Some issues about Agencies and Distributorships in Brazil, Australia and New Zealand Fabiano Deffenti Attorney at Law (New York) Legal Practitioner (Australia) Barrister and Solicitor (New Zealand) Advogado (OAB/RS)

Brazil – Background Civil law system  No stare decisis and very different civil procedure, administrative law, and tax rules  Practically no discovery/disclosure, little weight to oral evidence, not everyone is a witness  Lots of trips to the notary  Exceedingly bureaucratic tax system  Legislation is vague and poorly drafted

Brazil – Background Civil law system (2)  Academics’ (jurists) opinions carry a lot of weight  Court cases take years and years – lots of appeals, though it is changing

Brazil – Agencies, distributorships or agencies and distributorships? New Civil Code of 2002  Book 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 Law  Representatives 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-sale  Tax issues may want you to reconsider this  Distributor is not exclusive  Distributor 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 tough  Corporate veil not respected  Strict liability standard Customs are not trade-friendly  Slow and bureaucratic  Tough fines apply on slightest mistakes

Brazil – Things to watch out for Technology transfers  Contracts must be registered with INPI or else there will be problems with royalties not being paid Trademark protection  First to file system applies  Different application for each class  Taking 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 forum  Arbitration 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 constitution  Not a schedule like the Canadian Court system is very efficient  Discovery/disclosure is stricter than in the U.S.  Legal costs are awarded to the winner  Foreign parties must give “security for costs”  Champerty and maintenance prevent lawyers from charging on a percentage of proceeds’ basis

Australia Arbitration  Infamous 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 forum  Flexible, 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 conduct  Section 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 Trademarks  First to file system  Section 129 of the Trade Marks Act 1995 (Cth): careful when sending cease and desist letters No tort of unfair competition

New Zealand A single jurisdiction  Opted 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 Deffenti Telefone: (51) Celular: (51) Skype name: Deffenti