Advisory for Agri Product Exporters.

Consulate General of India
Sao Paulo
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Advisory for Agri Product Exporters

          A few instances of trade disputes have come to the notice of the Consulate wherein a Brazilian importer – Fegaro (also represented as  COMERCIAL FEGARO IMPORTACAO E EXPORTACAO EIRELI or JET TRADING IMPORTACAO E EXPORTACAO LTDA or COMERCIAL LP), having imported products such as dehydrated onion/garlic, garlic powder, sesame seeds,  yellow mustard seeds, from Indian companies has not cleared shipment even after many months of arrival of consignment at Santos port in Brazil or delayed due payment to Indian exporter for many months indefinitely explaining its financial difficulties.  In all these cases, terms of payment were CAD (Payment on receiving BOL through bank).

2.      It was learnt that the company was undergoing customs fraud and tax investigation conducted by the Brazilian Federal Revenue in Sao Paulo, due to suspected fraud in previous imports. 

3.      In view of the above, the Indian agri product exporters while entering into an export contract are advised to exercise more caution and adopt measures as follows: 

(i) An Indian exporter entering into contract with Brazilian importer are advised to include an `Arbitration` clause in the goods sales agreement with the importer.  By strength of this clause, if importer acts against terms of contracts, the exporter can invoke the Arbitration clause, which by Brazilian law, entails legal  process giving enforcing powers to the Chamber assigned Arbitration power in the contract [A sample contract with `Arbitration` clause is attached herewith along with details of suggestive fee charged by Arbitration chamber CEMAAC - Business Chamber of Mediation and Arbitration of the Commercial Association of Sao Paulo (ACSP), Manager, CEMAAC - Mr. Guilherme Giussani, Email: diretoria.cemaac@acsp.com.br ].

(ii) In case the contract did not have an Arbitration clause, the second available course of feasible action for an Indian exporter might be to take recourse to mediation through a mediation Chamber or firm.  The mediation Chamber/firm based in Brazil are in good position to take up the matter professionally and actively with the Brazilian importer (Details of suggestive fee charged by CEMAAC for mediation service are also attached).

(iii) Apart from the above, it is understood that Letter of Credit is also a much safer mode of contract than CAD (Cash against documents through bank).

(iv) Besides, another important point is to avoid sharing scanned copy of Bill of Lading in advance with the importer and in case it is unavoidable then to write `COPY NON NEGOTIABLE` on it.

4.      Also, the  agri product exporters, before entering into contract with Brazilian importer, are, in case of doubt, advised to check credibility of the Brazilian company with the Consulate by email to com.saopaulo@mea.gov.in

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Model Proforma for Goods Sales Agreement.

Table of cost of Arbitration - CEMAAC.

Table of cost of Mediaton - CEMAAC.