Legal and Strategic Guide for Czech Exporters to South American Markets

The South American market presents a fascinating challenge for Czech exporters, full of opportunities but also legislative pitfalls. In this article, experts from our Prague-based law firm, ARROWS, explain how to securely establish contractual relationships, protect your intellectual property, and avoid draconian fines. You will learn specific procedures that will save you time and costs when entering markets in Brazil, Chile, or Colombia. We assist Czech and Slovak clients in these regions through ARROWS International. 

Quick summary for managers from ARROWS

• Local specifics: Legal systems are based on civil law but suffer from extreme bureaucracy and specific customs barriers.
• IP Protection: Without timely trademark registration directly in the destination country, you risk losing your brand to local speculators.
• Partner verification: Thorough due diligence of your partner is critical in this region to eliminate the risk of insolvency.
• Contractual certainty: The key to success is the correct choice of governing law and international arbitration for effective enforceability of claims.

Legal framework and specifics of the South American continent

South America is not a uniform legal block. While countries like Brazil, Argentina, Uruguay, and Paraguay form the Mercosur group, others, such as Chile or Colombia, have different bilateral agreements with the EU. For a Czech entrepreneur, this means that exporting to each of these countries requires an individual legal strategy and knowledge of local regulations.

Legal issues in this region are much more complex in practice than they appear at first glance. Steps that occur automatically in Europe have hidden exceptions, procedural details, and links to local regulatory authorities in South America. Our Prague-based law firm handles these matters daily and can significantly shorten the time a client spends negotiating with local authorities.

Thanks to the ARROWS International network built over ten years, we handle cases with international elements worldwide. Our experience in providing long-term services to our portfolio, which includes more than 150 joint-stock companies and 250 LLCs, allows us to anticipate risks before they arise. 

Mercosur in detail

• Digital control: Siscomex is a central portal integrating Brazil's customs, tax, and regulatory authorities for all foreign trade.
• Licensing requirement: Access to the system requires RADAR registration, which can only be performed by an entity based in Brazil.
• Strict parameters: Even the smallest error in data leads to drastic fines, penalties, and long-term detention of goods in customs warehouses.
• Legal certainty: Our Czech legal team ensures oversight of contractual documentation and partner verification so that the Siscomex process runs smoothly.

Siscomex: Integrated Foreign Trade System in practice

Siscomex, or Sistema Integrado de Comércio Exterior, is the backbone information system used by the Brazilian government to control and record all imports and exports. It is not a mere database, but an active control mechanism where the interests of the customs administration (Receita Federal), the central bank, and the Ministry of Industry meet. Every commercial operation must be entered into this system in real-time.

For Czech companies, it is essential to understand that they cannot access Siscomex directly from Prague. You can learn more about the risks of entering distant markets in the article how to safely invest in real estate in Paraguay. The system requires a digital certificate and access is only granted to an authorized Brazilian entity. This is either your local subsidiary or your Brazilian distributor. The legal issues of setting up the relationship with this representative are much more complex in practice than they seem.

The experts at our Prague-based law firm have experience in preparing distribution agreements that precisely define the responsibility for entering data into Siscomex. Did you know that ARROWS has a specialized team for contracts and negotiations? A poorly drafted contract can mean that the Czech exporter bears the financial consequences for the distributor's error. You might also be interested in the tax and legal traps for foreign investors in cross-border transactions. Do you need advice on this matter? Contact us at office@arws.cz.

Siscomex and partner registration

1. What is a RADAR license? It stands for Habilitação no Siscomex. Without this active license, your partner in Brazil cannot legally clear even a single screw through customs.
2. Who applies for the license? Exclusively a Brazilian entity at the federal tax office. There are different limits (express, limited, unlimited) based on the partner's financial strength.
3. Can we apply for RADAR ourselves? Only if you establish your own legal entity in Brazil. Our Prague-based attorneys can fully assist you with this process.

Procedural channels and risks of incorrect classification

Once the goods are registered in Siscomex via the DI (Declaração de Importação) document, the system automatically assigns them to one of four control channels. The green channel means immediate release, while the yellow, red, or grey channels mean physical inspection of documentation, goods, or even an investigation into suspected fraud.

A critical point is the correct assignment of NCM (Nomenclatura Comum do Mercosul) codes. This is the technical term for the customs tariff applicable to Mercosur countries. If you provide an incorrect NCM code in Siscomex, it may be interpreted by Brazilian authorities as an attempt at tax evasion. This leads to the immediate blocking of the shipment and fines that can exceed the value of the goods themselves.

Our attorneys in Prague at ARROWS law firm regularly handle these situations and assist clients in verifying goods classification before the shipment is dispatched. Our international presence through the ARROWS International network allows us to communicate with local customs brokers in real-time. To resolve your situation, please write to us at office@arws.cz.

Legal Liability and the Role of the Customs Broker

In Brazil, a key role is played by the Despachante Aduaneiro – a customs broker who has physical access to Siscomex. Although they are a professional, they act on the instructions of your partner or your branch. The legal issue of liability for their actions is complex because Brazilian law is very formal and strict regarding procedural details that a layperson often overlooks.

1. What happens if goods are in the gray channel? This is the most serious situation, where customs verifies the legality of the entity and the origin of the funds. It can take up to 90 days to resolve the situation.
2. Can Siscomex be managed from Europe? No, access requires a Brazilian e-CPF or e-CNPJ certificate and the physical presence of a representative in the Brazilian registries.
3. Can one company in Brazil represent multiple exporters? Yes, one importer can have multiple suppliers registered in Siscomex, but each relationship must be properly documented.

Business Partner Selection and Due Diligence

In South America, more than anywhere else, a good partner is the foundation of success. Unfortunately, in practice, we encounter cases where a Czech company enters into a contract with an entity that exists only on paper. Searching for and vetting business partners directly on the ground is therefore the first service you should request from specialists.

Our Prague-based attorneys at ARROWS law firm will ensure that your future partner possesses the necessary licenses and has a clean history in local registries. This step looks simple, but in the real world, it involves analyzing connections that a layperson often does not see. To verify your partner, write to us at office@arws.cz.

Export microFAQ – Partners

1. How to verify a partner's creditworthiness in Brazil? In addition to the commercial register, it is necessary to check tax registries and the central bank, which requires knowledge of local systems.
2. Is the internet enough for verification? Definitely not. Online information is often outdated or misleading; an inquiry into non-public databases through local legal representation is essential.
3. What to do in case of suspected fraud? Immediately stop all transactions and contact our Czech legal team at ARROWS law firm at office@arws.cz to initiate legal steps in the respective country.
4. Why aren't international company databases enough? These sources often have significant delays in South America and do not contain information about ongoing litigation or tax offenses of the partner.
5. What is reputational risk? In this region, it is crucial to verify whether a partner is linked to entities on sanctions lists, which could have fatal reputational and legal consequences for a Czech company.
6. How long does a detailed check take? Standard due diligence usually takes 10 to 14 business days, depending on the quality of cooperation from local authorities. If you are in a hurry, contact us at office@arws.cz.

Intellectual Property and Brand Protection

The vast majority of South American states apply the first-to-file principle. This means that the trademark rights belong to whoever registers it in the given country first. If you hesitate with registration, your own brand could be registered by a local distributor, who may subsequently blackmail you or block your sales. ARROWS, a law firm in Prague, will help you secure timely protection for your industrial designs and trademarks throughout the region. Legal and tax advisory that protects against fines and loss of assets is our priority. ARROWS law firm is insured for damages up to CZK 400,000,000, providing our clients with maximum security.

Logistics and customs barriers in practice

Exporting to South America entails the necessity of precisely setting up Incoterms (international commercial terms). For example, in Brazil, there is the Siscomex system, a complex electronic portal for foreign trade. Even the slightest discrepancy in documentation can lead to long-term detention of goods in a customs warehouse and astronomical storage costs.

Experts from our Prague-based law firm have extensive experience in preparing and reviewing contracts, directives, and other documents that protect against fines and sanctions at South American customs offices. We commonly act as partners to in-house legal counsel in resolving these specialized matters. If you are looking for specialists in this field, please write to office@arws.cz.

How to effectively resolve potential disputes

Court proceedings in countries like Argentina or Brazil can last up to ten years, and the outcome is often unpredictable for foreigners. Therefore, at ARROWS law firm, we recommend including international arbitration clauses in contracts, for example, in Paris or London. The enforceability of such an award is much higher in South America thanks to the New York Convention.

The topic of disputes is so complex that it is safer to entrust it to experts who handle this agenda daily. Our Czech legal team will provide you with expert legal opinions and background statements for your management decisions. If you are looking for financing or a partner in the given area, we can also connect you. Write to us at office@arws.cz.

Exporting to South America is an ambitious step that requires more than just a great product. It requires legal certainty in an environment that is bureaucratically demanding and highly specific. The attorneys at ARROWS law firm have long been dedicated to this area and regularly handle it in practice for dozens of Czech companies. Our experience with partner vetting, IP protection, and international arbitration is your competitive advantage. 

FAQ – Most frequent legal questions regarding Export to South America

1. Which governing law should be chosen for export to Brazil? Neutral law (e.g., English law) is often preferred, but for enforceability directly in the country, Brazilian law with a correctly set arbitration clause can sometimes be more advantageous. 
2. Is superlegalization of documents required in South America? Most countries (e.g., Chile, Brazil) are members of the Hague Convention, so an apostille is sufficient. However, some countries still require lengthy superlegalization. Our Prague-based attorneys can assist you with document verification. Write to office@arws.cz.
3. Can ARROWS help me with debt recovery in Argentina? Yes, representation in litigation and debt collection abroad is one of our key agendas, thanks to the ARROWS International network.
4. Do I need a local subsidiary to sell in Colombia? This depends on the volume and type of goods. Often a distribution agreement is enough, but for larger projects, a separate entity is safer. 
5. What are the biggest risks when signing a contract in Spanish/Portuguese? There is often a different interpretation of technical terms that may not have a direct equivalent in other languages. Contract reviews by ARROWS law firm eliminate this risk. Write to office@arws.cz.

Disclaimer: The information contained in this article is for general informative purposes only and serves as a basic orientation on the issue. Although we ensure maximum accuracy of the content, legal regulations and their interpretation evolve over time. To verify the current wording of regulations and their application to your specific situation, it is essential to contact ARROWS law firm directly (office@arws.cz). We bear no responsibility for any damages or complications arising from the independent use of information from this article without our prior individual legal consultation and professional assessment. Every case requires a tailor-made solution; therefore, do not hesitate to contact us.

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