CARGO (MIS) DELIVERY IN BRAZIL
A FREIGHT FORWARDER'S PERSPECTIVE
Fabio Gentil, Maritime Lawyer
Contact: gentil@gentiladvogados.com.br
One of the most problematic issue in Brazil is cargo (mis) delivery, specially when the shipment is originated in China. It has becoming verey common to hear about claims filled in China against Freight Forwarders for wrongful dleivery of goods, but this is due to a clear misconception. Freight Forwarders have no means to hold cargo or avoid idelivery to the consignee or to any other legitimate party. In order to guarfantee payment, shippers must hold the original Bills of Lading and not provide even scanned copies to the consignee.
APPLICABLE LAW
Legislation in Brazil is very complex and vast, but you can find below, as a general reference, a list of important rules covering the subject matter:
Decree-Law n. 116/67
Official source:
http://www.planalto.gov.br/ccivil_03/decreto-lei/1965-1988/Del0116.htm)
Federal Law n. 10.406/02 - Brazilian Civil Code
Official source:
http://www.planalto.gov.br/ccivil_03/leis/2002/L10406compilada.htm)
Normative Instruction IRS/Customs Authority n. 680/06
Official source:
http://normas.receita.fazenda.gov.br/sijut2consulta/link.action?visao=anotado&idAto=15618
Normative Instruction IRS/Customs Authority n. 800/07
Official source:
http://www18.receita.fazenda.gov.br/Legislacao/ins/2007/in8002007.htm
CARGO DELIVERY IN BRAZIL | RESPONSIBLE PARTY
Cargo delivery is a duty carried out by the port terminal or the responsible warehouse (official bailees of the cargo) as defined by the Normative Instruction IRS/Customs Authority n. 680/06, Art. 54 and Art. 55.
The ocean carrier – Vessel Operating Carrier (VOCC) can hold the cargo for unpaid Freight or general average adjustment, as per Art. 7, Decree-Law n. 116/67, but this procedure cannot be confused with cargo delivery. In Brazil there is no such procedure as a “Delivery Order”.
Non-Vessel Operating Common Carriers (NVOCC) and Freight Forwarders not even have powers to hold for unpaid freight, and cannot hold the cargoes for any reason. It is a matter of legal authority and also a practical matter (NVOCC and Freight Forwarders do not have access to the necessary profile on the "Sistema Mercante" - Customs software, to execute a command to hold cargoes.
CARGO DELIVERY IN BRAZIL | DOCUMENTATION
According to Art. 54, IV, Normative Instruction n. 680/06, the bonded warehouse (or port terminal) must request original Bills of Lading or an equivalent document to deliver the goods to the consignee or to whoever the cargoes be endorsed by the original consignee.
However, it is important to stress out that due to the COVID 19 Pandemic, many port terminals and warehouses focused all customer service procedures online, and a scanned copy of the Bills of Lading would be acceptable for the purposes of proving proprietary rights related to cargo delivery. Again, it is of utmost importance to reiterate that Freight Forwarders have no means to interfere on such procedure.
For the purpose of confronting any claim that might have raised in China for alleged misdelivery of goods in Brazil, and in addition to the above clarifications about cargo delivery, it must be understood that all cargo discharged in Brazil is immediately subject to the control of the Brazilian Customs Authorities.
I bring this fact to your attention because cargo delivery is preceded by cargo release, which is a procedure carried out before Customs by the consignee, and only after clearance by Customs the cargo can be delivered by the port terminal or warehouse (bailee).
As on cargo delivery, on cargo release procedures the Freight Forwarder has absolutely no intervention or any rights to interfere. It is common shippers ask Freight Forwarders to hold the cargo at the POD, but this cannot be executed in Brazil.
With regard to information provided to Customs, both the VOCC and the NVOCC or the Freight Forwarder have legal obligations to be carried out before Customs on informing about arriving cargo. According to the Normative Instruction IRS/Customs Authority n. 800/07 (the Art. 1): “the control by Customs of arriving and departing vessels, and the movement of cargo and containers in the ports, as well as the delivery of goods by the bailee, will be done according to this Normative Instruction and will be processed through the SISCOMEX-CARGA module in the SISCOMEX program.”
Sole paragraph: “The information required for the control mentioned above will be provided to the Brazilian Internal Revenue Service (IRS) by the involved parties as defined in this Normative Instruction.”
Under such command, both the ocean carrier and the freight forwarder must present to the IRS (Customs authority) the cargo manifest (Master and House, respectively), showing all cargo information. The named consignee is one of those details that must be informed.
This information is available online to the involved parties, which have access to the IRS cargo control program (SISCOMEX-CARGA), including the Port Terminal or warehouse (bonded area appointed to receive the cargo). Therefore, the importer (consignee) does not need to be informed about the cargo arrival by the ocean carrier or by the freight forwarder. The necessary information for the payment of taxes and imports duties is available online as well.
CONCLUSION
As a conclusion, Freight Forwarders cannot be hold responsible for misdelivery of goods in Brazil, since such procedure is out of their legal duties. In cases in which the consignee managed to release and pick up the cargo without payment, shippers must appoint a Legal representative in Brazil (usually an Attorney) to notify and sue the consignee. In some cases, the port terminal or warehouse can be sued too, for not following the obligations determined by the Normative Instruction IRS n. 680/06 and other relevant applicable rules, and allow the delivery of goods without presentation of a proper title of credit and property (such as the Bills of Lading).
Fabio do Carmo Gentil
Maritime Lawyer | Brazilian Bar Association (OAB) n. 208.756
GENTIL ADVOGADOS | Senior Associate
Contact: gentil@gentiladvogados.com.br