Choice of Forum in Brazil: Recent Changes May Render Clauses Void

On 5 June 2024, the Brazilian Code of Civil Procedure (“BCCP”) was amended to narrow the parties’ ability to choose the forum for resolving disputes. The change affects forum selection clauses in domestic contracts and may also affect certain international contracts.

In practical terms, the amendment introduces a stronger connection requirement between the chosen forum and the parties or the underlying obligation. As a result, forum selection clauses that previously would often have been upheld may now face a greater risk of challenge.

Background

The former Brazilian Code of Civil Procedure did not contain detailed provisions on forum selection, other than in relation to clauses contained in standard-form contracts (contracts of adhesion). It provided that the court could disregard the parties’ choice and transfer the matter to the court of the defendant’s domicile.

The BCCP came into force in 2016 and fully replaced the former Code. It introduced a specific provision dealing with forum selection by the parties:

“Article 63. The parties may modify jurisdiction by reason of value and territory, electing a forum in which an action arising from rights and obligations will be filed.

Paragraph 1^st – The choice of forum only takes effect when it is contained in a written document and expressly refers to a particular legal transaction.

Paragraph 2^nd – The chosen forum binds the parties’ heirs and successors.

Paragraph 3^rd – Before service, a choice of forum clause may, if abusive, be deemed ineffective ex officio by the judge, who will order the transfer of the matter to the court of the defendant’s domicile.

Paragraph 4^th – Once service has occurred, it is for the defendant to allege the abusiveness of the choice of forum clause in the defence, failing which the objection will be precluded”.

In practical terms, the enforceability of a forum selection clause depended on whether: (a) the choice was recorded in writing in the contract or in a document referring to it; and (b) the clause was not abusive. If those requirements were met, the parties’ choice would generally be upheld.

The parties’ freedom of choice was not unlimited, however, given restrictions found in specific legislation, such as the Consumer Protection Code. More broadly, and subject to those constraints, the Economic Freedom Law reinforced the principle that contractual allocation of risk and procedure should generally be respected.

The 2024 Amendments

The 2024 amendments replaced the wording of paragraph 1^st of article 63 with the following:

“Paragraph 1^st – The choice of forum only takes effect when it is contained in a written document, expressly refers to a particular legal transaction and is relevant to the domicile or residence of one of the parties or to the place of the obligation, except in consumer agreements, where the clause is favourable to the consumer” (emphasis added).

The explanatory memorandum (justificativa) to the bill stated that the choice of forum should not be “random and abusive”, as that would conflict with the principle of objective good faith. It also emphasised that the parties’ choice must be exercised in a manner consistent with procedural loyalty. The explanatory memorandum did not specifically address international contracts.

Before the 2024 amendments, consumers already had the right to bring proceedings in their own domicile, regardless of any contractual provision to the contrary. The new relevance requirement nevertheless changed the position materially by adding a third element to the test of enforceability.

In addition, a new paragraph (paragraph 5^th) was inserted into article 63, defining what constitutes an abusive forum choice and confirming that the court may decline jurisdiction ex officio:

“Paragraph 5^th – The filing of a lawsuit in a court lacking any connection with the domicile or residence of the parties or with the legal transaction in dispute constitutes an abusive practice that justifies the ex officio declination of jurisdiction”.

The new provisions therefore confine party choice to forums with a specific connection to the parties or the contract, namely:

• the domicile or residence of one of the parties; and
• the place where the obligation is to be performed.

How do the 2024 amendments affect choice of forum in international contracts?

Where a contract is international (that is, it has material international connections or at least one party is based outside Brazil), article 25 of the BCCP excludes the jurisdiction of Brazilian courts where the parties have chosen an exclusive foreign forum. The BCCP expressly exempts from that rule the following matters:

• consumer disputes where the consumer is domiciled or resident in Brazil;
• alimony disputes where the creditor is domiciled or resident in Brazil or where the defendant has relevant connections with Brazil, such as assets, income or economic benefits located there;
• disputes involving real estate located in Brazil;
• succession disputes involving assets located in Brazil; and
• disputes relating to the distribution of assets in divorce, separation and de facto relationships.

In addition to those exclusions, paragraph 2^nd of article 25 states that only paragraphs 1^st to 4^th of article 63 apply to the parties’ choice. Because paragraph 5^th is not mentioned, the better view is that a Brazilian court should not decline jurisdiction ex officio in this context. That interpretation is consistent with the opening words of article 25, which require the defendant to raise the jurisdiction point in the defence, failing which preclusion applies.

A more difficult issue arises where the parties to an international contract choose a forum that has no meaningful connection to the dispute. This is not uncommon in cross-border agreements, particularly where New York, London or Switzerland is chosen for neutrality or commercial convenience. It remains to be seen whether Brazilian courts will draw on the concept of “abusive practice” in paragraph 5^th when assessing such clauses, even though that paragraph is not expressly incorporated by article 25, paragraph 2^nd.

In my view, the principal risk of a Brazilian court disregarding the parties’ choice is likely to arise where a Brazilian party has materially weaker bargaining power or insufficient resources to protect its interests in the chosen foreign forum. In that situation, a court may be more willing to rely on general principles and on the logic underlying paragraph 5^th of article 63 to invalidate the choice of forum clause.

It should also be noted that a non-exclusive jurisdiction clause is not necessarily a complete solution. Where the chosen forum is non-exclusive, disputes may proceed in parallel proceedings, that is, concurrently before a foreign court and a Brazilian court, because Brazil does not generally adopt the forum non conveniens doctrine. In those circumstances, timing may become strategically important: if the foreign judgment is recognised in Brazil before the Brazilian proceedings reach a final and unappealable conclusion, the recognised foreign judgment may produce res judicata effects in Brazil and bring the domestic proceedings to an end.

What about arbitration clauses?

At least on the face of the legislation, parties appear to have greater latitude when choosing arbitration. Unlike the BCCP, Brazil’s Arbitration Law does not expressly restrict the parties’ freedom to choose a foreign arbitrator, seat or arbitration institution.

That distinction, however, may prove significant only in a limited range of cases. Brazilian courts may refuse recognition or enforcement of arbitral awards under article V of the New York Convention, where applicable, and under articles 38 and 39 of the Arbitration Law, which broadly reflect article V.

An arbitration clause, or a choice of seat or venue, that lacks a meaningful connection with the transaction and was agreed in circumstances involving a weaker Brazilian party may therefore be vulnerable to challenge, with consequent risks to the recognition of the award in Brazil.

Time Required for Recognition of Foreign Judgments and Arbitral Awards

Another practical issue is the time typically required to recognise and enforce a foreign judgment or arbitral award in Brazil. The process can be lengthy.

In addition to timing, parties should consider whether it is strategically sound to create an additional opportunity for the judgment debtor, or the equivalent respondent in arbitration, to raise grounds for refusing recognition before the Brazilian courts.

In practice, the recognition and enforcement process may be time-consuming and costly. In some cases, that additional layer can be avoided by choosing the relevant Brazilian courts as the forum or, in the arbitration context, by choosing an appropriate seat and venue in Brazil for the resolution of the dispute.

Final Remarks

Parties should therefore take care when selecting the forum, or the arbitral seat and venue, for dispute resolution, particularly where one of the contracting parties is Brazilian. In addition to the considerations outlined above, relevant factors include:

• which party is more likely to be in breach of the contract;
• where the assets of each party are likely to be located, particularly because judgments and arbitral awards may need to be enforced in more than one jurisdiction;
• which party has greater financial resources, as international litigation and arbitration can be costly;
• the jurisdictions in which the evidence relating to the dispute is likely to be located (for example, whether the parties should opt for the IBA Rules on the Taking of Evidence in International Arbitration), together with the parties’ legal traditions and document retention obligations;
• the likely predictability of outcome if the dispute is litigated in Brazil, abroad or before an arbitral tribunal;
• whether the risk of a Brazilian court refusing recognition of a foreign decision is justified by the perceived advantages of a “home court” forum; and
• the overall cost of conducting the litigation or arbitration and enforcing the resulting decision.

As with contracts more generally, a well-drafted dispute resolution clause reduces the risk that a court will disregard or invalidate the parties’ chosen forum.

arbitration Brazil Choice of forum Choice of law Contracts Forum non conveniens Forum selection IBA Rules of Evidence International contracts Recognition of Foreign Judgment

Last modified: 4 April 2026