(English) French and other foreigners can be exempt from the obligation of security before Brazilian tribunals

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The Brazilian law requires that foreigners who do not possess real property within Brazil, when filing a lawsuit, provide security, whether in cash or in personal assets, in order to support eventual payment of the expenses incurred by the prevailing party during the procedure (court costs, expert fees amongst others), as well as to guarantee the payment of the fees due to the other party’s attorney in case that the lawsuit is dismissed. The amount of such security is set by the judge and usually reaches up to 20% of the amount at stake.

Such guarantee is imposed by article 835 of the Brazilian Code of Civil Procedure.

Such legal provision sometimes hinders or prevents access to the Brazilian courts by foreign companies which, in addition to procedural cost and money spent on the filing of a lawsuit, must also be submitted to the payment of said security in order to be allowed to initiate court proceedings.

However, the aforementioned rule of mandatory deposit for foreigners contains exceptions that will be addressed hereby.

The Brazilian Code of Civil Procedure itself provides for through art. 836 that the foreigner is discharged to offer security: i) when it is a enforcement lawsuit; ii) in case of a counterclaim (claim made in opposition to an initial claim).

In addition to the above situations, the security will not be required from foreigners from countries that have entered into a judicial cooperation agreement with Brazil, which expressly sets forth the waiver of such security. In this case, the provisions of the cooperation agreement shall prevail (special rule) on the rule of law in Brazil.

However, the mere existence of the agreement is not enough; it is indispensable that such agreement is incorporated into the Brazilian legal system. Therefore it has to be enacted by decree.

Some countries have already entered into judicial cooperation agreement with Brazil that explicitly exempt companies and individuals therefrom to provide security for filing a claim with Brazilian courts. It is the case of Mercosur countries such as Bolivia and Chile (under the Decree No. 6,891/2009), as well as European countries such as Spain (Decree n°166/1991), Italy (Decree No. 1,476/1995) and France (Decree No. 3,598/2000).

With regard to the French, the exemption is provided for by Article 5 of the Agreement on Cooperation in Civil Matters entered into by and between the Brazilian and French governments, on May 28th, 2006, which states:

Nationals of each one of the two states cannot be forced, in the territory of the other, to provide security or deposit under any denomination whatsoever, by virtue either of its foreigner status, or of the absence of domicile or residence in the country.

Such agreement entered into force on 01.10.2000 and was enacted by Decree No. 3,598/2000. From then on nationals from France (individuals or corporations) are not required to provide security in order to be able to file claims with the Brazilian Courts.

Although such international agreements are fully effective in Brazil since enacted, they are sometimes unknown to judges who improperly require a guarantee from foreigners who are legally exempt therefrom.

In that case, appeals must be presented, such as the Special Appeal (“Recurso Especial”) before the Superior Court of Justice (STJ), since massive former court decisions thereof deem international treaties and conventions to have status of ordinary law[2].

Given the above, it appears that the legal requirement for foreigners to provide security for the introduction of claims in Brazil does not apply in an indiscriminate manner, the exemption being applicable when either a cooperation agreement in judicial matters is in force or when legislation provides so. Thus, some foreigners, notably French, are not required to provide such security.

Along these lines, if necessary, judicial measures should be brought before the court in order to ensure the full effectiveness of such agreements and the waiver of the security.

[1] Lawyer in the litigation department of Chenut Oliveira Santiago – law firm. Specialized on Business Law.

[2] « (…) once regularly incorporated in the internal law, they are situated, within the Brazilian legal system, in the same level of validity, efficiency and authority as ordinary law.” (STF, ADI-MC 1480-3, Min. Celso de Mello, DJ de 18.05.2001)

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