Yes. There are two main provisions that could impact commercial contracts and their performance in case of war:
- State of Defence and State of Siege measures.
- Sanctions (including commercial and economic) imposed against a country, legal entities and individuals.
The Brazilian Federal Constitution (“CF”) has specific provisions referring to the State of Defence and State of Siege (Articles 136 to 139).
The President may, after consultation with the Council of the Republic and the National Defence Council, decree a State of Defence to preserve or quickly re-establish public order and peace in certain areas, in response to serious and imminent institutional instability or major natural calamities.
The President may request authorisation from the National Congress to decree a State of Siege, after consulting the Council of the Republic and the National Defence Council, in the event of: (i) serious disturbance with nationwide effects or evidence of the ineffectiveness of measures taken during the State of Defence; and (ii) declaration of war or response to foreign armed aggression. The decree of the State of Siege shall specify the period of its duration, the rules required to implement it and the constitutional guarantees that are to be suspended. After its publication, the president shall assign the person/authority responsible to enforce the specific measures.
As Brazil is a member of the United Nations (“UN”) and has ratified the UN Charter into the Brazilian legal system [Federal Decree No. 19,841/1945], UN Security Council Resolutions are promptly enforceable in Brazil, including economic sanctions preventing or restricting trade with certain countries (and certain legal entities and individuals).
Federal Law No. 13,810/2019, regulated by Federal Decree No. 9,825/2019, requires compliance with UN Sanctioning Resolutions, including provisions related to the freezing of assets, the national designations of individuals under investigation or charged on terrorism allegations, financing of terrorism or related acts. Violation of those rules and measures under the State of Siege could lead to administrative penalties imposed by the competent authority and even criminal prosecution.
In periods of recognised abnormality, temporary and exceptional laws can be enacted to deal with the consequences of such abnormal circumstances. In that case, enforceability of such laws is limited to the duration of the event itself (e.g. war). Therefore, sanctions and/or government decisions (factum principis) may impact or prevent the performance of commercial contracts.
Brazilian law has no specific legislation addressing the legal consequences of war or sanctions on commercial contracts. There are, however, statutory provisions regarding ‘force majeure’ (força maior) and ‘act of God’ (caso fortuito), which are applicable to commercial contracts subject to Brazilian law.
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