A Dutch salvage company filed a lawsuit against the owners of recovered cargo from the Liberian ship Nedlloyd Recife, which sank in Brazilian territorial waters. It aimed to prevent the owners from taking their goods from the port prior to effecting payment of the premium to which the salvors were entitled, by virtue of the salvage agreed with the vessel's master. On such occasions the vessel's master represents the interests of the representative of the owners, shipowners, containers and the transported cargo.
At the start of the lawsuit, the Santa Catarina State Court of Appeals dismissed the salvage company's case. It argued that in the contract entered into, the London arbitration court had been elected to determine the remuneration. In order for the case to be brought before the court of appeals, the chosen jurisdiction of a vessel's salvage contract may be a foreign court only where Brazilian vessels are not present in the contractual relation and the salvage does not occur in Brazilian waters.
The company appealed to the Superior Court of Justice, alleging that the appeal decision violated Article 88 of the Civil Procedural Code and mistakenly applied Article 7 of Law 7.203/84 by not observing the fact that such provision sets forth rules of exclusive competence of the Brazilian courts.
It was alleged that all of the requirements necessary for the application of Article 88 of the Civil Procedural Code had been met, as:
- the majority of the consignee companies were Brazilian or had representatives in Brazil;
- the obligation should be complied with in Brazilian territory; and
- the provisional measure originated in a fact that had occurred in Brazil.
The company further argued that under Article 7 of Law 7.203/84, the case fell under the exclusive competence of the Brazilian courts; such legal provision does not disregard the concurrent competence set forth in Article 88 of the Civil Procedural Code. Finally, the company emphasised that it would not be possible to claim protection against the release of the containers from the Brazilian port before the London Arbitration Court, as the claim resulted from emerging relations between the salvage company and Brazilian third parties which were not participants in the contract.
The Superior Court of Justice held that the London arbitration court had been elected for fixing the remuneration. However, the chosen and agreed jurisdiction was irrelevant to the controversy in question, considering that the remuneration for the salvage was not under discussion, but rather the possibility of preventing withdrawal of the recovered cargo, which serves as a guarantee to society in the event of lack of payment of the remuneration. Furthermore, the exclusion of the contractually chosen jurisdiction was not sought, but only the acknowledgment of the concurrent competence of the Brazilian court.
However, in relation to Law 7.203/84, the Superior Court of Justice understood that no factual support was necessary, and therefore in light of this legal precept, the Brazilian court was not exclusively competent. Therefore, if a vessel is not a Brazilian vessel and the salvage does not occur in Brazilian territory, it is not that the Brazilian court is not competent, but rather that its competence is not exclusive - for example, in the above case, athough the salvage occurred in Brazilian territorial waters, the vessel was of Liberian nationality.
For further information on this topic please contact Godofredo Mendes Vianna at Law Offices Carl Kincaid by telephone (+55 21 2276 6200), fax (+55 21 2253 4259) or email ([email protected]).