BRAZIL Law and Practice Contributed by: Godofredo Mendes Vianna, Camila Mendes Vianna Cardoso and Lucas Leite Marques, Kincaid | Mendes Vianna Advogados
Protection and indemnity insurance (P&I) club letters of undertaking are not recognised by Bra - zilian law but may be accepted by the judge if they are accepted by the opposing party. 4.10 Procedure for the Judicial Sale of Arrested Ships The judicial sale of vessels in Brazil follows the same general rules of asset bidding. The auc - tions are conducted by the public auctioneer in the course of a judicial proceeding, who will adopt all necessary formalities 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 inter - ested 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. How - ever, the judge may also determine that the Pub - lic 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 request - ing an arrest to compensate eventual losses sustained by the vessel’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 pre - sented; 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 undertak - ing may be accepted, mainly depending on whether the other party accepts them; and • for judicial sales – if the vessel holds a maritime lien, the Brazilian Commercial Code establishes that an amount sufficient to guar - antee 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 noted that, based on the applica - tion of the Brazilian Commercial Code and the Brussels Convention, the priority of each credit is as follows: • federal taxes; • legal costs and expenses; • claims resulting from the employment of the Master, crew and ship personnel; • indemnities due for salvage; • general average contributions; • obligations undertaken by the Master outside the port of registry for actual maintenance needs or continuation of the voyage; • indemnities due as a result of collisions or any other maritime accident; • ship mortgages; • port dues, other than taxes; • outstanding payments due for depositar - ies, storage and warehouse rentals and ship equipment;
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