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How-To-Understand-Litigations-In-Brazil.Pdf American Chamber of Commerce for Brazil - AMCHAM International Affairs Department Brazil, 2015/2016 *This guide is part of the project ACKNOWLEDGEMENTS The American Chamber of Commerce for Brazil, being the largest Amcham outside the United States is constantly serving its members by building bridges for Brazilian businesses worldwide. Our foreign investment attraction efforts have also been a key leading point for Amcham. The How to series is part of this initiative. With the support of some of our corporate members, the States of the country and now some cities, we are putting together strategic information on the most various aspects of doing business in Brazil and its opportunities. As part of BRICS (Brazil, Russia, India, China and South Africa) and representing the 7th largest economy of the world, being also the 5th biggest destination for foreign investment, Brazil has clearly demonstrated its importance in the global market. Furthermore, the medium and high classes are increasing, which creates a solid internal market and contributes to maintain good results in the economy. It is now more than ever a strategic time for businesses opportunities in Brazil. We welcome you and hope that the information you are about to read serves you best. Gabriel Rico - CEO, Amcham Brasil Teixeira, Martins & Advogados law firm provides personalized legal services to Brazilian and foreign clients from a range of fields, and is renowned for its performance both in litigation, for the settlement of disputes, and consulting. We understand the importance of providing clients with information for a better understanding of the complex Brazilian Legal System, thereby facilitating decision making and business, including dispute settlement. In this respect, our partnership with Amcham provides an opportunity to clarify the legal aspects, opportunities and alternate methods under Brazilian Law for the settlement of disputes, thus increasing the chances of a successful outcome in each specific situation. Roberto Teixeira, Founding Partner, Teixeira, Cristiano Zanin Martins - Partner, Teixeira, Martins & Advogados Martins & Advogados LAW CONTENT 01 GENERAL ASPECTS OF BRAZILIAN LAW 06 02 STRUCTURE OF THE BRAZILIAN LEGAL SYSTEM 08 03 METHODS OF DISPUTE RESOLUTION IN BRAZIL 11 04 JUDICIARY 13 05 ARBITRATION AND MEDIATION 22 06 ADMINISTRATIVE PROCEEDINGS 30 07 COMMON PRINCIPLES OF JUDICIAL AND ADMINISTRATIVE PROCEEDINGS 31 08 FINAL REMARKS 33 09 ABOUT OUR SPONSOR 34 01. GENERAL ASPECTS OF BRAZILIAN LAW Brazilian Law embraces the concept of legality, according Res judicata. to which no one is allowed to do or to refrain from doing anything if not by virtue of law. In accordance with this A perfect legal act is created according to the law in basic principle, no one is excused from complying with force at the time of its practice. A vested right, definitely the law for not being cognizant of it. incorporated into the property of the party who has such right, cannot be changed either by a fact or by a subsequent The Brazilian Legal System, apart from the Statute and law. Finally, res judicata is a procedural phenomenon in other legal rules, embraces as sources of Law: which a court ruling is unchangeable and indisputable and may no longer be contested by any appeal. Custom, which is nothing more than a continued, consistent, public practice of acts incorporated into The adoption of the principle of legality by Brazil means the everyday life of one society; the adoption of the Roman-German system or the Civil Law system. Legal literature, characterized by opinions and legal work prepared by legal scholars; and Therefore, it is worth describing the main differences between the Roman-German or Civil Law and the Common Law systems. Case law, which encompasses repeated judgments of the same effects rendered by the Courts. The Roman-German system, currently in force in Brazil, as previously mentioned, is characterized by the supremacy As a result of the aforementioned principle of legality, of the legislative process (Statute), and by attributing in order to grant legal safety to the relationships, the secondary value to the other sources of Law, i.e., statutory following emerge: texts are prepared by proper legislative bodies and are used the predominant source of Law. The perfect legal act; LAW The other sources of Law, particulary doctrine and case law, Vested right; and are intended to interpret the law and fill eventual legal gaps. 6 Thus, the Brazilian System (Civil Law) prioritizes must resort to the aforementioned secondary sources of legislation, having as the main source of Law the Statute, Law, if required, as well as analogy, general principles of while other sources of Law play a secondary role in the law and equity. regulatory power. Analogy consists of applying a law to a different The system’s basic dogmas are consolidated in the Civil Code, event not covered directly or specifically by any law, which regulates private relationships and also has significant but which is similar to the event not provided for. interference in the relationship with Public Authorities. General principles of law are the set of principles which although are not provided for by any Statute, convey the Legislation has sovereign power and must be interpreted and spirit and purpose of Law. Finally, equity is the act to be applied by the Judge regardless of previous interpretations carried out by the Judge aiming for full justice, when no and decisions rendered on other similar cases (there are answer is found in any of the previous sources. exceptions, which will be addressed later). In the Common Law system, a Judge’s decision takes into It is noteworthy that although the Statute is the primary consideration a previous analysis of equal or similar cases source of Brazilian Law, it is virtually impossible for the from which premises are taken to reach a decision. This legislator to provide all legal situations that may occur in is known as “stare decisis”, which Common Law Courts society, mostly because of the speed in which commercial tend to follow precedents. and interpersonal relations evolve, especially as a result of technological advancements. In light of this, in Common Law, in order to enforce the law, the Judge shall draw principles from previous However, a Judge may not refrain from deciding on decisions while in Civil Law the principles of the decision claims submitted in a lawsuit, even if there is no legal are drawn directly from Statutes and subsequently applied rule regulating an actual event (statutory gap), and so he to the actual event, with due adjustments. HOW TO UNDERSTAND LITIGATION IN BRAZIL LITIGATION HOW TO UNDERSTAND 7 02. STRUCTURE OF THE BRAZILIAN LEGAL SYSTEM As a consequence of the adoption of the Roman-German Therefore, the adoption of the Roman-German system system by Brazil, in which Statutes prevail as a source of by Brazil arises from an express provision of the Federal Law, it is relevant to provide background on the enactment Constitution, which is the use of the principle of legality. of the Brazilian Federal Constitution, as well as the entire legislative process. FEDERAL, state AND MUNICIPAL statutes FEDERAL CONSTITUTION As previously mentioned, the Brazilian State organization is established by the Federal Constitution, which provides The Brazilian Federal Constitution was enacted in the Federative Republic of Brazil to be composed by the 1988 (CF88), being the essential and highest rule of the Federal Government, the States, the Federal District and Democratic State Ruled by Law in Brazil, i.e., the Federal the Municipalities. Constitution is the set of rules that unifies and confers legal validity to other rules organizing and structuring the It is necessary to mention this organization, as there are Brazilian Legal System based thereon. Federal Statutes (in force in the entire Brazilian territory), State Statutes (in force only within the territory of the In other words, the Federal Constitution is the unity of a respective States), Federal District Statutes (in force only plurality of rules, reflecting the basis for validation of all in the Federal District) and Municipal Statutes (in force rules of the regulatory system. only within the relevant Municipality). In terms of hierarchy, there is no higher rule than the The Federal Constitution expressly provides for which Federal Constitution, which is on top of the Brazilian matters may be ruled by Federal Statutes. Thus, the Legal System pyramid. remaining matters, i.e. those not reserved for the Federal Statutes, are covered by State Statutes, and those not In summary, the Brazilian Constitution establishes the reserved for the State are covered by Municipal Statutes. political principles (Republican, Democratic State Ruled LAW by Law, separation of Powers, Legality, etc.), guarantees A Federal District Statute may encompass matters of and essential rights of every citizen. It also describes the both State and Municipal Statutes, as the Federal District organization of the Brazilian State. 8 is a combination of State and Municipality. In Brazil the Supplementary Laws are those required for certain Federal District is its national capital, Brasília. situations in which the Constitution itself expressly and unequivocally requires the enactment of such regulation. TYPES OF FEDERAL statutes That is, the Federal Constitution has established that certain matters shall only be regulated by means of Supplementary Laws. Following this scenario, we will address how the Federal Statutes are enacted, given that the reserve of matters If there is no constitutional requirement for regulation by under Federal Jurisdictions is substantially important to a Supplementary Law, the matter must be regulated by an the business community. Ordinary Law. The enactment of regulatory acts establishing rights or The only difference between these two types of regulation obligations is a typical function of the Legislative Power is required quorum for approval. A Supplementary Law and an atypical function of the Executive Power (as shall requires a majority (half plus one of all the congress be explained later) and is called legislative process.
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