Signed, sealed, enforced: The treaty that binds Italian and Brazilian judgments
Giovanni Catanzaro (Author)
GC Law Firm, Venice
info@gc-law-firm.com
Luciana Fernandez (Co-author)
LTC International Business Solution, Sao Paulo
braziloffices@ltcgroup.com.br
Gaia Cosacurta (Co-author)
GC Law Firm, Venice
gcostacurta@gc-law-firm.com
General framework of the bilateral agreement of 1989 between Italy and Brazil
The Treaty on Judicial Assistance, Recognition, and Enforcement of Judgments in Civil Matters between the Italian Republic and the Federative Republic of Brazil (hereinafter also referred to as ‘the Treaty’) was signed on 17 October 1989, in Rome. It was ratified by Italy through Provision No 336 on 18 August 1993 and entered into force on 1 June 1995.
The Treaty is part of the broader and intensified judicial cooperation initiated between the two countries in the 1980s, which also includes the Extradition Treaty. Both agreements were signed in Rome on 17 October 1989.1
Although the Treaty title refers to civil matters, its scope includes commercial, family, and labour law, aiming to ensure the recognition and enforceability of judicial decisions across jurisdictions. It also addresses procedural aspects such as competent authorities, document transmission, and language requirements, reflecting its comprehensive and multi-faceted nature.
Conditions for the recognition and enforcement of judgments: The Brazilian perspective
The recognition of foreign judgments in Brazil is a process strictly regulated by private international law and managed by the Superior Tribunal de Justiça (STJ).2 The process aims to balance national sovereignty with international legal cooperation, but recognition can be denied for a series of specific reasons, considered by the STJ in a formal review that does not re-examine the merits of the original decision.
The refusal of recognition primarily occurs when the foreign judgment is in conflict with the fundamental principles of the Brazilian legal system, or with essential procedural norms.
A judgment is rejected if it concerns matters under the exclusive jurisdiction of Brazil,3 such as property rights over real estate located in Brazil and family law matters involving Brazilian citizens or residents. Furthermore, it is precluded in cases of pending litigation (litis pendência) or when the foreign judgment is not final and binding (res judicata), or in case of conflict with public policy (ordem pública) or internal Brazilian legal principles (Article 17 of the LINDB).
The foreign judgment must be final and binding according to the law of the country of origin, and the definitiveness must be documented.
Jurisdictional conflicts and limits of recognition: The Italian Supreme Court’s stance
One of the main applications of the 1989 Italy-Brazil Treaty emerged in a jurisdictional conflict that also involved breaches of the Brussels I bis of 19684 and the Italian Law no.218/1995.5
The leading case began in the Court of Appeal of Ancona and culminated with the United Sections of the Court of Cassation, judgment No. 19571 of 10 July 2023.
The case involved the termination of a commercial contract between an Italian company defendant and a Brazilian company claimant. On 14 September 2009, the São Paulo court issued a judgment in the Brazilian claimant’s favour. There then arose a recognition, enforcement and jurisdictional issue stemming from proceedings that began in Italy in 2018 seeking to enforce that judgment. In those proceedings, the Court of Appeal in Ancona (Judgment No. 3098/2018) recognised and declared effective in Italy the São Paulo judgment. This recognition violated a contractual jurisdiction clause that specified disputes should be heard in Italy.
The Italian company filed an appeal in Ancona, to request a precautionary suspension of enforcement of the Brazilian judgment, pending a ruling on the merits, arguing that the São Paulo ruling did not apply in Italy because that judgment found that the São Paulo court had jurisdiction over the place where the obligation must be fulfilled, thereby violating Article 21 of Law No. 336/93. At the same time, the same Italian company filed an appeal before the Court of Milan, requesting a declaration that the São Paulo ruling was unenforceable in Italy because it was issued in violation of Article 25 of Regulation (EU) No. 1215/2012, which provides for the parties' freedom to choose the competent court to hear the dispute.6 Despite the proceedings pending in Milan, the Court of Ancona recognised the Brazilian ruling, prompting the Italian company to appeal to the Supreme Court.
The Italian company’s arguments primarily focused on the issue of lis pendens (the principle that prevents multiple courts from hearing the same case) and the breach of the jurisdiction clause. In contrast, the reasons supporting the decisions made by the Court of Appeal in Ancona, which favoured recognizing the judgment from the São Paulo court, were based on Article 67 of Law No. 218/1995, which gives Italian appellate courts the authority to decide on the conditions for recognising foreign judgments. Therefore, the Court of Appeal in Ancona was considered the appropriate venue to decide on the recognition of the foreign judgment, as it was the court where the judgment would be enforced. The reasons given by both parties had jurisprudential and doctrinal value, which highlighted a discrepancy in respect of the jurisdiction of the Italian Court ex art. 374 co.1 c.p.c.
The proceedings were accepted by the Court of Cassation, which recognised the need to refer the case to the United Sections (SS. UU).7 The Court ruled that, according to Article 18(a) of the 1989 Italo-Brazilian Treaty, a decision can only be recognised by one state in the other if the judicial authority that issued the judgment had jurisdiction. The ruling specifies that pursuant to Article 3, paragraph 2, of Law No. 218/1995, when the matter falls within the scope of the Brussels Convention of 27 September 1968, Italian jurisdiction is determined according to the stability criteria set out in Regulation (EU) No. 1215/2012.8 Accordingly, Article 25 of the Brussels I bis Regulation applies. The United Sections held that, under the forum selection clause in the contract, jurisdiction lays exclusively with the Italian courts. The Court held that, pursuant to Article 18(a), of the 1989 Italo-Brazilian Treaty, decisions may be recognised by one State in the other, only where the judicial authority that issued the judgment to be enforced, had jurisdiction.
The Supreme Court therefore annulled the Ancona decision with the sentence no.19571/2023 and upheld the appeal of the Italian company, reaffirming the primacy of party autonomy and the exclusivity of national jurisdiction when so agreed under both international treaties and EU law.9
Conclusions: The primacy of party autonomy and exclusive jurisdiction
According to the Historical Judgment no.19571/2023 of the SS. UU:
- Art. 21, Law No. 336/93: concerns the incorrect attribution of jurisdiction to a foreign judge based on the criterion of the place where the obligation must be performed.
- Art. 3 (paragraph 2), Law No. 218/1995: establishes that Italian jurisdiction is determined according to the criteria of Regulation (EU) No. 1215/2012, which identifies the competent court in cases with cross-border elements.
- The jurisdiction clause chosen by the parties in the contract prevails, the other criteria provided by the cited laws have only a supplementary role, applicable when no choice of court has been made.
1 Different treaties were signed in the same year between Italy and other countries, for example the Taxation Agreement with China (Law No. 376/1989), and the Mutual Investment Protection Agreement with Poland (signed on 21 June 1989).
2 Article 17 of the Law of Introduction to Brazilian Law (LINDB)
3 Ex art. 23 of the procedural civil code (CPC).
4 The Brussels I bis, set uniform rules on jurisdiction and on the recognition and enforcement of civil and commercial judgments in Europe.
5 Law No. 218/1995 establishes the criteria for identifying the applicable law and regulates the effectiveness of foreign judgments and acts.
6 The violation in these matters concerned not only the Italy-Brazil treaty of 1989 in Article 18(a) and Article 21 of Law no.336/93, but also Article 25 of the regulation (UE) no.1512/2012 that ensures party autonomy in choosing the competent court, but only under strict formal conditions.
In the Italian legal system, the United Sections (SS. UU) constitute the most authoritative division of the Supreme Court of Cassation. In civil proceedings, the United Sections' ruling is provided for by Article 374 of the Code of Civil Procedure (pronunciation by United Sections), which expressly provides for its possibility in the cases indicated in Articles 360 and 362 of the Code of Civil Procedure.
7 When conflicts between the decisions of individual sections need to be resolved, or when the issues raised are of particular importance (for example, because the matter is being heard for the first time), the President of the Court of Cassation, at the request of the Attorney General, the parties' counsel, or even ex officio, assigns the appeal to the United Sections.
8 Furthermore, the individual section may refer the appeal to the United Sections if it finds that the question of law submitted to it has given rise to, or may give rise to, a conflict of law.
9 As previously seen in the judgment of the Court of Justice of 2020 in the Supreme Site Service GmbH-Supreme Headquarters allied powers Europe C-186/19.
10 As seen in the judgment of the United Section Court of Cassation no.32362 of 2018.