BRAZIL Law and Practice Contributed by: Godofredo Mendes Vianna, Camila Mendes Vianna Cardoso and Lucas Leite Marques, Kincaid | Mendes Vianna Advogados
It should be noted that the arrest of bunkers may involve logistic difficulties for the arresting party, as the claimant will be obliged to nominate a fiduciary agent to be responsible for the bunker and arrange a licensed facility to receive the bunker when it is even - tually arrested. 5.7 Sister-Ship Arrest Brazil is not a party to the arrest conventions, and the Brazilian legal system does not provide a specific reg - ulation regarding the arrest of sister ships. If the claim is based on privileged creditors with effects in rem on the vessel, the claimant would be unlikely to obtain the arrest of another vessel of the debtor’s fleet. How - ever, if the arrest is in personam, in principle it may be possible to file a precautionary lawsuit against the ship-owner to arrest a sister ship and request security. 5.8 Other Ways of Obtaining Attachment Orders The Civil Procedural Code establishes other forms of measures and injunctions that may be sought to obtain security and/or the compliance with a judicial order, the most common of which are the attachment of values and the seizure and constraint of assets, either liquid or illiquid. 5.9 Releasing an Arrested Vessel In order to release an arrested ship, the ship-owner will have to request the release at the court, convinc - ing the court to review the arrest decision; or provide a guarantee to replace the arrested vessel, plus the legal and attorneys’ fees. The most common type of guarantee is a judicial deposit or a letter of credit issued by a first-line bank headquartered in Brazil. Protection and indemnity insurance (P&I) club letters of undertaking are not recognised by Brazilian law but may be accepted by the judge if they are accepted by the opposing party. 5.10 Procedure for the Judicial Sale of Arrested Ships The judicial sale of vessels in Brazil follows the same general rules of asset bidding. The auctions are con - ducted by the public auctioneer in the course of a
judicial proceeding, who will adopt all necessary for - malities to conduct the auction and sell the vessel under a commission. An evaluation of the asset will be made by the court, and the public auctioneer will publish a Public Call announcing the auction for any interested party, which will contain a description of the object to be sold, the minimum price for the bid, the conditions of payment and the place where the auction will take place, among other details. The Public Call must be published at least five days prior to the auction date. As a rule, the Public Call must be made available on a web page to be determined by the judge. However, the judge may also determine that the Public Call be affixed in a local customary place and published in a newspaper of wide circulation. The types of bonds required are as follows: • to act ex officio – the Brazilian legal system does not oblige a bond constitution in order to sell a vessel extrajudicially; • for vessel arrest – a guarantee may be required by the judge from claimants requesting an arrest to compensate eventual losses sustained by the ves - sel’s interest in the case of a wrongful arrest, while the Civil Procedural Code also establishes that a guarantee must be presented by foreign claimants with no assets in Brazil in order to ensure payment of legal court costs and attorneys’ fees; • to lift arrest – the Brazilian legal system does not provide a specific list of bonds to be presented; usually, the bond would be a judicial deposit in cash or a letter of credit by a first-line bank, while P&I club letters of undertaking may be accepted, mainly depending on whether the other party accepts them; and • for judicial sales – if the vessel holds a maritime lien, the Commercial Code establishes that an amount sufficient to guarantee the payment of maritime lien creditors must remain deposited until it is time-barred or until it is shown that it was paid, unless a guarantee is presented. Furthermore, regarding the position of the mortgage in relation to other maritime claims, it should be not - ed that, based on the application of the Commercial
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