Law amends agreement’s laying of venue rules

In June, Law No. 14.879 (“Law”, available here) came into force, amending Article 64 of the Brazilian Code of Civil Procedure (“Código de Processo Civil” or “CPC”) regarding choice of jurisdiction by contracting parties.

Previously, the parties could freely agree on the jurisdiction to ~dispute resolution arising from the agreement, as long as such jurisdiction election: a) was expressly agreed, in writing, in the agreement; and b) expressly referred to a specific legal transaction.

The new Law introduced more rules in addition to the ones previously provided. Now, the jurisdiction election clause has a legal effect if, in addition to items “a” and “b” above, it is relevant to the domicile or residence of one of the parties or to the obligation’s place. The rule only has one exception, in consumer agreements, when the jurisdiction of dispute resolution must be favorable to the consumer.

Therefore, the parties will no longer be able to agree on what has become known as a “neutral jurisdiction” or even choose the one most favorable to their claim – it will always be necessary for the jurisdiction to be relevant to the parties, otherwise, it will not produce legal effects.

Furthermore, the Law also inserted paragraph 5 into Article 63, providing that the filing of a lawsuit in a random court, that is, one with no connection to the domicile/residence of the parties or to the legal business discussed in the lawsuit, will be considered an abusive practice that justifies the declination of jurisdiction ex officio. It is clear, therefore, that random choices of jurisdiction by contracting parties  will no longer be accepted in Brazilian law.