The Fourth Panel of the Brazilian Superior Court of Justice (STJ) recently ruled that serving legal process on a foreign company through an alleged representative in Brazil requires concrete proof of legal authority to represent that company.
In the case under review, Hyundai Corporation, a South Korean company, had been served through Hyundai Caoa do Brasil Ltda., which was alleged to be its representative in Brazil. The lower courts accepted the service based on factors such as the use of the Hyundai brand, distribution agreements and the alleged economic integration between companies within the same corporate group.
The STJ, however, rejected this assumption, holding that a foreign company's representative in Brazil is only the person or entity formally appointed and legally authorized to act on its behalf. In the absence of a duly appointed legal representative in Brazil, the appropriate method for serving process on a foreign company remains the (costly and time-consuming) letter rogatory.
The ruling is particularly relevant because it reinforces the role of legal representation in Brazil. More than a legal requirement, appointing a qualified legal representative helps strengthen corporate governance, facilitates interactions with public authorities and reduces legal and regulatory risks.
A corporate group is not a power of attorney
As demonstrated by the STJ's decision, a commercial partnership, distribution agreement, shared brand, operations in the same market or membership in the same corporate group do not, by themselves, constitute legal representation. In other words, being part of the same corporate group does not create legal authority to represent another company. A Brazilian company may act as a distributor, commercial partner, service provider, customer, commercial agent or even belong to the same corporate group as a foreign company. None of these circumstances automatically grants the authority to receive court summons, legal notices or any other official communications on behalf of the foreign company.
Justice Isabel Gallotti, whose opinion prevailed in the case, made this distinction clear by stating that the undisputed commercial or corporate relationship between Caoa and Hyundai Motors did not mean that Hyundai Corporation effectively operated in Brazil through Caoa with respect to products outside Caoa's corporate purpose.
Commercial representation should not be confused with legal representation
A company or individual may promote products, negotiate contracts, maintain direct relationships with customers or serve as the commercial face of a foreign brand in Brazil. However, this does not mean they are legally authorized to receive service of process or official notices on behalf of the foreign company.
A legal representative is not someone who merely appears to represent a company. Rather, it is someone who has been formally authorized to do so. This authority is typically established through a power of attorney, corporate resolution, specific agreement or another legal instrument expressly defining the scope, duration and purpose of the powers granted.
Practical implications
If a claimant directs service of process to a commercial partner, distributor or affiliated company without demonstrating formal legal authority to represent the foreign company, the validity of the proceedings may be compromised. That is precisely what occurred in this case: due to the lack of concrete evidence of legal representation, the STJ declared all procedural acts performed after the service of process to be null and void.
Why this matters for foreign investors
This ruling reinforces a fundamental, yet often overlooked, measure that foreign investors should adopt when operating in Brazil: establishing a properly structured legal representation framework. More than simply complying with a legal requirement, appointing a qualified legal representative is an essential step toward operating in Brazil with greater legal certainty, predictability and regulatory compliance.
