BRAZIL Trends and Developments Contributed by: Marcelo Lucidi, Henrique Forssell, Octaviano Duarte and André Marcassa, Duarte Forssell Advogados
However, the Paraná State Court overturned the recognition order issued by the bankruptcy court, on the grounds that, due to the particulari - ties of the case, the Brazilian subsidiary should have been heard in advance of the order. Coun - sel to the British Virgin Islands liquidator argued that the Brazilian legislation does not require prior intervention from related parties prior to the granting of a recognition order. The matter was appealed to the Superior Court of Justice, which is expected to settle the argument. What alternatives to recognition are there? Although recognition increasingly appears to be a viable choice, foreign creditors and liquidators also have access to the Brazilian jurisdiction by a number of alternative methods, such as the following. Enforcement of foreign judgments Foreign creditors can enforce their judgments obtained outside Brazil through the Brazilian judicial system. The process typically involves filing a petition for recognition of the foreign order with the Superior Court of Justice. Under the standards adopted by Brazilian Internation - al Law, in the absence of a specific treaty the recognition and enforcement of a foreign inter - locutory decision (such as a freezing injunction) is based on the principle of reciprocity, which states that favours, benefits or penalties that are granted by one state to the citizens or legal entities of another should be returned in kind. After recognition, the creditor is entitled to file an enforcement proceeding with the Brazilian courts. Filing enforcement proceedings directly in Brazil The legal framework in Brazil provides mecha - nisms to facilitate cross-border enforcement and ensures that foreign creditors have avenues to
pursue their claims effectively. Enforcement in Brazil typically involves obtaining attachment orders issued by Brazilian courts. These orders are commonly sought in enforcement proceed - ings and can be obtained against a debtor’s free assets. However, attachment orders against third parties are only granted in specific cases, such as when fraud occurs or when the legal requirements of the disregard doctrine (piercing of the corporate veil) are met. Obtaining recognition of freezing orders Historically, the Brazilian courts did not grant “exequatur” to letters rogatory involving “meas- ures of compulsion” , which would include freez - ing injunctions. However, since 2015 the Code of Civil Procedure expressly states that “the enforcement… of a foreign interlocutory deci - sion granting urgent measures shall be made by means of a letter rogatory” . The Code of Civil Procedure further provides that “[t]he judgment regarding the urgency of the relief falls exclu - sively to the judicial authority that rendered the foreign decision” . In fact, the Superior Court of Justice has recently recognised a worldwide freezing order originating from a British Virgin Islands court in a civil matter. Obtaining disclosure of information from third parties The same standards for a Brazilian party to obtain disclosure apply to a foreign party. In the Brazilian legal system, parties have an inde - pendent right to obtain evidence regardless of a previous legal proceeding. Such right can be ini - tiated through a standalone proceeding known as the Early Production of Evidence (Article 381 of the Civil Procedure Code). The breach of fiscal (tax) and banking secrecy of a debtor is a legal measure that can be applied under certain cir - cumstances, typically in the context of legal pro - ceedings involving debt collection, enforcement
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