Some issues about Agencies and Distributorships in Brazil, Australia and New Zealand

Fabiano DeffentiAttorney at Law (New York)Legal Practitioner (Australia)Barrister and Solicitor (New Zealand)Advogado (OAB/RS)

Brazil – Background

•Civil law systemNo stare decisis and very different

civil procedure, administrative law, and tax rulesPractically no discovery/disclosure, little weight to oral evidence, not everyone is a witness

Lots of trips to the notaryExceedingly bureaucratic tax systemLegislation is vague and poorly drafted

Brazil – Background

•Civil law system (2)Academics’ (jurists) opinions

carry a lot of weightCourt cases take years and years

– lots of appeals, though it is changing

Brazil – Agencies, distributorships or agencies and distributorships?

•New Civil Code of 2002Book I: “Obligations in General”

Title V: “Contracts in General”Title VI: “The Various Types of Contract”•Chapter XII: “Agency and Distributorships”

Very poorly drafted – created a problem where there wasn’t one

Brazil – Agencies, distributorships or agencies and distributorships?

•New Civil Code of 2002 (2)View one – three different relationships:

Agency (Civil Code + Representatives Law)Distribution (Civil Code)Agency and distribution (Civil Code)

View two – two different relationships:Agency (Civil Code + Representatives Law)Distribution (Civil Code)

Brazil – Agencies, distributorships or agencies and distributorships?

•New Civil Code of 2002 (3)Courts and jurists agree that

“agency” relationships are governed by the Representatives LawRepresentatives Law offers protections similar to those in EU’s Commercial Agents Directive

Be very careful when drafting the agreements as parties cannot contract out of the applicable provisions!

Brazil – Agencies, distributorships or agencies and distributorships?

•Better view is that distributorships will exist where:Brazilian party acquires the goods

for re-saleTax issues may want you to reconsider this

Distributor is not exclusiveDistributor trades under a different

name

Brazil – Things to watch out for

• Very tough Labor Laws may apply depending on the level of control

• Consumer Defense Code is very toughCorporate veil not respectedStrict liability standard

• Customs are not trade-friendlySlow and bureaucraticTough fines apply on slightest

mistakes

Brazil – Things to watch out for

• Technology transfersContracts must be registered with

INPI or else there will be problems with royalties not being paid

• Trademark protectionFirst to file system appliesDifferent application for each classTaking at least 5 years to get

registrated

Brazil – Things to watch out for

• Domain name registration“.br” domain names must be

registered by Brazilian-registered companies or Brazilian residents

• Arbitration, choice of law and choice of forumArbitration is the surest way of getting

around the Brazilian legal system and actually choosing to have the matter litigated abroad

Australia

• Very similar to the UK system, but with a federal written constitutionNot a schedule like the Canadian

• Court system is very efficientDiscovery/disclosure is stricter than in the

U.S.Legal costs are awarded to the winnerForeign parties must give “security for

costs”Champerty and maintenance prevent

lawyers from charging on a percentage of proceeds’ basis

Australia

• ArbitrationInfamous Esso Australia Resources

Ltd v. Plowman decision: arbitrations are presumed to be public, unless the parties agree otherwise

Foreign arbitration awards from N.Y. Convention members can be enforced without the need for recognition directly at the local/county court level

Australia

• Choice of law and forumFlexible, but with some restrictions

See Akai Pty Ltd v. People’s Insurance Co Ltd and Golden Acres Ltd v. Queensland Estates Pty Ltd

• But see the English decision in Akai Pty Ltd v. People’s Insurance Co Ltd

Section 67 of the Trade Practices Act 1974

Australia

• Misleading and deceptive conductSection 52 of the Trade Practices Act

1974“(1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of subsection (1).”

Australia

• Other deeming provisions (merchantability, fitness for purpose, etc) where goods under A$40,000

• TrademarksFirst to file systemSection 129 of the Trade Marks Act

1995 (Cth): careful when sending cease and desist letters

• No tort of unfair competition

New Zealand

• A single jurisdictionOpted out of being a part of the Australian

Commonwealth

• Protections similar to Australia under the Fair Trading Act 1986 and Consumer Guarantees Act 1993

• Trademarks: same problems as Australia with cease and desist letters

• Arbitration and choice of law: UNCITRAL model and confidentiality presumed

Fabiano Deffentifdeffenti@cmted.com.br

Telefone: (51) 3022-5550Celular: (51) 8111-5550Skype name: Deffenti