A foreign company may need to enforce a contract in Brazil when a Brazilian customer, supplier, distributor or business partner fails to pay, deliver goods, perform services or comply with another agreed obligation.
The appropriate legal measure depends on the contract, available evidence, dispute-resolution clause and location of the Brazilian company’s assets.
Foreign companies can generally pursue contractual rights in Brazil without opening a local subsidiary, but they will normally need Brazilian legal counsel and appropriate corporate documents.
Review the contract and supporting evidence
The first step is to determine exactly which obligation was breached.
The legal review should consider:
- the parties identified in the contract;
- payment or performance deadlines;
- evidence that the foreign company fulfilled its obligations;
- notice and cure provisions;
- penalties and interest;
- guarantees;
- termination rights;
- governing law;
- jurisdiction or arbitration clauses.
Relevant evidence may include invoices, purchase orders, delivery receipts, technical reports, emails and messages acknowledging the obligation.
Under the Brazilian Civil Code, contractual default may result in liability for losses, damages, interest and other consequences established by law or contract. The injured party may also seek termination of the agreement when the breach justifies that remedy.
Send a formal notice
Before filing a lawsuit, Brazilian counsel may send a formal notice demanding payment or performance.
The notice should normally identify:
- the contractual obligation;
- the nature of the breach;
- the amount or action required;
- the deadline for compliance;
- applicable interest or penalties;
- consequences of continued default.
A notice may also satisfy a contractual cure requirement and preserve evidence that the Brazilian party was formally informed of the breach.
If the counterparty acknowledges the obligation, the parties may negotiate a settlement or acknowledgement-of-debt agreement with clearer enforcement provisions.
Direct enforcement of the contract
Some contracts and related documents may qualify as extrajudicial enforceable instruments under Article 784 of the Brazilian Code of Civil Procedure.
When the document contains a certain, liquid and enforceable obligation and satisfies the applicable formal requirements, the creditor may seek direct enforcement rather than first filing a broader lawsuit to establish the debt.
Brazilian legislation also recognizes that electronic signatures may satisfy certain execution requirements when the integrity of the document is verified through an electronic-signature provider accepted by the parties.
Whether direct enforcement is available depends on the complete document set, not merely the title of the contract.
When direct enforcement is not available
If the contract does not qualify as an enforceable instrument, the foreign company may need another judicial procedure.
Possible measures include:
- a collection action;
- a monitoring action based on written evidence;
- a breach-of-contract claim;
- a claim for damages;
- an action requiring delivery, performance or abstention;
- termination of the agreement.
The court may need to examine evidence and hear the parties before confirming the obligation.
The appropriate proceeding should be selected only after reviewing the contract, supporting documents and defence likely to be raised by the Brazilian company.
Specific performance
The foreign company may not always be seeking money.
It may require the Brazilian counterparty to:
- deliver goods;
- return equipment;
- transfer documents;
- stop using confidential information;
- comply with exclusivity;
- perform a contractual service;
- cease unauthorized use of intellectual property.
Brazilian procedural law allows courts to order specific performance and adopt measures intended to produce the practical result of the contractual obligation.
The feasibility of this remedy depends on whether performance remains possible and whether damages would be an adequate substitute.
Termination and damages
When the breach is serious, the injured party may seek termination of the agreement and compensation for losses caused by non-performance.
Recoverable amounts may include:
- unpaid contractual amounts;
- contractual penalties;
- interest;
- monetary adjustment;
- direct financial losses;
- additional damages supported by evidence.
The claimant must establish the contract, breach, loss and connection between the breach and the damages claimed.
Commercial frustration alone is not sufficient. Financial losses should be documented through invoices, payment records, replacement costs, cancelled orders or other objective evidence.
Asset enforcement
A favourable decision or enforceable instrument must still be converted into actual recovery.
Depending on the circumstances, Brazilian courts may order measures involving:
- bank accounts;
- vehicles;
- real estate;
- receivables;
- financial investments;
- ownership interests;
- other assets belonging to the debtor.
The success of enforcement depends on the debtor’s financial situation and availability of identifiable assets.
A legal assessment should therefore consider whether the Brazilian company remains active, has assets or is involved in judicial reorganisation or insolvency proceedings.
Contracts with arbitration clauses
When the contract contains a valid arbitration clause, the dispute may need to be submitted to arbitration rather than Brazilian courts.
The Brazilian Arbitration Act permits arbitration for disputes involving disposable economic rights.
The clause should be reviewed to identify:
- arbitral institution;
- seat of arbitration;
- governing law;
- language;
- number of arbitrators;
- procedure for urgent measures.
Foreign arbitral awards generally require recognition by the Superior Court of Justice before enforcement in Brazil, subject to the applicable legal and treaty framework.
Foreign judgments
If the foreign company has already obtained a judgment in another country, the decision will not usually be enforced automatically against Brazilian assets.
The Superior Court of Justice explains that foreign judicial decisions generally require recognition before becoming effective in Brazil.
After recognition, enforcement proceeds before the competent Brazilian court.
Before commencing litigation abroad, the company should compare that route with filing the original claim directly in Brazil.
Can enforcement be handled remotely?
A foreign company can generally coordinate the matter without sending directors to Brazil.
The process may involve:
- online meetings;
- electronic document transfer;
- a power of attorney;
- apostilled corporate documents;
- sworn translations;
- reports in English;
- remote settlement approval.
The foreign company should identify the person authorized to provide instructions, approve agreements and sign the required documents.
Legal assistance with contract enforcement
Willian Nunes Advogados assists foreign companies with contractual defaults involving Brazilian customers, suppliers and business partners.
The work may include:
- contract and evidence review;
- formal legal notices;
- settlement negotiations;
- acknowledgement-of-debt agreements;
- collection and enforcement proceedings;
- claims for performance or damages;
- reports in English.
Foreign businesses may also review the pages concerning a contract lawyer in Brazil, debt collection in Brazil and legal representation for foreign companies.
Documents may be submitted through the contact page of Willian Nunes Advogados.
Each case requires an individual assessment of the agreement, evidence, deadlines, dispute clause and debtor’s assets.
Frequently asked questions
Is a signed contract enough for direct enforcement?
Not always. The contract must satisfy the legal requirements applicable to extrajudicial enforceable instruments.
Can emails and invoices be used as evidence?
Yes. They may help prove the contractual relationship, performance and acknowledgement of the obligation.
Must a formal notice be sent first?
Not in every case, but it may be required by the contract or advisable to establish default and allow an opportunity to cure.
Can a Brazilian court order performance instead of damages?
Depending on the obligation, the court may order specific performance or measures producing an equivalent practical result.
Must foreign documents be translated?
Documents written in another language generally require sworn translation before formal use in Brazilian court proceedings.
