The National Agency for Waterway Transportation (ANTAQ) recently published Resolution 1.864, which governs the charter of vessels for inland navigation (ie, navigation carried out in inland waterways in domestic or international routes). The new rule establishes the procedures and criteria for a Brazilian shipping company to charter vessels for inland navigation for passenger or cargo transportation, or both.

Inland navigation in domestic routes may be made only by Brazilian flag vessels and foreign flag vessels that are chartered by a Brazilian shipping company, provided that the requirements set forth in the rule are met.

The process of chartering a foreign flag vessel for inland navigation is similar to that for chartering a foreign vessel for cabotage, which is achieved through a circularisation procedure. This procedure begins with a Brazilian shipping company consulting with other Brazilian shipping companies that are authorised to carry out inland navigation about the availability of Brazilian flag vessels for cargo or passenger transportation, or both, with the aim of obtaining ANTAQ's authorisation to charter a foreign vessel for such purpose.

Among other procedures set out in this rule, Article 24 provides for the mandatory registration of the charter contract with the competent registry of notaries.

Even though little was questioned about the new rule during the public hearing phase, it throws up a number of controversial issues.

First, the rule mandates the use of a foreign vessel for inland navigation in international routes. However, Law 9432 establishes in Article 6 that:

"the operation or exploration of inland navigation in international routes is open to shipping companies and vessels from any country, exclusively as per agreements entered with the Brazilian government, meeting the reciprocity principle."

Second, the registration of charter contracts derives from a provision established in Article 568 of the 1850 Commercial Code, which refers to transportation by sea, not river. This practice is no longer adopted by any of the industry's agents. Such a registration requirement would seem to interfere with existing commercial practices.

For further information on this topic please contact Godofredo Mendes Vianna at Law Offices Carl Kincaid by telephone (+55 21 2223 4212), fax (+55 21 2253 4259) or email ([email protected]).