- 1.Outline the court system in your jurisdiction.
The Brazilian judiciary power is regulated by the Federal Constitution, in force since October 5, 1988. It is comprised by several courts, which may be classified from different point of views, such as: the number of judges (singular and group bodies), the subject discussed (common justice courts and special justice courts), and from the federative point of view (state and federal bodies). The Supreme Court (STF) and the Superior Court of Justice (STJ) are the head courts.
STF has as main duty to look after the effectiveness of the Federal Constitution. Among other functions and competences it is mainly responsible for deciding causes in which there is an allegation of violation of the Federal Constitution. STJ is the court responsible for establishing a uniform interpretation of federal laws (infra-constitutional laws). It is responsible for judging causes decided by the federal regional courts or by the state, federal district, and the territories courts, in which the local courts have decided contrary to the federal law or applied the federal law in a way different from the interpretation of another court.
Below the Superior Courts, the Brazilian legal system is basically divided in federal and state justice. The labour justice, electoral justice and military justice are called special justice.
The federal jurisdiction is mainly responsible for: (i) cases in which one of the parties is the federal government (state); (ii) lawsuits between a foreign state or international organisation and a municipality or a person residing in Brazil; and (iii) cases based on treaties or international agreements of the federal government against a foreign state. In first instance, it is comprised by federal judges, and in the second instance, by five regional federal courts (TRFs).
The state justice has residual judicial power, which means that it is determined by exclusion. Everything that is not under the judicial power of the federal justice or of the special justice will belong to the state courts, both in civil area and in other areas. In first instance, the state justice is comprised by the state judges, and in the second instance, by the state courts of appeal/appellate courts (Tribunais de Justiça) of each state. They have judicial power to review, in second degree, decisions of singular judges and to judge, in first degree, certain lawsuits, such as those filed against determined authorities, like the state governor.
- 2.What remedies are available to a party that is in a dispute with a foreign entity? Do the laws provide foreign entities the same rights afforded to local entities? Are there laws requiring foreign entities to post a bond or other security before they can defend a suit?
The foreign entities have the same judicial measures offered to Brazilian companies/citizens, such as injunctions, declaratory action, collection procedure, action for damages (compensation/indemnification) and action for exhibition, among others. However the Brazilian Civil Procedural Code (CPC) sets forth that the plaintiff, whether national or foreigner, who resides outside Brazil, or is absent from the country during the procedure, shall post a bond, related to the payment of the legal costs and of the attorney’s fees of the other party, if such person doesn’t have immovable assets that ensure the payment.
- 3.What is the most common type of litigation encountered in your jurisdiction by foreign entities (for example, claims for breach of contract, employment or some other issues)?
Despite not having an official Brazilian ranking, based on our experience, the most common actions involving foreign entities are related to agreements’ violations and the indemnifications/compensations resulting from such violations.
- 4.How frequently do parties pursue criminal actions (eg, querellas) in the context of commercial disputes? May criminal trial evidence be adduced in follow-on civil litigation? May civil cases be brought concurrently or after criminal litigation?
Filing criminal procedures involving commercial disputes is not very common. However, among potential cases of criminal procedures resulting from commercial disputes, we may mention the ones that involve violation of patents (infringement action), unfair competition and bank fraud/deviation of financial resources. Evidences produced in the criminal procedure may be used in civil procedures. Civil and criminal procedures can be filed simultaneously, since they are distinct and independent. As a rule, the liability of an agent in a sphere does not imply the liability in the other one, because the civil liability does not depend on the criminal one, and vice-versa. However, the judge in charge of the criminal procedure can determine the suspension of the civil procedure while there are doubts about who committed the criminal fact, or about its existence, in a way to avoid the risk of conflicting decisions. Thus, if the continuation of the civil procedure depends on the verification of the existence of a criminal fact, the judge in charge of the civil procedure can suspend the course of the civil procedure until a decision in the criminal sphere is rendered.
- 5.Is there a right to a trial by jury in a commercial dispute?
No. In the Brazilian legal system the right for a jury is only granted in trials regarding intentional crimes against life and related crimes.
- 6.Do courts require or strongly encourage mediation before or during a litigation proceeding?
The previous mediation or the mediation during a legal procedure is not necessary and it is not even established in the Brazilian law. However, the CPC expressly sets forth the conciliation hearing to encourage parties to reach an amicable settlement before the evidence phase and before the judgment. Besides this, parties may, at any time, establish negotiations for an amicable settlement, also requesting a conciliation hearing.
- 7.Will choice of law and choice of forum provisions in a contract be enforceable recognised?
In Brazil, the rule that establishes the law that will be applicable to an agreement is determined by the preamble of article 9 of the Law of Introduction to the Civil Code (LICC - Decree Law No. 4657/42). According to this rule, the applicable law to an agreement will be the law from the place where the agreement was executed, concluded, ie, where the obligation was established. However, in international agreements, parties are free to choose the applicable law, as long as it is in accordance with the Brazilian laws, and does not oversteps the national sovereignty issues. Regarding jurisdiction, the Brazilian judiciary recognize the choice of forum, with the exception of the actions related to real properties located in Brazil, since the LICC establishes that the Brazilian judiciary has exclusive jurisdiction in such cases.
- 8.Does your jurisdiction have specific arbitration law? Are arbitration awards enforced by the courts? May courts enjoin or prohibit arbitration proceedings in matters that are also pending in a court proceeding?
Since the publication of Law No. 9307/96 (The Brazilian Arbitration Act), the arbitration award was equated to a court judgment, and it has force as a judgment debt, according to article 475-N, items IV and VI of the CPC. The arbitration award rendered in the country may be enforced by filing a judgment debt collection, before the civil and/or corporate courts, pursuant to the internal rules of the state court of appeals/appellate court where the suit was filed.
However, the foreign arbitration awards, ie, the ones rendered outside Brazil, must be previously confirmed by the Superior Court of Justice (STJ), pursuant to article 35 of the Brazilian Arbitration Act and to the Constitutional Amendment No. 45, through a procedure called Confirmation/Homologation of Foreign Judgment, which is judged by the president of the STJ, and regulated by Resolution No. 09/STJ of May 4, 2005. The requirements for the Homologation of Foreign Judgment are: (i) it has to be rendered by a competent authority; (ii) parties have to be serviced, or the default has to be recognized; (iii) the judgment has to be final and unappellable; and (iv) the award must be authenticated by the Brazilian consul, followed by a translation by an official translator or sworn translator in Brazil.
After the decision that homologates the foreign award becomes final and unappellable, the elaboration of the certified copy of the judgment (Carta de Sentença) has to be requested. With the certified copy, the lawyer can proceed with the enforcement of the foreign award in the competent federal justice.
According to Brazilian Arbitration Act arbitration proceeding can be initiated during a court proceeding, after a settlement for arbitration is celebrated in the records of the civil procedure by parties.
- 9.Do the courts recognise attorney-client privilege? If so, is the privilege applicable to in-house lawyers?
The Ethics Code of the Brazilian Bar Association sets forth that the professional secrecy is inherent to the profession, and it shall be observed. Besides, the Ethics Code sets forth that, even in a legal deposition, lawyers shall keep the secrecy about what they know as the result of their profession. They also may refuse to be a witness in a procedure in which they performed, or may perform as a lawyer, or about a fact related to a person whom they represented, or represent as a lawyer. Besides, the Lawyers and Brazilian Bar Association’s Statute (EAOAB) lists as one of the lawyer’s rights the inviolability of their office or place of work, as well as of their working instruments, of their written, telephonic and telematic mail, as long as they are related to the performance of the legal profession. In relation of the inviolability, the law doesn’t distinguish offices from legal departments of companies, aiming to protect the lawyers’ files. However, there are recent cases in which files and mail from legal departments of companies were violated by legal orders, which generated a huge controversy in the sphere of the judiciary power.
- 10.Are legal proceedings public? In other words, can the general public observe hearings and review the filings of the parties?
The procedural acts are public. Therefore, the trial court’s hearings and the trials in state court of appeal/appellate court are opened to the general public. The procedures, as well as the hearings and trials related to (a) public interests; (b) marriage, children, separation of the spouses and its conversion in divorce, alimony and tutelage are in camera procedures. However, the right to verify the records and request certificates of its acts is restricted to parties and their attorneys.
- 11.May a defendant join other potentially liable parties into the existing lawsuit?
A third party may enter as a defendant in the procedure through the institute named ‘third party action’, that may be effectual by presenting an ‘impleader’; ‘naming the real party in interest’, ‘third party complaint’ and by an ‘intervention/joinder of parties’. With the third party action, the third party becomes part (or assistant of the party) in the pending suit. The third party action will only be accepted under the observance of some requirements, such as the need of the third party to have a legal interest in the pending process.
Besides all above mentioned regarding third party actions, a party may enter a suit as a defendant due to an order expedited from the judge of the cause, if he finds that the judgment will produce effects on a party that did not joined the suit, ie, a lawsuit that discusses the validity of a contract in which not all signatories have been originally called.
- 12.How may a party enforce a foreign judgment?
Just like the foreign arbitration award, the foreign judgment shall also be confirmed by the Superior Court of Justice, by means of the procedure of Homologation of Foreign Judgment, already described in question 8 above.
- 13.How much time does a party have to answer a complaint? Can a party extend this time?
The time for a party to answer a complaint depends on the legal procedure. In the ordinary procedure, party has to answer the complaint within 15 days, counted as from the attachment to the records of the service of process received by the defendant. In the summary procedure, party is serviced to present the answer at a hearing previously scheduled by the judge. In the provisional remedies, party has five days, as from the attachment, in the records, of the evidence of the service of process of the defendant. The Brazilian Civil Procedure Code sets forth the legal terms to present the answer, which vary in accordance with the type of action being objected. All terms cannot be extended whatsoever. If the defendant does not answer the complaint within the term established all facts affirmed by the plaintiff in the complaint will be considered as true.
- 14.How long does it take to obtain a first-instance judgment in a typical commercial litigation case?
The average time for a common commercial litigation in the Lower Court is from one to three years. The time frame depends on the complexity of the case.
- 15.Is a party required to submit all facts, arguments and supporting evidence with its initial pleading?
A party is required to submit all fact arguments and supporting evidence with its initial pleading. However, parties can submit new allegations when they are related to supervening rights or facts, or if the law expressly allows it. Also, specific issues, about which judge may render a decision ex officio, such as nullities, may be submitted at any time, in any court. It is also allowed to a party, at any time, to attach to the records new documents to evidence facts occurred after the ones presented before, or to object the ones that were already attached to the records. In this case, the judge will notice the other party, in order to grant its right to file a petition regarding such documents within five days.
- 16.Does litigation provide a process for investigating claims or right to discovery of evidence prior to trial?
In the Brazilian Civil Procedure there is no ‘discovery’ system. The evidence should be presented in the examining trial hearing. Besides, the evidence is controlled by the judge responsible for the suit, which may or may not admit the evidence requested by the parties, with exception of documents, which may be attached to the records without the previous analysis of the judge.
In cases where there is a risk of perishing of proof, Brazilian law allows evidence to be produced in advance, even before the filing of the principal suit (where the merits will be debated), through a remedy called ‘Provisional Remedy to Early Production of Evidence’.
- 17.Does litigation provide a process to subpoena or obtain documents or testimony from third parties?
Pursuant to the CPC, nobody may ignore the duty of collaborating with the Brazilian judiciary in order to find the truth. The witnesses appointed are summoned by mail or by bailiff. When summoned, the witness shall attend the preliminary hearing. The witness that misses such hearing and do not justify the absence will be conducted by bailiff, and will bear the expenses of the postponement of the hearing.
Third party shall also, in relation to any litigation, (a) inform the judge the facts and circumstances they know of; and (b) show things or documents that are in their possession. When the document or thing belongs to third parties, judge will summon them to answer within 10 days. If the third party denies the obligation of showing it, or denies the possession of the document or thing, the judge will schedule a special hearing, taking such person’s deposition, as well as the parties’ and, if necessary, the witnesses’ deposition. If the third party does not comply with such order, the judge may issue a seizure warrant, requesting, if necessary, police force, besides the possibility of charging the party for disobedience crime, and the imposition of a fine in an amount to be fixated in accordance with the severity of the conduct, but not over 20 per cent of the value of the procedure.
- 18.Does the judge or opposing counsel examine witnesses?
Witness evidence is usually given orally in a special hearing called examining trial. Judge and lawyers may question the witness, although questions from lawyers are addressed to the judge and not directly to the witness. Witnesses are questioned individually to ensure testimony is not overheard by other witnesses.
- 19.How may evidence be challenged? Are there specific rules of evidence?
All legal means, as well as the morally legitimate ones, even if not specified by the CPC, may be used to evidence the truthfulness of the facts that are the base of the action or defense. In the CPC there are specific rules for the production and admission of evidence. However, nobody has to produce any evidence against them. The witness evidence, for instance, can be previously objected, by means of petition, after the acknowledgement of the witnesses’ list. The witnesses can also be objected when the preliminary hearing is being held. The judge will deny the questioning of witnesses in relation to facts (a) already proven by documents or by confession of the party, and (b) that can only be evidenced by an expert document or examination. The witnesses that are incapable, barred or who are suspicious cannot be questioned as a witness. The documentary evidence may be objected by the party against whom the document was attached by means of a petition, if it does not admit the authenticity of its signature and the truthfulness of its contents.
- 20.Do courts typically allow hearings at or before a trial? At what state may parties present expert witness testimony?
The CPC sets forth the performance of at least two hearings before the judgment. The first one is a pretrial hearing or hearing of settlement, scheduled before the evidence phase begins, and the second one is the examining trial, in which the evidences requested by the parties and previously approved by the judge are showed.
In case of expert evidence, the expert is appointed by the judge, and parties present questions for the expert to answer in a written report, and name their technical assistants, which will follow the performance of the expert examinations. Usually, the expert presents their report within the term established by the judge. The technical assistants of the parties may provide their opinions after parties are summoned about the presentation of the expert’s report. However, when the nature of facts allows it, the expert examination may only consist of the questioning, by the judge, of the expert and of the assistants, during the examining trial, in relation to the things that they may have formally examined or evaluated.
The party that needs clarification from the expert may request the judge to notice him to attend the examining trial. In this case, the expert will attend the hearing not as witness, but as an expert who will provide clarification on the report presented.
- 21.What must be demonstrated to collect a debt based on a written instrument?
The legal collection of a debt, based on a written non judicial document, may be basically made by 3 types of judicial procedures: the foreclosure procedure, the collection of debt procedure, and the monition action (ação monitória).
The foreclosure procedure is the fastest way to collect debts, and it shall be based on an extrajudicial executive title of certain obligation (debt instrument), being clear legal (net and certain). In the foreclosure procedure the judge do not render a judgment (merits decision), but only an order for the debtor to pay the debt.
The collection action follows the ordinary procedure, in which the party is serviced to answer the complaint and several procedure phases go on, until the merits judgment is rendered. It is usually used when the debt is not clear legal (net and certain). This type of procedure allows a wider range of evidence in order to prove the existence of the debt. If the judgment evidences the existence of the debt, it will, then, be a judgment debt.
The monition suit is exclusively based in written evidence, such as a private agreement, but without being considered a debt instrument. The monition suit is faster than the collection of debt procedure, as it follows the summary procedure and it already begins with the issuance of the payment order, or order of delivery of the thing by the defendant. If the defendant understands that they do not have to pay such amount, they may present their answer by means of a motion to dismiss the lawsuit, regardless of the previous guarantee of the court, and such motion will follow the ordinary procedure.
- 22.What remedies are available in your jurisdiction to a minority shareholder of a corporation in a dispute with the corporation or the majority shareholders?
There are several applicable actions that will depend on the intention of the minority shareholder and of the provisions of the bylaws and the shareholders’ agreement. For example, it is important to highlight remedies such as injunctions, declaratory action, collection procedure, action for damages (compensation/indemnification) and action for exhibition.
- 23.What rights are available in the courts for someone holding a maritime lien interest in a vessel?
The agreements guaranteed by mortgage, lien and bond are debt instruments. This way, if the debtor does not pay their obligation up to the deadline of the obligation, the mortgage creditor has the right to file a foreclosure procedure to collect such debt. If the debtor summoned to pay the debt in court does not object to it by filing a debtor’s motion to dismiss the lawsuit, their assets can be attached and afterwards sold through an auction performed in the records of the foreclosure procedure. The mortgage creditor has the right of following (the asset in any place it its) and the right of preference to judicially expropriate the assets posted as guarantee in order to receive the payment before any other creditor from the debtor.
- 24.What rights are available for a party holding a security interest in real property and personal property? Are there expedited proceedings to allow the recovery of property serving as security for debt obligations?
The measures are basically the same as the ones described in item 23 above, and will depend on the type of guarantee and on the agreement to which such guarantee is related to. Considering nonpayment regarding an agreement guaranteed by a real property, the creditor may file a collection of debt or foreclosure procedure already explained above and the real property offered as a guarantee of the agreement can be attached and sold through a judicial auction. The fastest way to retrieve the asset given as guarantee is to pay the debt resulting from the guaranteed agreement, or its replacement for other assets, which must be accepted by the debtor.
- 25.Describe the types of employment disputes that frequently result in litigation.
The most frequent litigations involving labor matters aim to discuss salary issues, such as the complementation of the severance pay, unpaid overtime, incorporation of salary benefits, indemnifications by work accidents, etc. Such lawsuit shall be filed before the labour court.
- 26.Does your jurisdiction allow class actions or some form of collective litigation proceeding?
The CPC states the possibility of a joinder of plaintiffs or defendants in four areas: (i) when the claim involves common rights or obligations between those parties; (ii) when the rights or obligation derive from the same legal or factual fundaments; (iii) when there are joinder actions due to the same subject or claim; or (iv) when there are connected issues due to legal or factual fundaments.
Law No. 7.347/85 states that groups of claimants with similar claims can file a class action if they are represented by the public attorney’s office, the legal aid services, the federal union, federative states, municipal corporation, public companies, agencies, government controlled company; and associations. These claims usually involve injuries to environmental, artistic, esthetic, historical, tourist and landscape wealth or rights.
- 27.Do government-owned or controlled entities enjoy any privilege when they are engaged in commercial activity and involved in a commercial or administrative litigation?
The government-owned or controlled entities have privileged jurisdiction (federal justice), and the terms for answering the complaint and for appealing are wider.
- 28.Is injunctive or other relief available on an emergency basis?
If an urgent remedy is needed, the plaintiff can request a preliminary order, as an injunction, in his complaint. For that, the plaintiff must show that the claim seems to have legal grounds and that there is risk of damage if there is a delay in granting the pleading. Generally, the judge needs to hear the opponent, but, exceptionally, the judge can grant the request before summoning the defendant. It is also possible that preliminary or incidental injunctions are filed, although an incidental injunction is acceptable only if there are new facts or circumstances that justify this new request.
- 29.Is injunctive relief or other relief available as part of a final award? If so, in what types of cases do courts usually provide injunctive relief?
If there is the danger of irreparable damages resulting from the effects of the judgment rendered, the judge may maintain the injunctive relief initially granted until the end of the procedure. The judge may grant the injunctive relief in the judgment until the final judgment of the action on the other instances, even if the benefitted party has lost in the lower court.
- 30.What are the typical court fees and costs required to file a civil lawsuit?
It depends on the court where the action is filed. Usually, the legal fee is of 2 per cent on the economic value of the demand, but the legal fee has a minimum and a maximum limit. The legal fees depend on the type of procedure to be filed and on the acts required throughout the demand. Each state court has an official table with the indication of the value of the legal fees and of the procedural acts.
- 31.Is a bond required for non-residence? What is the amount of the bond?
The plaintiff, national or foreigner, who resides outside Brazil, or is absent from the country during the course of the lawsuit, must post a bond that guarantees the payment of the legal costs and of the attorney’s fees of the other party, if they do not have real properties to ensure the payment.
- 32.What damages are available? How are damages quantified? Are punitive damages available?
Indemnifications for moral and material damages are the most common ones. The material damages must be demonstrated and evidenced by documents throughout the demand. The plaintiff has to prove the alleged loss and its precise amount. As for the moral damages, the only evidence available is the demonstration of the existence of the facts described, and the establishment of a relationship between them and the illegal act practiced by the agent. If such relation is established, and if it is a right guaranteed by the Brazilian laws, the judge may decide on the value of the indemnification based on the criteria of reasonability and proportionality. In other words, the personal conditions (social, economic) of the offended party and of the party that caused the damage, the degree of their fault or the intensity of the event, as well as their re-incidence, among other factors are relevant. Usually, the punitive damages are not accepted by Brazilian courts. The indemnifications in Brazil have the purpose to offer compensation to the victim, and not the imposition of a penalty to the offender.
- 33.Is the losing party liable for attorneys’ fees and costs? If so, how are attorneys’ fees and costs determined and proved?
The judge will condemn the losing party to pay to the winner the expenses of the cause and the attorney’s fees. The fees may be pointed out between the minimum of 10 per cent and the maximum of 20 per cent of the value of condemnation, complying with: (a) the degree of carefulness of the attorney, (b) the place where the services are rendered, and (c) the nature and importance of the cause, the work performed by the lawyer and the time demanded for his service. In the some procedures with small values or with an incalculable, ie, the fees will be fixed by the judge, following the criteria established in items a, b and c mentioned above.
If each litigating party is, in part, a winner and a loser, the fees and expenses will be reciprocally and proportionally distributed and compensated between them. If a litigating party declines the minimum part of the request, the other party shall pay the total expenses and fees. If there are several plaintiffs or several defendants, the losing parties shall pay for the expenses and fees, in proportion.
- 34.Will courts enforce a liquidated damages provision in a contract?
As a rule, Courts enforce a liquidated damages provision in a contract. However, such values may be reviewed by request of the party responsible for their payment, based on reasonable reasons for it, or if the value fixed propitiate a huge enrichment to the winning party, greatly overcoming the compensation of the suffered damages.
- 35.What is the appeal process against trial court decisions?
All judicial orders rendered during the procedure, which have decided any controversy, may be appealed. For each type of judicial decision, there may have one or more type of appeals.
If the party verifies the existence of omission, obscurity or contradiction in a legal decision, whether it is interlocutory or final, an ‘Amendment of Judgment’ can be filed and will be judged by the judge who rendered the decision, in trial court cases. Besides, if the party does not agree with an interlocutory decision, an interlocutory appeal to the state court of appeal can be filed. Against the judgment rendered by trial court judge, an appeal may be filed, which will also be judged by the state court of appeal.
The interlocutory appeal and the appeal will be distributed to a civil chamber of the state court of appeal, and a judge rapporteur will be chosen randomly. Such appeal will be decided by a panel of three judges. However, the rapporteur judge may render a singular decision, if the necessary requirements are present. Against the state court of appeal decisions rendered in the interlocutory appeal and in the appeal, special and extraordinary appeals may be filed to the Superior Court of Justice and Supreme Court of Justice.
After an appeal is filed by the defeated party, the opponent part is notified to answer the appeal. The reporting judge will examine all the information, documents and evidence, in general, contained in the records and, then, will set a date for the trial.
- 36.How frequently do appellate courts reverse trial court decisions?
There isn’t a way to precise, but the modification of trial court’s decisions by the state court of appeal is very common.
- 37.May the courts entertain challenges to administrative decisions made by federal or local governments? If so, how frequently do courts reverse administrative decisions in favour of a private party?
As a rule, the discretionary acts from the administration are not reviewed by the Judiciary, and the same happens with the discretionary aspects of the related acts. However, regarding the competence, the purpose and the form of the discretionary act, it is as subjected to the legal text as any other one, and therefore, it may be judicially reviewed.
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