Many international companies and service providers are gearing up to establish themselves in Brazil in response to a slate of new opportunities in the country.
Brazil will host the 2014 Soccer World Cup in 12 different cities, and Rio de Janeiro was chosen as the seat for the 2016 Olympic Games. Furthermore, giant reserves of high-quality light oil were recently found in the pre-salt of the Brazilian coast. The opportunities presented by these developments will require major investments in national infrastructure, and the investment programmes of the federal government for the next few years total US$30 billion in logistics, US$140 billion in electrical energy, oil, natural gas and renewable fuels, and US$70 billion in sanitation, urban and rural electrification, housing and transportation. Three hydroelectric plants, one nuclear plant, a giant refinery and several ports are under construction, and more are at the planning stage. The invitation for bids for the US$17 billion fast train project between Rio de Janeiro and São Paulo will be opened at the beginning of next year. In October, the world’s biggest IPO of the year took place when Santander Bank of Brazil raised almost US$8 billion at the São Paulo Stock Exchange.
All this comes after several years of economic growth. Brazil suffered few consequences from the world subprime crisis, and its firms, financial institutions and insurance companies are solid and active. And this year, in line with the other international rating agencies, Moody’s finally brought Brazil’s rating to the investment-grade level, opening a definitive gate for big international funds to invest here.
But potential investors in Brazil should still be cautious. Brazil is not a country for beginners, and may be hard to understand. We have a complex fiscal system, with taxes of all kinds, including those on labour relationships. State bureaucracy is heavy, and the legal system is codified, contractual freedom being restricted. Consumer protection laws are very strict, and the local courts are slow. Relationships with the government are rarely simple, and the rules of competition are still at an initial stage.
In view of all the above, good local partnerships are mandatory, and there is a large field for business and for national and international lawyers. The presence of foreign law offices in Brazil is relatively recent, and their activity is ruled by the Provision number 91 of 13 May 2000 issued by the Federal Bar Association, according to which foreign attorneys will only be allowed to practise in Brazil upon authorisation by the Brazilian Bar Association (BBA). The grant of this authorisation will be revocable, enabling the professional in question to exclusively act as a consultant on the foreign law of his country of origin. He is expressly forbidden to plead in court, to provide clients with advice or assistance in matters concerning Brazilian law, even in collaboration with local attorneys or law offices, and to receive powers of attorney, even if those powers are only to delegate.
Foreign law offices can also apply for registration at the BBA, provided that they are incorporated under Brazilian law, have a seat in Brazil, and are dedicated only to consultancy in foreign law. They must be exclusively staffed by consultants in foreign law, who must be duly authorised by the BBA.
The above restrictions are justified by the argument that, for the purpose of issuing opinions on Brazilian law, the professional must know it, such knowledge being exclusively recognised in attorneys who graduated in Brazil, or to those who graduated abroad but who obtained validation of their graduation by a local university. Therefore, BBA has been resisting applying international treaties – including those of Mercosul – for the opening of the market, as the Association understands such provisions to be unconstitutional.
Compared with other countries, Brazil also sets strict standards for attorneys’ behaviour. Brazilian attorneys may be punished for public statements in relation to proceedings where they are not involved, or even for immoderate publicity of their services. Brazilian attorneys are also prevented from supporting their clients’ judicial expenses. These rules also apply to foreign legal consultants. As we can see, Brazil offers good chances for businessmen and attorneys, but the way must be carefully built with good partnerships.