Trade Promotion and Legal Certainty: Brazil Adopts the CISG
On April 1, 2014, the 1980 United Nations Vienna Convention on Contracts for the International Sale of Goods (“CISG” or the “Vienna Convention”) will finally come into force in Brazil.
Brazil deposited its letter of adhesion to the Convention on March 4, 2013,[1] becoming the 79th CISG Contracting State.
Brazil’s absence from the CISG community has been often questioned, especially because the country is one of the largest economies in the world (7th in the beginning of 2013)[2] and is viewed as an economic leader in South America. It had, however, shown no clear signs in favor of the official adoption of the Vienna Convention.
One could question why Brazil took so many years to finally accept the CISG as part of the legislation, but the delay does not mean that it has been against adopting the Convention altogether. On the contrary: Firstly, Brazilian representatives actively participated in the drafting of the CISG during the seventies. They also participated in the Vienna Diplomatic Conference of April 1980, which lead to the approval of the final CISG text.
Secondly, Brazilian law does not prohibit the use of the CISG, in cases where the applicable law to the contract is the law of a Contracting State. This view was emphasized with the enactment of Brazilian Arbitration Act in 1996 and the reinforcement of the right of parties in choosing the applicable law to the contract where arbitration is provided as the dispute resolution method.
Finally, it is interesting to see that in recent years Brazilian courts have started using concepts that originated from the CISG in their rulings, while applying Brazilian law, incorporating some of the Convention’s concepts into Brazilian case law. For instance, the duty to mitigate losses has already been discussed in a couple of important court decisions related to parties’ good faith in the performance of contracts.[3]
Despite the time elapsed between the creation of the CISG and its ratification by Brazil, the country demonstrates now a full desire to be part of the CISG community by frequently applying the Convention and also by taking part in the international network for unified interpretation of the Convention.
Brazilian Congress has efficiently processed the necessary authorizations for the recognition of CISG. The approval of the Convention by the Congress was preceded by extremely positive reports from the internal commissions responsible for the examination of its text in light of its introduction into the Brazilian legislation.
Additionally, the country has adhered to the CISG without making use of the declarations provided by the CISG itself (i.e. article 95 of the CISG, which provides for the exclusion of application of the CISG based on article 1(b) of the Convention), meaning that the CISG will be applied in full with no limitations.
The adoption of the CISG by Brazil will most certainly favor commerce with Brazilian parties and it places the country at the same level as its partners in trade. State members of the CISG are responsible for more than 90% of the world trade and over 50% of the Brazilian exports have been directed to China, United States, Argentina, Germany, Netherlands, Japan, Venezuela, Belgium and Italy – all countries signatory to the CISG. Also, more than half of Brazilian imports come from United States, China, Argentina, Germany, Japan, Italy, France and Mexico – again, all countries which are part of the CISG.[4]
As it has been highlighted during the approval process of the CISG at the Brazilian Congress, although the CISG encompasses specific provisions in relation to international contracts, which provide different consequences to obligations undertaken by the parties in comparison with the Brazilian Civil Code, the CISG’s main principles of parties’ autonomy and contractual good faith are in complete agreement with the same principles provided under Brazilian civil law. It has been also stressed that the Vienna Convention should not violate the civil law principles set forth under Brazilian law, which should provide a smooth acceptance of the Convention into the Brazilian legal system.
As known internationally, the use of the CISG in international contracts of sale of goods has the objective of creating greater predictability and legal certainty in contractual relationship between parties. That leads to a decrease of costs, time and complexity in international trade. Although Brazil’s adhesion to the CISG has been long overdue, the country seems now ready to fully apply one of the most successful international unification instruments created to facilitate and boost international commercial sale of goods.
[1] The deposit of the instrument of adhesion to CISG with the Secretary-General of the UN, Mr. Ban Ki-moon - Reference: C.N.177.2013.TREATIES-X.10.
[2] See http://www.worldbank.org/en/country/brazil/overview.
[3] See Rio Grande do Sul Court of Appeals - Appeal No. 7002.5267683, 5th Private Law Chamber, Reporting Judge Umberto Sudbrack, decided on Feb. 18, 2009 and Superior Court of Justice, Special Appeal No. 758.518/PR, 3rd Chamber, Reporting Justice Vasco della Giustina, decided on Jun. 17, 2010 – FRADERA, Vera, “A contribuição da CISG (Convenção de Viena sobre Contratos de Compra e Venda Internacional) para a atualização e flexibilização da noção de contrato no direito brasileiro”, in Revista de Arbitragem e Mediação, 2012, RArb 34, p. 43.
[4] Data from 2009 (Report from the Foreign Relations and National Defense Commission - Message No. 636/2010, Project 222-A, 2011, in Revista de Arbitragem e Mediação, 2011, RArb 37, p. 286). Data from 2013 shows that Brazil’s five main business partners are CISG Contracting States (42.87% of trade): China, United States, Argentina, Germany and Netherlands. See http://www.mdic.gov.br/sitio/interna/noticia.php?area=5¬icia=1262.
