Publications
- Category: Intellectual property
- Category: Litigation
In this context, debates on the statute of limitations for suits for public corruption are of extreme relevance insofar as they represent one of the main issues raised in defense by public agents and third-party beneficiaries of acts of public corruption, with significant repercussion also in the scope of public civil actions.
Before the recognition of the general repercussion of the matter via an en banc decision by the Federal Supreme Court (STF) in 2013, controversies regarding the application of the sanctions provided for in the Public Corruption Law (Law No. 8,429/92) were understood to be of an infra-constitutional nature, such that indirect offense against the Federal Constitution did not allow for the admissibility of extraordinary appeals.
Having overcome debates on the nature of the matter, in 2016, the STF validated the understanding that suits involving unlawful actions against the treasury may be time-barred upon reviewing Extraordinary Appeal No. 669.069/MG, which was admitted based on the general repercussion regime. The court explained, however, that the guidance contained in the judgment does not apply to reimbursement of damages to the treasury due to the commission of acts of administrative corruption, which was found not to be subject to a time-bar by virtue of the interpretation of the rule set forth in article 37 of the Federal Constitution.
In other words, the STF understands that the no-time-bar rule for suits for reimbursement to the public treasury has exceptions (including suits for reimbursement of damages for misconduct characterized as public corruption and suits arising from criminal offenses).
The Superior Court of Justice (STJ), in the wake of the STF's ruling, established a position that suits for reimbursement of damages to the treasury due to acts of public corruption cannot be not time-barred.
With regard to civil penalties and sanctions (removal from office, civil fine, prohibition against contracting with the Public Authorities, prohibition on receiving benefits/tax incentives), the understanding settled under the scope of the STJ is that the limitations period is five years, and that limitations period runs as of the actual holding of the position by the public agent.
That is, with regard to the civil penalties under the Public Corruption Law, it is possible to argue for the limitations period of five-years, including for companies that are beneficiaries of the alleged corrupt act. Thus, it is possible to avoid the severe penalty of prohibition on contracting with the public authorities and to receive tax benefits and incentives after the expiration of five years.
Finally, it is worth discussing the STJ's understanding on tolling the statute of limitations on suits for public corruption, which is recognized as of the mere filing of the suit within a period of five years, counted from the end of the term of office of the commissioned position or a position of trust, even if the defendant's summons is effected after that time limit.
- Category: Infrastructure and energy
In this article we analyze which situations call for companies providing public aviation services to submit their corporate acts for the approval of the National Civil Aviation Agency (ANAC) before they are filed with the competent board of trade.
Aviation services in Brazil are divided into two modalities: (i) public, which comprise specialized public aviation services and the services of public transportation of passengers, cargo, or mail, whether scheduled or not, domestic or international, such as those provided by airlines or by air taxi companies; and (ii) private, performed without remuneration and for the benefit of the aircraft operator, including sports activities, transportation reserved for the owner or operator of the aircraft, or specialized services provided for the exclusive benefit of the owner or operator of the aircraft.[1]
Unlike other companies subject to the regulations established by the Civil Code (Law No. 10,406, of January 10, 2002) and by the Brazilian Corporation Law (Law No. 6,404, of December 15, 1976), companies operating public aviation services must also observe the provisions of the Brazilian Aeronautical Code (Law No. 7,565, of December 19, 1986, or CBA) and Resolution No. 377, of March 15, 2016, and Ordinance No. 616, of March 16, 2016, both issued by ANAC.
As a result of these provisions, certain corporate acts of companies providing public aviation services must be submitted to ANAC for approval before they are filed with the competent board of trade.
The joint interpretation of articles 5 of Resolution 377 and 185 of the CBA allows us to conclude that, currently, only acts resulting in certain changes in ownership, corporate-type conversion, merger, or spin-off require prior approval by ANAC.
In this sense, Resolution 377 excludes the obligation to obtain prior approval for changes in constitutional documents unrelated to corporate ownership, corporate-type conversion, merger, or spin-off. Therefore, such documents can be submitted directly to the competent board of trade for filing. Acts exempted from prior approval must be forwarded to ANAC within 30 days after being filed with the board of trade.
When necessary, ANAC'S approval must be requested using the form provided as an exhibit to Ordinance 616.
Due to the implementation by ANAC of the Electronic Information System (SEI), the whole process of approval of corporate acts is electronically performed. Thus, ANAC'S consent ceased to be demonstrated by means of a stamp physically affixed to the relevant document and is now formalized by a letter digitally signed by the technician responsible for the approval. This letter must be sent to the board of trade along with the document to be filed.
A copy of the document filed with the board of trade must be sent to ANAC within three months of receipt of ANAC's approval.
In case of noncompliance with the legal requirement of prior approval by ANAC, the company may be ordered to pay a fine or have its authorization or concession to act as a provider of public aviation services cancelled.
1. Articles 175 and 177 of the Brazilian Code of Aeronautics (Law No. 7,565, of December 19, 1986)
- Category: Tax
Last year was special for the Administrative Council of Tax Appeals (Carf). The period began with heated discussions (and many lawsuits) questioning the productivity bonus of tax auditors [1] and ended with the joining of the representatives of the Brazilian Treasury in the strike for regulation of the bonus.
And 2018 started in an equally troubled manner. The first sessions of the judicial panels and the Superior Chamber of Tax Appeals were marked by extensive and unfulfilled agendas, either due to the cancellation of meetings due to the strike, or due to the impossibility of deciding cases due to lack of time.
Administrative problems aside, the importance of this administrative adjudicatory body is uncontested. With a more and more overwhelmed and time-consuming judiciary, having a quick and technical resolution, and a less burdensome one (without court fees and any order to pay attorneys’ fees), is a boon to taxpayers.
In practice, however, the path through administrative proceedings is not free of its own thorns. There are limitations in the decisions issued by the administrative authorities, which cannot rule on the unconstitutionality of rules. In addition, the resumption of Carf’s activities in 2015, following the outbreak of the Zelotes operation, was felt in the form of a harshening of decisions and an increase in tax victories for the Tax Authorities.
2016’s figures released by the agency [2] indicate that, in absolute terms, the taxpayer was victorious in 52% of the claims, while the Brazilian Treasury won 48%, an only slightly lower level. [3] Carf has not yet released the 2017 numbers (the annual report should be published soon), but if one keeps the same methodology for benchmarking, the proportion should not vary by much.
Analysis of this form of calculation, however, requires attention. It takes into account the total number of voluntary and special appeals decided, without considering whether an eventual victory by the taxpayer at the trial level, if modified by the Superior Chamber of Tax Appeals, represents a failure of the claim in the administrative sphere as a whole, that is, the percentage is not based on the final result of the case, but rather on the number of decisions rendered, including those that were modified.
Moreover, when we analyze the percentage of victories in large cases and more complex tax theories involving significant sums, the taxpayer's losses seem more evident. Throughout 2017, the Brazilian Treasury was successful in practically all debates involving the application of transfer pricing legislation in cases of goodwill amortization. The same occurred in the interpretation of Law No. 10,101/00 for the purposes of classifying payments to employees as Profit Sharing (PLR) and in various cases relating to the calculation of the PIS and Cofins calculation basis, just to name a few.
Relevant taxpayer victories were not so numerous. Among the decisions for the year, two cases are worth mentioning that relate to a topic of first impression before the 1st Panel of the CSRF (responsible for reviewing suits relating to IRPJ and CSLL, among others) - the deductibility, for the purposes of IRPJ and CSLL, of expenses with the payment of PLR, when there is an accusation of noncompliance with the requirements of Law No. 10,101/2000, and the consequent misclassification of such amounts as profit sharing. For different reasons, the two cases that dealt with the issue culminated in favorable results for the taxpayer and in cancellation of the tax assessment.
The 2nd Panel of the CSRF (which has jurisdiction to review matters arising from the application of social security contributions, among other issues) ordered cancellation of the tax assessment of companies that granted private pension plans only to part of the employees and managers. It was understood by unanimous vote that Complementary Law No. 109/01 eliminated the requirements of Law No. 8,212/91 (which required the provision of a pension plan to all employees and managers so that there was no application of social security contributions) and thus struck down the interpretation raised in the tax assessment.
Also in 2017, the 3rd Panel of the CSRF (responsible for the decisions involving issues of PIS and Cofins contributions, among others) settled its favorable opinion to the taxpayer with respect to the possibility of appropriating the PIS and Cofins credit on freight paid in the transfer of products between establishments of the same owner.
Even with timid victories for taxpayers, Carf is a reference body in tax matters. Decisions issued by the 15 lower court panels of the body and by the three panels of the Superior Chamber of Tax Appeals, and, more recently, by extraordinary panels,[4] are of undeniable importance for an examination of federal tax legislation.
The court continues to be the scene of important debates involving issues of great factual complexity and high amounts at issue. Considering the possible change in the composition of the adjudicatory panels, it can be assumed that taxpayers may achieve different results in litigation on topics for which they are not successful today. Some terms of office of board members are about to end and there are several vacant positions pending appointment of a board member. Carf has 146 full members, 120 in the lower panels and 26 on CSRF panels. Today, there are eight vacant positions with the lower panels and another four on the CSRF panels.
In 2018, it is expected that effective regulation of the productivity bonus will put an end to the strike that affected the organization, such that all the decisions can be resumed with the prospect of important debates and victories.
1. Initially instituted by Presidential Decree No. 765, of December 29, 2016, converted into Law No. 13,464, of July 10, 2017.
2. CARF Decisions Report - January to December of 2016, published on the website: http://idg.carf.fazenda.gov.br/noticias/2017/carf-divulga-relatorio-das-decisoes-proferidas-de-janeiro-a-dezembro-de-2016
3. Table 1 - Appeals decided by appellant and result of the appeal - published on the website: http://idg.carf.fazenda.gov.br/noticias/2017/relatorio-julgamento-2016-v3.pdf
4. Extraordinary panels are responsible for deciding cases involving up to 60 minimum wages.
- Category: Labor and employment
The Labor Reform (Law No. 13,467/17) extended the jurisdiction of the Labor Courts to include in its list of duties decisions on ratification of out-of-court settlements (article 652, item IV, letter "f", of the Consolidated Labor Laws), based on the Voluntary Adjudication Process.
In the general judiciary, in turn, the Code of Civil Procedure of 1973 already set forth in its article 1 the exercise by magistrates of voluntary adjudication. With the enactment of the New Code of Civil Procedure, the subject gained even more prominence, with the drafting of a separate chapter on the matter (Chapter XV, in articles 719 to 770).
In the Labor Courts, the inapplicability of voluntary adjudication had as its justification the characteristics of labor relations, according to which, in theory, the employee is always at a disadvantage vis-à-vis the employer. In other words, there is allegedly a defect consent in any and all negotiations, regardless of the characteristics and the desire of the employees.
The impossibility of ratifying out-of-court settlements by the Labor Courts was certainly one of the reasons for the so-called "judicialization of labor relations."
Since employers had no assurances about the enforceability of out-of-court settlements (as a result of the alleged unwaivability of labor claims), it was common practice to bring "strike suits" or so-called "sham litigation" in association with employees. This occurred mainly in cases of workers with a higher hierarchical level as a way of guaranteeing the effectiveness of settlements to resolve conflicts in a definitive manner, without the possibility of future surprises on any other subject. In other words, security was sought.
This procedure was repudiated by the Labor Courts because it was understood that mock litigation was fraudulent, which could lead to denial of ratification of the settlement or even to termination of any ratification if the parties were discovered later. There was also a risk of opening of a complaint with the Brazilian Bar Association against the parties' lawyers.
The new prerogative has been regulated by articles 855-B and 855-E of the Consolidated Labor Laws, which establish that the parties may reach a settlement out of court and present it for ratification by the Labor Courts, provided that: (i) it is done by joint petition between the parties' lawyers; and (ii) the parties are assisted by different lawyers.
Except for the 15-day deadline for the judge to review the settlement, as well as the latter's option to schedule a hearing, the Labor Reform did not bring in further procedural details relating to ratification of settlements before the Labor Courts.
In view of this lack of regulations and the importance of the matter, the Higher Council of the Labor Judiciary (CSJT) chose this issue for its first public hearing, led by the Deputy Chief Judge of the Council and of the TST, Justice Emmanoel Pereira.
According to news piece published on the TST’s website, the objective is to standardize voluntary adjudication by creating a standard procedure for ratifications of out-of-court settlements at a national level. Thus, the CSJT seeks to provide a general guideline for all Labor Courts.
In this sense, and considering the broad adherence by parties (more than 600 settlements since November of 2017), the Judicial Center for Consensual Methods of Dispute Resolution of the Circuit Court of the 2nd Circuit (Cejuscs-JT-2), the body responsible for ratification together with the judges of the Labor Courts, was a pioneer in providing guidelines to be followed in the assessment of the Voluntary Adjudication Process:
- Requirements for the complaint: The filing brief must contain identification of the contract or legal relationship, the obligations agreed upon (amount, time, and mode of payment), a penalty clause, items negotiated and their respective amounts, the amount in controversy, as well as assignment of responsibility for tax and social security payments.
- Listing of amounts: the complaint must list the installments subject to the settlement, thereby defining their respective legal nature, respecting the rights of third parties and matters of public policy.
- Registration in the PJe: it is necessary that the lawyers of both parties register, and it is not enough for the lawyers to sign the petitions together.
- Processing of the petition: the request for ratification of the out-of-court settlement is filed, the court sends the record to the Judicial Center for Consensual Methods of Dispute Resolution (Cejusc-JT-2), which will review the application.
- Procedural costs: The costs of 2% over the value of the settlement must be advanced by the parties and prorated among the interested parties. The collection of costs shall be determined in the order by the judge of the Cejusc-JT-2 that receives the complaint.
- Powers of the magistrate: judges may order amendment of complaints; reject complaints because of unlawful or inadmissible settlements; grant ratification; order the curing of procedural defects; or schedule a hearing for the parties to provide testimony.
- Scheduling a hearing: a hearing is not mandatory, but the Cejusc-JT-2, as a rule, should schedule one.
- Management of the hearing: the judges may preside directly over the hearings or do so through mediators, always under the supervision of the magistrate, who alone is competent to approve the settlement.
- Attendance at the hearing: when scheduled, unjustified absence of any party at the hearing will cause the proceedings to be closed, resulting in extinguishment without a resolution on the merits.
- Discharge of the settlement: discharge involving a subject foreign to the process or legal relationship not brought to court is possible only in the event of judicial voluntary settlement in contentious proceedings. The discharge must be limited to the rights (amounts) specified in the petition for settlement.
- Employment relationship: the existence of an employment relationship or lack thereof is not at the discretion of the parties.
- FGTS and unemployment insurance: no authorizations shall be issued for the release of the Guarantee Fund for Length of Service (FGTS) and unemployment insurance; it is up to the employer to assure the employee access to these benefits.
- Execution of settlements: ratified settlements are judicially enforceable instruments, and any execution due to noncompliance must be submitted to the judge of the original Labor Court, since the Cejuscs-JT-2 is only responsible for reviewing and ratifying settlements.
It is important to note that the guidelines issued by the Cejuscs-JT-2 do not have the force of law. Magistrates have the autonomy to follow different guidelines in ratifying out-of-court settlements.
In any case, within the jurisdiction of the Circuit Court of Labor Appeals of the 2nd Circuit (Greater São Paulo and the Southern Seaboard/Shoreline), the Cejuscs-JT-2 guidelines serve as important recommendations to be followed for future out-of-court settlements brought to court for ratification.
- Category: Infrastructure and energy
The expansion of the power sector, one of the flagships in Brazil's infrastructure, has been assured in recent years by investments obtained in several auctions of new, existing, and reserve energy held by the Federal Government through the National Electric Energy Agency (ANEEL) and the Electric Energy Trading Chamber (CCEE). The authorizations or concessions granted in these auctions conferred upon various agents the right (and responsibility) to develop power generation projects for delivery under commercialization contracts also resulting from the auctions. These documents follow the format of an Electric Energy Trading Contracts in the Regulated Environment (CCEARs), between generators and distributors, in the case of new and existing energy auctions, or Reserve Energy Contracts (CERs), between generators and CCEE, in the case of reserve energy auctions. In both cases, after the results of the public tenders are ratified, a search for sources of funding begins in order to enable the development of the projects and the generation and delivery of the power purchased. In this context, a fiduciary assignment of the receivables originating from the CCEARs or CERs of the project receiving the financing is used as collateral in almost all financing transactions. The manner for formalization and perfection of this type of collateral is already well established and involves the execution of a collateral agreement, filing it with the appropriate registry of deeds and documents, and sending notifications regarding the fiduciary assignment to the counterparties purchasing the energy (power distributors, in the case of CCEARs, and CCEE, in the case of CERs). The notifications have two main objectives: (1) informing the counterparties of the creation of a lien over the receivables with a fiduciary assignment in favor of the creditors; and (2) instructing the counterparties to direct payments due under the contracts to the escrow accounts indicated by the creditors. In addition to sending these assignment notices, it is also important to follow the procedure for changing the payment instructions under CCEARs and CERs, established by CCEE, an entity that, among other duties, is responsible for implementing rules for electric energy trading contracts and mechanisms. In order to change the banking data provided in CCEARs and CERs, an electronic form generated and made available by CCEE, upon the agent’s request, should be filled out, pursuant to Module 3, Sub-module 3.2, of the CCEE Trading Procedures (approved by ANEEL through Order No. 1,454/2016 and updated by Order No. 1,911/2017). Specifically with regard to CERs, it is also necessary to obtain CCEE’s prior consent in order to conduct a fiduciary assignment of receivables arising therefrom. Consent is required under the terms of the CERs themselves and must be requested by following the procedure established by CCEE in a document complementary to Sub-Module 3.2, mentioned above, issued in August 2017. Based on the CCEARs used in the latest energy auctions, the distributors' consent is not required for the fiduciary assignment of receivables therefrom.