The CISG in Brazil

Now that it has been ratified by Brazil (Federal Decree No. 8,327, of October 16th, 2014), we should expect the United Nations Convention on Contracts for the International Sales of Goods to be more frequently applied in the country. One thing we should bear in mind is that, by means of Article 4 of Federal Decree No. 4,657, of September 4th, 1942, statutes are the chief source of law in Brazil; and treaties such as the CISG are fully applicable once they are incorporated into domestic law. By its very nature and scope, this Convention will replace the Brazilian Civil Code in matters of international trade, unless parties agree otherwise – but even before coming into force the CISG had already played a far-reaching role in case law.

Back in 2003, Mannesmann Dematic AG (Mannesmasn Dematic), a German company, referred to international arbitration a dispute with Rodrimar S.A Transportes Equipamentos Industriais e Armazéns Gerais (Rodrimar). The court found the Brazilian company owned Mannesmman Dematic damages in the matter of a promise of sale of a ship crane. In 2005, Gottwald Port (Gottwald), a German company, tried to enforce the ruling in Brazil, on the grounds of an assignment of credit it had with Mannesmann Dematic (SEC 968). The Superior Court of Justice dismissed the case without prejudice. In accordance to rules of the Court, there could be could no decision on the validity and on the effects of the assignment of credit in order to tackle the issue whether Rodrimar owned Gottwald any damages. It would have been thought-provoking, though, to see the Court´s finding on a matter which arose in that case: the indispensability of the debtor´s agreement (Rodrimar) to the assignment of credit between the creditor (Mannesman Dematic) and a third party (Gottwald). This (a) would allegedly not be necessary according to German law; (b) would be a tricky matter according to Brazilian law, inasmuch as Article 1.065 of the Brazilian Civil Code of 1916 stated that such an assignment would be possible only if not at odds with “the nature of the obligation, the law or the contract with the debtor”; (c) was not even discussed in light of Swiss law, which was applicable to the contract between Mannesman Dematic and Rodrimar, or more broadly, in light of the CISG, which the arbitration court found to govern the dispute in the award.

Later on, in 2008 (SEC 3.035) Atecs Mannesmann GMBH (Atecs Mannesman), a German successor company of Mannesmann Dematic, tried to enforce the ruling once again. As a preliminary defense, Rodrimar argued that the dispute had already been settled in a judgment which had become unappealable. Furthermore, the Brazilian company argued that Atecs Mannesmann lacked standing to file the suit, for it had not been a party to the arbitration case. On the merits, Rodrimar said the Brazilian public order had been violated, since the award did not apply the law chosen by the parties, that is to say, Swiss law; and that the application of the CISG to the dispute in the award would be at loggerheads with the Brazilian Constitution, taking into account that the Convention had not been ratified.

At SEC 3.035 the SCJ found that the decision at SEC 968 could not be seen as substantive res judicata. Besides, under article 40 of Federal Law No. 9,307, of September 23rd, 1996, awards that cannot be ratified on formal grounds may be later ratified if such defects are cured. Likewise, the Court held that Atecs Mannesmman could enforce the award in the capacity of successor company – in going over this issue the Court pointed out that the assignment of credit, just like in the Gottwald case, should not be taken into account. The merits of Rodrimar’s defense, precisely because they were linked to the merits of the award, were not considered by the Judge-Rapporteur. However, one of the other judges of the panel did allude to the fact that the CISG had been ratified by Switzerland and thus was to be constructed as being part of Swiss law.

SEC 968/CH, Rel. Ministro FELIX FISCHER, CORTE ESPECIAL, julgado em 30/06/2006, DJ 25/09/2006, p. 197. In Portuguese here.

SEC 3.035/FR, Rel. Ministro FERNANDO GONÇALVES, CORTE ESPECIAL, julgado em 19/08/2009, DJe 31/08/2009. In Portuguese here.