Series on Brazilian Legal Research No. 4 — Brazil’s Dispute Resolution System | Dentons · Practice Guide

Brazil is a federal state but belongs to the civil law tradition; its legal system and legal environment are highly complex, comprising both federal and state-level laws, with substantial variations among state laws. For Chinese enterprises expanding into Brazil, it is essential not only to understand Brazil’s business environment but also to familiarize themselves thoroughly with laws and judicial practices at all levels relevant to investment and dispute resolution—so as to effectively manage risks and resolve disputes. This article primarily introduces three civil and commercial dispute resolution mechanisms in Brazil: litigation, arbitration, and mediation. By analyzing current laws and regulations as well as judicial practice, it aims to assist and guide Chinese enterprises entering the Brazilian market in resolving disputes. I. Civil and Commercial Litigation in Brazil (A) Primary Legal Basis In Brazil, the substantive law governing civil relations is mainly the 2002 Civil Code (Law No. 10,406, of January 10, 2002). In March 2015, Brazil enacted the new Civil Procedure Code (Law No. 13,105/2015), which serves as the principal procedural legal basis for handling civil and commercial litigation in Brazil. (B) Brazil’s Court System As a federal state, Brazil’s court system comprises two parallel systems: federal courts and state courts. Under the Brazilian Constitution, judicial power is exercised by state courts, state high courts, federal courts, and the federal high court. Investment-related commercial disputes are generally heard by state courts.[1] (C) Jurisdiction and International Judicial Cooperation 1. Jurisdiction According to Brazil’s Civil Procedure Code, Brazilian courts have jurisdiction over cases where: the defendant resides in Brazil (regardless of nationality); foreign legal entities with branches, subsidiaries, or representative offices in Brazil are deemed domiciled there; the defendant has obligations to perform in Brazil; or the facts or acts giving rise to the dispute occurred in Brazil. In consumer disputes, Brazilian courts also hold jurisdiction if the consumer resides or is domiciled in Brazil; likewise, jurisdiction exists where parties expressly or implicitly agree to submit disputes to Brazilian courts. *Note: Parties may agree on jurisdiction in their contracts. Article 25 of the Civil Procedure Code stipulates that, except for exclusive jurisdiction matters such as real estate disputes—which cannot be subject to party agreement—if an international contract designates an exclusive foreign jurisdiction, Brazilian judicial authorities bear no obligation to hear or adjudicate the case. Thus, when drafting contracts, Chinese enterprises may designate Chinese courts as the competent forum, depending on project-specific circumstances and feasibility. 2. International Judicial Cooperation Brazil generally conducts international legal cooperation on the basis that both countries are parties to the same international treaty. In the absence of a treaty, cooperation may proceed through diplomatic channels on a reciprocal basis. Forms of cooperation include service of judicial documents, evidence collection, recognition and enforcement of judgments, granting of urgent judicial measures, and international legal assistance. *For Chinese enterprises, China and Brazil signed the “Treaty between the People’s Republic of China and the Federative Republic of Brazil on Mutual Legal Assistance in Civil and Commercial Matters” in 2009. Under this treaty, both sides provide broad mutual legal assistance and cooperation in civil and commercial matters. The scope of judicial assistance includes: service of judicial and extrajudicial documents; evidence collection; recognition and enforcement of court judgments; and exchange of legal information.

Tether Pursues $300 Million Loan Recovery in Brazil; Brazil Simultaneously Tightens Cross-Border Stablecoin Settlement—Global Stablecoins Enter an Era of Divergent Regulation

Over the past two days, two developments in the stablecoin space—both widely discussed in the market—have emerged almost simultaneously. One stems from the judicial sphere: Tether, the world’s largest stablecoin issuer, has filed a lawsuit against Titan Holding in São Paulo’s courts to recover approximately USD 300 million in loans. The other originates from the regulatory sphere: Brazil’s foreign exchange system has adjusted its rules governing cross-border stablecoin settlements, restricting their direct use in international trade payments. Although these two events are unrelated in substance, their temporal proximity has once again placed stablecoins at the center of scrutiny within the real-world financial system. | Tether Initiates Litigation in Brazil: $300 Million Loan Enters Legal Recovery Phase The core of this case before São Paulo’s courts is Tether’s loan recovery action against Titan Holding. Public information indicates that this roughly USD 300 million loan falls under Tether’s investment and lending business operations—not its USDT reserve assets. Yet market attention focuses less on the ownership of funds and more on how stablecoin institutions are increasingly assuming business roles akin to those of traditional financial institutions. Historically, stablecoin issuers performed two primary functions: token issuance and reserve asset management. In recent years, however, this role has gradually evolved: some institutions have expanded into broader financial activities—including institutional financing, short-term loan arrangements, collateral asset management, and U.S. dollar liquidity allocation. These activities are no longer merely crypto-asset operations; rather, they closely resemble the asset-side behavior of financial institutions. Under this structure, stablecoin issuers have begun participating—albeit indirectly—in credit expansion. Credit expansion implies that associated risks extend beyond on-chain asset volatility to encompass loan defaults, collateral price fluctuations, fund recovery timelines, and cross-border enforcement challenges. Especially in transnational contexts, divergences among judicial systems significantly lengthen and complicate asset recovery pathways. The Titan case has drawn attention precisely because it illustrates how stablecoin institutions have now entered genuine credit relationship networks. | Brazil Tightens Cross-Border Settlement: Stablecoin Foreign Exchange Pathways Reintegrated into Regulatory Framework Central Bank of Brazil Against the backdrop of Tether’s litigation, Brazil’s foreign exchange system has also adjusted how stablecoins may be used. The policy shift centers specifically on cross-border settlement. Under Brazil’s new regulatory framework, stablecoins are no longer permitted as direct instruments for cross-border trade settlement; instead, enterprises engaged in international payments must rely more heavily on the banking system to complete fund clearing. Over the past several years, stablecoin usage in cross-border payments has gradually increased—particularly in regions characterized by inefficient banking systems or stringent foreign exchange controls. Their advantages lie in faster settlement speeds and shorter transaction paths, reducing intermediaries. However, as usage expands, this model begins challenging traditional foreign exchange regulatory frameworks. If cross-border fund flows bypass the banking system entirely, regulators lose comprehensive oversight over fund trajectories. For foreign exchange systems, traceability and regulatory controllability of fund flows constitute core requirements. Therefore, Brazil’s latest adjustment leans toward reintegrating cross-border payments into the conventional banking system—not permitting free, unregulated on-chain circulation.

Brazilian court suspends new transfers from Braskem to Mexico's Idesa

Sep 24, 2026

A Brazilian court temporarily blocked Braskem from transferring funds to its Mexican unit Idesa following creditor concerns regarding capital position. The decision coincides with Idesa's US Chapter 11 bankruptcy and Braskem's ongoing out-of-court reorganization in Brazil.

Reuters

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Braskem (NYSE: BAK) weighs creditor protection options while reviewing capital structure

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Pomerantz Law Firm Investigates Braskem S.A. Over Investor Claims

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Braskem Reviews Creditor Options as Shareholders Weigh São Paulo Move

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Braskem Clarifies Capital Structure Review and Plans Shareholder Vote on Legal Domicile Change

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Braskem (BAK) Outlines Braskem Idesa Missed Interest Payments and Debt Talks