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Category: Labor and employment

Since the enactment of the Labor Reform (Law No. 13,467/2017, effective as of November 11, 2017), there has been much debate about the possibility of applying the changes in the rules of substantive law to employment agreements entered into before the Reform.

The discussion in legal scholarship revolves around two distinct scenarios related to the applicability of the new legal provisions: (i) to employment agreements that terminated before the beginning of the Reform; and (ii) to employment agreements entered into prior to its entry into force and which remain active after the expiration of the vacatio legis of Law No. 13,467/17.

Regarding the first scenario, article 5, XXXVI, of the Federal Constitution and article 6 of the Law of Introduction to the Rules of Brazilian Law (the "Law of Introduction") put an end to any discussion. They clearly provide for the immediate applicability of the innovations brought in by the Labor Reform to new hires and, therefore, the inapplicability of the Labor Reform in relation to the employment agreements entered into prior to its enactment.

Article 6 of the Law of Introduction is clear in its head paragraph that the law in force, in this case the Labor Reform, has immediate and general effect, which leads us to conclude that, when the employment agreement is entered into after November 11, 2017, the law in force being Law No. 13,467/17, all legal provisions brought in by the Labor Reform will be fully applicable to such agreement.

Concerning agreements entered into prior to the Labor Reform, it should be pointed out that article 6 of the Law of Introduction deals precisely with matters relating to perfected legal acts and res judicata, thus prohibiting a subsequent law from prejudicing an accrued right. It is undeniable that employment agreements entered into before November 11, 2017, are perfected legal acts, as they were consummated according to the law then in force.

Thus, the main controversy concerns the application of the Labor Reform to labor agreements entered into before its enactment and which remain in force. In the field of legal scholarship, there is debate regarding whether the application of the innovations brought in by the Reform to these agreements would imply violation of accrued labor rights that were provided for in the legislation that was amended or repealed by the Reform.

For example, prior to the Reform, employees who worked in remote locations without collective transportation were entitled to receive "hours in itinere" for the time spent commuting to work. The Labor Reform changed the legal wording and now, even if there is no collective transportation to the workplace, employees do not have the right to receive "hours in itinere".

The discussion after the Reform is whether the company can withdraw the payment of "hours in itinere" from all employees or only from persons hired after the entry into force of the new law. Have employees hired under the previous law accrued the right to receive "hours in itinere"?

The controversy was so great that the government ended up including article 2 in Presidential Decree No. 808/2017, therein expressly providing that "the provisions of Law No. 13,467 of July 13, 2017, applies in full to employment agreements currently in force." However, with the expiration of the term of effectiveness of Presidential Decree No. 808/2017, on April 23, 2017, article 2 had its legal effectiveness vacated, thereby bringing back the issue of the application of the Reform to agreements in force entered into before it.

In order to resolve this issue, it is necessary to differentiate accrued rights from expectations of a right. While the former can be characterized as the scenario in which all the mandatory requirements for a particular right have been fulfilled, the second is translated into the scenario in which all the conditions for the regular exercise of the right have not yet been fulfilled.

As is well known, employment agreements are characterized as relations of successive treatment between the employer and the employee, in which the obligations inherent to the agreement are renewed periodically, like cycles of renewal of rights.

One example is the right to vacation: it cannot be argued that employees with a six-month employment relationship have the accrued right to take vacation. Employees only have an expectation that, after fulfilling the legal requirements, they will have the right to use their vacation. Such an understanding can be applied to other rights arising from an employment agreement.

Taking this understanding as a basis, it is found that, when the factual support that substantiates the guarantee of a certain right or the legal support that guarantees the enforceability of a certain right is modified, a right cannot be said to have been accrued. Thus, the continuation of the legal regime prior to the new law is unenforceable and it is concluded that, for labor agreements entered into before the Labor Reform was in force, the legal innovations brought in by it are applicable to them only after the date of enactment of Law No. 13,467/17.

Thus, answering the question of "hours in itinere", one concludes that the employees simply were not entitled to receive them; they only have the expectation of a right, based on the law that guaranteed them this right. Once the law has been amended in this regard, it is entirely possible that the employee's expectation of a right is also altered and that the payment of "hours in itinere" is abolished after the enactment of the Labor Reform.

For the time being, there is still no unified position from the labor courts on this issue. Anamatra (National Association of Magistrates of the Labor Judiciary) issued non-binding restatements of law regarding the Labor Reform, indicating that the magistrates would walk in the opposite direction because they understood that the agreements entered into before the Labor Reform included an accrued right to the maintenance of the substantive rights envisaged in the previous law.

This understanding, in addition to being contrary to the law and to the best interpretation of the subject, would require companies to have parallel Human Resources controls and policies applicable to employees according to the date of their hiring, which, in addition to being absurd, is fatally mistaken.

More in line with the constitutional and basic principles of Brazilian law, the Ministry of Labor issued on May 14, 2018, an opinion concluding that, even after the loss of the effectiveness of article 2 of Presidential Decree No. 808/2017, the legal provisions brought in by the Labor Reform are applicable in a general, comprehensive, and immediate manner to all employment agreements governed by the Consolidated Labor Laws, including those entered into before the Reform expires and remain in force after November 11, 2017.

On May 16, 2018, a commission of justices of the TST also published an opinion on the amendments brought in by Law No. 13,467/2000, in which the justices concluded that, as far as substantive law is concerned, there should be jurisprudential construction of the changes based on judgments of concrete cases.

Therefore, despite the opinion of the commission of justices of the TST relegating the issue of formation of case law, the fact is that, according to the principles of the application of the norms of Brazilian law, the provisions of the Labor Reform are generally, comprehensively, and immediately applicable to all employment agreements governed by the Consolidated Labor Laws, including those entered into before the Reform was enacted and continue in force after November 11, 2017.

Category: Environmental

If the high costs resulting from the construction and maintenance of offshore wind farms were not enough, the sector also faces legal uncertainty due to the lack of regulations for environmental licensing.

On July 25, 2014, the National Environmental Council (Conama) Resolution No. 462/2014 was published, which establishes procedures for the environmental licensing of projects to generate electricity from a wind farm on a land surface. The rule is clear in stating that it applies only to onshore wind farms.

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Despite the absence of a specific rule, there is no obstacle to the licensing of these activities based on the current rules on environmental licensing. Currently, there are three projects for offshore wind farms in Brazil, all under environmental licensing with the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA). Jurisdiction is determined by Federal Decree No. 8,437/2015, which granted the agency the jurisdiction to license wind farms offshore and in land-sea transition zones.

Offshore wind farms may be considered potential sources of noise pollution because they produce high amplitude sounds, and are sources of visual pollution since their towers can compromise the landscape where they are installed. These potential impacts may be mitigated when they are installed at the sea in a distance far enough offshore for such adverse sound and visual effects to be reduced or eliminated.

Wind farms also pose risks to birds of all species, which may fly close to their blades and turbines. Preventing the installation of wind farms in areas known to be migratory bird routes is one way to reduce these risks.

Other impacts of the offshore wind farms are: vibration, emission of electromagnetic fields, high maintenance and supervision costs, soil degradation, and disturbances to benthic seabed organisms.

As opposed to high maintenance and installation costs, offshore wind farms stand out due to the permanence and uniformity of the winds, which results in less interference from turbulence. In addition, in the high seas the speed of the winds is higher, which increases the energy production capacity.

Because offshore wind farms are far from the coast, there is also a significant reduction in negative externalities, such as noise emissions, impacts to the neighborhood, and non-occupation of potential dwellings of traditional communities or arable land in that space.

Another positive factor is the possibility of installing larger turbines, since there is no weight limit on the transportation of components via sea vessels, a common problem for onshore installations due to road transport.

Despite all the advantages that offshore wind farms have, particularly with regard to viability, the absence of specific legislation is a major barrier to investment in these structures. A vast potential for clean energy production is being wasted, a phenomenon observed in a study published in 2011 on the Brazilian Exclusive Economic Zone (EEZ) regarding the wind potential available on Brazil's shoreline.^[1] According to this study, the energy potential of the EEZ is approximately 12 times greater than that of the Brazilian onshore continental area, with a length {an extension} of 200 nautical miles.

Based on international regulations and existing regulations, the first steps towards greater legal certainty for the installation of offshore wind farms in Brazil are specific environmental regulations based on Conama Resolution 462/2014, which establishes objective criteria for defining environmental impact studies appropriate in each situation (whether simplified studies, such as the Simplified Environmental Report (RAS), or more complex studies such as the Environmental Impact Study and the Environmental Impact Report (EIA/Rima)), and propose the content of the terms of reference for such studies.

^[1] ORTIZ, G.P.; KAMPEL, M. Potencial de energia eólica offshore na margem do Brasil [“Offshore wind potential on the Brazilian coast”]. V Simpósio Brasileiro de Oceanografia [“V Brazilian Symposium on Oceanography”].

Category: Environmental

Ordinance No. 01/2017 of the Genetic Heritage Management Council (CGEN) and Federal Law No. 13,123/15 (the new legal framework for biodiversity, which repealed Presidential Decree No. 2,186-16/2001) established the date of November 6, 2018, as the final deadline for regularization or adaptation in the National System of Management of Genetic Heritage and Associated Traditional Knowledge (SisGen).

Those who performed activities of access to Genetic Heritage (PG) and Associated Traditional Knowledge (CTA); shipment abroad of PG samples and economic exploration of a finished product or reproductive material resulting from access to PG or CTA are subject to the requirements of the new legal framework for biodiversity.

Access to PG or to CTA completed before June 30, 2000 (date of the first enactment of Presidential Decree No. 2,186/2001) and economic exploration of a finished product or reproductive material resulting therefrom are not subject to regularization or adaptation in SisGen required in the new legal framework for biodiversity.

In this case, an interpretation of the legislation leads to the understanding that it is the duty of the user to demonstrate that all stages of access, including technological development, were completed before June 30, 2000, through the presentation of some of the following documents: patent application; cultivar record; registration of the product with public agencies, or proof of commercialization of the product.

Activities carried out after that date are subject to regularization or adaptation, depending on whether or not the activities were carried out in accordance with Presidential Decree No. 2,186-16/2001. Thus, those that obtained authorization for access or economic exploration during the term of Presidential Decree No. 2,186-16/2001 and, according to it, were obliged to carry out the process of adaptation by registering access and reporting the finished product or reproductive material in SisGen.

For the adaptation, the user must distribute the benefits related to the economic exploration carried out as of the date of entry into force of Law No. 13,123/15, except when it was so done in the manner set forth in Presidential Decree No. 2,186-16/2001.

Regularization, on the other hand, is conditioned on the signature of a consent order, since it is applied to those who carried out the following activities in disagreement with Presidential Decree No. 2,186-16/2001:

-      Access to PG or associated CTA;
-      Access and economic exploration of a product or process arising from access to PG or CTA, which is dealt with in Presidential Decree No. 2,186-16, of August 23, 2001;
-      Shipment of PG samples abroad; or
-      Dissemination, transmission, or retransmission of data or information that are or constitute CTA.

The execution of a consent order between the user and the Federal Government is an essential condition for the regularization of activities and must provide for the following obligations: registration or authorization of access or remittance of PG or CTA; reporting of the product or process originating from access to PG or CTA; or distribution of the benefits obtained with respect to the time in which the product developed after June 30, 2000 based on access to PG or CTA was made available on the market, up to five years prior to the execution of the consent order. Once the consent order has been signed, the application and enforceability of administrative penalties shall be suspended.

In the event of access to PG or CTA solely for the purpose of scientific research, the user shall be exempt from signing a consent order and may be regularized by means of registration or authorization of the activity.

If the procedures for adaptation or regularization have not been carried out by November 6, 2018, according to the new legal framework for biodiversity, the ser shall be subject to penalties, including penalties of up to R$ 10 million, warnings, and product seizures.

Category: Banking, insurance and finance

The Superior Court of Justice (STJ) established an understanding that electronic loan agreements signed through the Brazilian Public Keys Infrastructure (ICP-Brasil) have the enforceability of an enforceable instrument, thus dispensing with the need for signature by two witnesses. The opinion was obtained in the judgment of Special Appeal No. 1.495.920/DF, of the authorship of Justice Paulo de Tarso Sanseverino, on May 15, 2018.

An electronic contract is nothing more than a contract in which the declarations of will of the parties express themselves through the electronic transmission of data. It is not, therefore, a new type of contract, but only a new means by which the declarations of will of the parties are manifested. This concept of electronic contracts covers agreements signed remotely by the parties as well as electronic means the so-called smart contracts, written as code in a programming language and executed on a computer in order to reduce the transaction costs of the parties to the contract.

As determined by the Code of Civil Procedure (CPC), private documents signed by the debtor and by two witnesses is considered an enforceable instrument, but there is no provision regarding the waiver of witnesses in the case of digitally signed electronic contracts.

Presidential Decree No. 2,200/01 created ICP-Brasil "to guarantee the authenticity, integrity, and legal validity of electronic documents, support applications, and registered applications that use digital certificates, as well as the execution of secure electronic transactions." The Presidential Decree provides that declarations contained in the documents in electronic form produced using the certification process made available by ICP-Brasil are assumed to be true in relation to the signatories. The decree did not, however, provide for effective enforceability of contracts signed through ICP-Brasil.

Despite the absence of an express legal provision as to the enforceability of contracts signed through ICP-Brasil, the central argument formulated in the special appeal is that, although the CPC does not mention electronic contracts digitally signed by ICP-Brasil as an enforceable instrument, they must be so considered as they have been repeatedly entered into these days because they embody a liquid, certain, and enforceable obligation to pay, and especially because certification by ICP-Brasil has a function similar to that of the signing of the contract by witnesses.

This decision attends to the expectations of market participants operating in the digital credit market since, considering the costs of ICP-Brasil, signature by two witnesses on electronic loan contracts in order to impart enforceable effect to these documents represents a significant impediment to such transactions (especially in retail). It is important to point out, however, that the agreement established in the appellate decision has not yet been reiterated by the STJ, in addition to there being a divergence between the justices (presented in the dissenting opinion by Justice Ricardo Villas Bôas Cueva to the effect of not admitting loan agreements signed by ICP-Brasil as an enforceable instrument).

Thus, although the decision is in line with market expectations (especially with the recent regulations of credit fintechs), it does not circumvent the need for specific regulations that address the instruments necessary to carry out credit transactions by electronic means in order to define parameters that provide legal certainty and promote the growth and development of such transactions.

Category: Tax

Brazil has for years been witnessing an intense debate regarding the constitutional jurisdiction to tax the most varied of legal deals involving digital assets, more precisely software, whether it is the ICMS, ISS, or neither of the two.

Law No. 16,757/2017, published by the municipality of São Paulo, established as a new tax triggering event for the ISS, among others, the "provision, without definitive assignment, of audio, video, image, and text content through the Internet, respecting the immunity of books, newspapers, and periodicals."

In this manner, streaming started to be taxed at the rate of 2.9% in the city of São Paulo. This occurred as a side effect of Complementary Law No. 157/2016, which authorized municipalities to commence collection.

Streaming could be another example of a dispute between states and municipalities. The ICMS covers goods and services of communication and transportation. The ISS covers the remainder and the most varied of services. In the digital economy, where activities would not fit clearly into either of the two fields of taxation, the ground for disputes is fertile.

Confaz, through Agreement No. 106/2017, authorized the states and the Federal District to charge the ICMS for transactions with digital goods and merchandise, such as software, programs, electronic games, applications, electronic archives, and standardized similar items (even if they have been or might be customized) and marketed through electronic transfer of data.

The agreement, which began to take effect on April 1, 2018, establishes that the ICMS will be collected upon shipment from the manufacturer and on imports done through a website or electronic platform that sells or makes available, even if via periodic payment (such as subscriptions), digital goods and merchandise through electronic transfer of data, at the state where the purchaser of the digital goods or merchandise is domiciled or established.

The São Paulo State Revenue Department recently published CAT Ordinance No. 24, of March 24, 2018, to detail how the application of the ICMS on digital goods and merchandise in the state will occur. It mentions that digital goods and merchandise are considered "all those that are not personified, embedded in a mass marketing chain, like those that were offered for sale on physical media, "such as "audio, video, image and, text content, with definitive assignment (download)", thus meaning that there will be no ICMS tax on streaming (availability without definitive assignment).

In fact, we are of the opinion that there would be no transfer of ownership of goods in streaming that would be capable of giving rise to application of the ICMS tax, just as it does not apply in other situations in which subscribers access temporarily purchased content.

The definition of tax jurisdictions, especially with regard to potential conflicts between the ISS and ICMS, is commendable. It reduces legal uncertainty, as well as all costs associated with it, and contributes to improving the business environment and encouraging investment.

Clarification on the non-application of the ICMS is therefore beneficial. However, one may still debate the constitutionality of application of the ISS on streaming because it does not fit perfectly within the traditional concept of services that involve an obligation "to do” something, and not an obligation to "give" something.

Although it acted well in clarifying the non-taxation of streaming, the State of São Paulo, as expected, maintained taxation on transactions involving software download. It also maintained taxation on access to software in the cloud. In the latter case, in addition to all the issues surrounding the long discussion on taxation of software downloads, there are peculiarities that further distort the concept of mere marketing and sale of merchandise. Accessing the cloud, in addition to not involving transfer of ownership, may encompass various utilities, such as storage, provision of content, among others, which in no way resemble the marketing and sale of merchandise.

From all the foregoing, one can see that developments towards legal certainty in this area may show some progress, but it is still a difficult road ahead.

Category: Environmental

The Brazilian Institute for the Environment and Renewable Natural Resources (Ibama) published on August 14, 2018, Normative Instruction (IN) No. 18/2018, in order to allow more covered parties to join the fines conversion program. The new standard changes the transition rules set out in IN 06/2018 and, in practice, extends to 60 days the period originally established for covered parties to submit their requests to convert fines. With the change, adherence to the program may be requested until October 15, 2018.

The rules in force require that requests to convert fines be submitted by the interested parties up to the point of submission of final arguments for new proceedings. For the infraction notices drawn up prior to entrance into force of IN 06/2018, as a transitional rule, a period of 180 days was originally granted as of the publication of IN 06/2018, which would end on August 15.

The possibility of converting these monetary sums ​into services for preservation, improvement, and recovery of the quality of the environment was already provided for in Federal Law No. 9,605/1998 and Federal Decree No. 6,514/2008. However, there was no regulation for the substitution of fines to be effectively adopted by environmental agencies.

In the federal sphere, the procedure for the conversion of fines imposed by IBAMA was regulated by IN No. 06/2018, published on February 16 of this year. In general, the rules establish which projects will be considered services of preservation, improvement, and recovery of the quality of the environment, the procedure to be followed by the interested party to request the conversion, and the characteristics of direct and indirect conversion modalities, hitherto unpublished in Brazilian legislation.

Also as a change, Ibama provides important restrictions on granting the conversion of environmental fines. As an example, IN No. 06/2018 provides that requests in this regard will be denied when: (i) the environmental violation results in human death; (ii) the covered party is included in the official register of employers who have submitted workers to conditions analogous to those of slavery; (iii) in the inspection procedure evidence is found that the covered party exploits child labor; and (iv) the offense is committed through the use of cruel methods for slaughter or capture of animals.

Upon choosing to convert a fine, the covered party will have its administrative proceeding suspended and, depending on the modality chosen (direct or indirect), it may have a discount of up to 60% of the amount of the fine imposed. Once the conversion is granted, the covered party must appear before Ibama to sign the commitment agreement (consent order) that will govern the environmental services to be provided, in addition to the general rules of validity, a fine in the event of any breach, a deadline for compliance with the obligations, etc.

IN No. 06/2018 and IN No. 18/2018 are applicable only to administrative proceedings in progress before IBAMA. The conversion of fines imposed by infraction notices issued by the other environmental agencies must follow the specific rules of the competent body, if there are any. With the regulation regarding the subject by the federal authority, the expectation is that other environmental agencies will issue rules on the conversion of fines or opt to apply the provisions applicable in the federal sphere.