Ship Arrest under Brazilian Law, by Felsberg, Pedretti, Mannrich e Aidar
Felsberg, Pedretti, Mannrich e Aidar
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Sao Paulo - SP - Brazil
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Rio de Janeiro - RJ - Brazil
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I Arrest: typical provisional remedy
In a broad sense, arrest is a specific or typical[1] provisional remedy provided by law so as to ensure satisfaction of a judgement in a future action at law brought to enforce collection of a debt (mainly as regards collection of a sum certain) through a preventive and provisional seizure of assets of value sufficient for the settlement of the debt.
The circumstances in general in which such provisional remedy may be requested are explained in Article 813 of the Brazilian Code of Civil Procedure. In short, such measure may be adopted when, in certain situations and in an attempt to evade the payment of its debts, a debtor intends to leave its civil domicile or perform certain acts envisaging the alienation of property, thus disposing of the assets necessary for the settlement of all its liabilities.
Further, in general, Article 814 of the Code of Civil Procedure establishes that the requirements for the judge to grant the provisional measure upon examining the motion for arrest are: i) unquestionable evidence that the debt is certain and indisputable; and ii) proof of the existence of one of the circumstances foreseen in the aforementioned Article 813 is actually the case at hand, whether through supporting documents or evidence produced in a hearing specifically held for this purpose ( justification hearing ), which may be avoided if the creditor posts a bond, pursuant to Article 816, subparagraph II.
Note that, pursuant to the sole paragraph of Article 814 of the Code of Civil Procedure, a judgment or arbitration award ordering the debtor to pay its debt in cash, or through any other means that can be converted into cash, is held to be sufficient proof that the debt is certain and indisputable. However, a judgment or arbitration award rendered in a foreign country will require prior ratification by the Federal Supreme Court in order to produce effects in Brazil.
II Ship Arrest: typical provisional measure with specific requirements
The arrest of ships, also known as embargo of ships, like arrest in general, is a typical provisional remedy adopted to secure future collection of a debt. However, the difference lies in the nature of the asset to be provisionally and preventatively seized: debtor s ship or ships.
Therefore, in view of the distinctive characteristics of the commercial relationship, especially within the scope of Maritime Law, such type of arrest received special treatment by the Brazilian legislator, by the inclusion of provisions for specific events and requirements, mostly regulated by Articles 479 to 483 and 607 to 609 of the Brazilian Commercial Code and by the International Brussels Convention of 1926, in force in Brazil by virtue of Decree No. 351 of 10.01.1935.
Thus, the applicability of a measure implying the arrest of a vessel, whether Brazilian or foreign, under Brazilian commercial legislation must take into account the distinction between two possible situations: a) the arrest is grounded on one of the credits qualified by the Commercial Code as privileged ; and b) the arrest is grounded on credits qualified by the Commercial Code as not privileged .
Below is a brief analysis of such events:
i) Arrest grounded on privileged credits :
Privileged credits are not only those listed in Articles 470 and 471 of the Commercial Code, but also those provided by complementary legislation, which, under Brazilian law, accompany the ship wherever it may be, namely:
1. Taxes due to the State and court costs and expenses;
2. Salaries due for services rendered aboard ship;
3. Salvage indemnity claims;
4. Obligations assumed by the ship master while exercising the powers conferred upon him by law, falling upon the ship s hull or equipment, whether or not represented or not by notes (promissory notes, bills of exchange, etc.) signed by the master;
5. Indemnification for general average;
6. Indemnification for marine accidents;
7. Credits secured by marine mortgage;
8. Debts owed to private port operators;
9. Expenses with depositaries, as well as storage costs relating to the ship s instruments;
10. Expenses incurred with the ship s costs and maintenance;
11. Shortages on delivery of cargo and damage thereto;
12. Debts deriving from the contracts for construction and purchase of the ship; and
13. Debts deriving from costs incurred in the repair of the ship and its installations and equipment.
ii) Arrest grounded on non-privileged credits:
Any other credit of nature and origin other than as stated above, is qualified under Brazilian law as non-privileged , therefore it does not accompany the ship wherever it may be.
Therefore, the arrest based on such type of credit is enforceable only at the port where the ship has been registered and, even so, only upon the posting of a bond and after the filing of the applicable action to collect the debt of whatever nature. This means that in such event, the provisional measure requesting the arrest may only be instituted as an ancillary proceeding, not before the main action is filed.
Nevertheless, whatever the nature of the credit (privileged or non-privileged), pursuant to Article 479 of the Commercial Code, only ships without cargo or with no more than 25% of its cargo capacity onboard may be arrested. However, whatever the amount of cargo onboard, by virtue of the same legal provision the arrest will never be allowed if the ship has already obtained all required authorizations to depart, given by the competent port authorities, unless the credit being claimed arises from bunkering and catering carried out at the same port and for the same voyage.
This article has been provided for general information only and should not be relied upon as legal advice. For advice please contact Cl udia Haidamus Perri (claudiaperri@felsberg.com.br) or Marcus Matteucci Gomes (marcusgomes@felsberg.com.br) at FELSBERG E ASSOCIADOS or see our website at www.felsberg.com.br.
[1] Note: In Brazil, provisional measures are classified as nominada or t pica (specific or typical) meaning that they are specifically provided by law, such as arrest, seizure, judicial notification, etc. Inominada or at pica (non‑specific or non‑typical) measures are remedies not specifically provided by law, which may be claimed by the plaintiff and granted or not, according to the discretion of the court.