of a foreign extrajudicial title must be filed before the competent Brazilian court.

Article 781 of the CPC allows enforcement to be filed, as the case may be:

• in the forum of the domicile of the party against whom enforcement is sought;
• in the forum chosen in the title;
• in the place where the assets subject to enforcement are located;
• in the place where the act or fact that gave rise to the title occurred;
• in the forum of the creditor, when the domicile of the party against whom enforcement is sought is uncertain or unknown.

The Brazilian courts may also exercise jurisdiction when the defendant is domiciled in Brazil, when the obligation must be performed in the country or when the parties have expressly or tacitly chosen Brazilian jurisdiction, pursuant to articles 21 and 22 of the CPC.

It is important to distinguish international jurisdiction from internal territorial jurisdiction. The former determines whether Brazil may adjudicate the claim. The latter determines which Brazilian court or judicial district will be responsible for the proceedings.

How direct enforcement works

The enforcement of an extrajudicial title issued abroad generally follows these steps:

1. analysis of the nature and enforceability of the document;
2. verification of the foreign law applicable to the formation of the title;
3. review of the forum clause and of the place of performance of the obligation;
4. apostille or legalization of the documents;
5. sworn translation;
6. preparation of the calculation statement;
7. choice of the competent Brazilian court;
8. filing of the enforcement action;
9. service of process on the debtor;
10. voluntary payment or adoption of attachment and expropriation measures.

In enforcement for a definite amount, the judge initially sets attorney’s fees at 10% of the amount enforced. The debtor is served with process to pay the debt within three days, pursuant to articles 827 and 829 of the CPC.

If payment is not made, measures such as the following may be requested:

• attachment of amounts held in bank accounts;
• attachment of vehicles;
• attachment of real property;
• blocking of financial assets;
• asset search;
• attachment of equity interests;
• attachment of revenues;
• registration of the enforcement in asset registries;
• inclusion of the debtor in delinquent debtor databases, where applicable.

The debtor may file objections to the enforcement (embargos à execução), alleging, among other grounds:

• nonexistence or invalidity of the title;
• absence of enforceability;
• payment;
• statute of limitations;
• excess of enforcement;
• unenforceability of the obligation;
• irregularity of the service of process;
• lack of jurisdiction of the court;
• nullity of the obligation;
• absence of proof of representation or of the signature.

When the enforcement action is not appropriate

Not every foreign document allows immediate enforcement.

If the document lacks enforceability but constitutes written evidence of the debt, a monitory action may be filed. Article 700 of the CPC allows a monitory action precisely when the creditor holds written evidence that does not have the effectiveness of an enforcement title.

It may also be necessary to file an action on the merits when there is a significant dispute over the existence of the obligation, the validity of the agreement or the debtor’s liability.

An inappropriate choice of procedure may lead to dismissal of the initial petition or termination of the enforcement. Therefore, before filing, the document, the foreign law, Brazilian law, the applicable treaties and the case law of the courts should be examined together.

Enforcement of a foreign decision after recognition

Once the STJ recognizes the foreign judgment, a second stage begins: enforcement of the decision before the first-instance Federal Court.

Article 965 of the CPC requires that the request be accompanied by a certified copy of the recognition decision or of the exequatur, as the case may be.

Enforcement of the recognized judgment follows the rules applicable to the enforcement of domestic decisions. In condemnations to pay a definite amount, the debtor will be summoned to pay voluntarily, under penalty of the applicable legal consequences, including a fine, attorney’s fees and acts of asset seizure.

Thus, recognition by the STJ does not represent the receipt of the credit. It merely allows the foreign decision to produce effects in Brazil. Economic satisfaction will occur later, before the competent enforcement court.

Conclusion

Enforcement in Brazil of a title issued abroad is legally possible, but it requires the correct identification of the document and of the applicable procedure.

A foreign court judgment and a foreign arbitral award depend, as a rule, on recognition by the STJ. A foreign extrajudicial enforcement title, in turn, may be enforced directly, provided it meets the requirements of formal validity, certainty, liquidity, enforceability and the indication of Brazil as the place of performance of the obligation.

The documentation must be carefully prepared, with apostille or legalization, sworn translation, proof of the applicable foreign law and an updated calculation statement.

In international transactions, contractual prevention is decisive. Indicating the forum, the place of payment, the applicable law and the collection mechanisms may determine whether the creditor will have immediate access to enforcement or will first need to bring an action on the merits or a monitory action.