Publications

Category: Litigation

The Fourth Panel of the Superior Court of Appeals (STJ) completed in August the judgment of Special Appeal (REsp) 1.837.386/SP, in which it was litigated whether the promulgation of Precedent 326 of the STJ^[1], based on the Code of Civil Procedure of 1973 (CPC/73), would conflict with the wording of article 292, V, of the Code of Civil Procedure (CPC) in force.^[2]

Among the provisions submitted for analysis by the court in the REsp,^[3] article 86 of the CPC merits attention, according to which the parties must bear, proportionally, the case costs and the attorneys' fees in the event of reciprocal loss of suit.

According to the recent understanding of the STJ, established on the occasion of the judgment of REsp 1.837.386/SP, in actions for compensation for non-economic damages, even if the amount of the compensation awarded by the judgment is miniscule if compared to the amount indicated in the complaint, "there is no question of loss of suit for the plaintiffs, who were victorious in their claim for compensation," which reinforces the content set forth in Precedent 326.

This is because the plaintiff would be allowed to formulate a claim for compensation for non-economic damages in an estimated manner, such as, for example, using "generic formulas like 'compensation not less than', without an award in an amount higher than his estimate qualifying as an ultrapetita decision."

The discussion submitted to the STJ is old and subject to divergence. On one side, there are those who, in the legal scholarship^[4] and in the case law,^[5] defend maintenance of the validity of what is stated in the precedent. Considering that the judge, in theory, is be bound to the amount requested in the complaint to fix the quantum of the compensation, the understanding would prevail that, if the request for compensation for non-economic damages is granted, even if in an amount lower than that requested, there would be no partial or reciprocal loss of suit between the parties.

In this sense, although article 292, V, of the CPC expressly requires that a claim for non-economic damages be quantified and determined by the plaintiff when the suit is filed, the total loss of suit would fall to the defendant, since the amount indicated in the complaint for the award of compensation for non-economic damages would be merely an estimate.

From the point of view of constitutional law, the first current seeks to protect full access to Justice (article 5, XXXV, of the Federal Constitution), as it finds that the risk of the party incurring costs for loss of suit, in the case of partial acceptance of the claim for compensation, may inhibit the filing of suits seeking compensation for non-economic damages. In practice, this happens not infrequently, since the amount of compensation is derived from the subjective assessment of the judge.

In line with the understanding held by the STJ when ruling on REsp 1.837.386/SP, it would be inconsistent to impose a burden for loss of suit on plaintiffs who won a suit for compensation for non-economic damages, since, depending on the situation, the amount of the compensation set by the court could even be lower than the attorneys' fees imposed on the winner in the claim.^[8]

Thus, by upholding the understanding set forth in Precedent 326, the STJ demonstrates its concern for the potential legal effects and consequences that would result from a possible overruling of said precedent, as provided for in article 21 of the Law of Introduction to the Norms of Brazilian Law (LINDB).^[9]

On the other hand, as to the second trend, it is impossible to ignore that the CPC is explicit in requiring the plaintiff to present a certain and determined claim in “actions for compensation, including those based on non-economic damages", not allowing generic or estimated requests. Although we recognize the existence of legal authorization in article 324, paragraph 1, II, of the CPC for the formulation of a generic claim, "when it is not possible to immediately ascertain the consequences of the act or fact", this scenario does not apply to claims for non-economic damages.

This is because, even though the instability of the case law is undeniable, the courts, especially with the advent of the internet, have ample access to countless parameters to quantify claims for compensation according to the concrete case, as seen in case research in the courts of all the states in the federation, preparation of legal studies, among others.

Even if the judgment does not establish the exact amount of damages requested in the complaint, the judge should evaluate whether, in the concrete case, the plaintiff lost in a minimum part of the claim that would justify an exclusive judgment against the defendant for the costs for loss of suit, as provided for in the sole paragraph of article 86 of the CPC.

This interpretation honors the system provided for in article 7 of the CPC, assuring the parties exercise of the adversarial process, inasmuch as, in addition to allowing the defendant to discuss the extent of the amount sought by the plaintiff, it prevents irresponsible claims for compensation for non-economic damages due to the possibility of partial loss of suit.

Except in the case provided for in the sole paragraph of article 86 of the CPC, it seems reasonable that the percentage of the fees for loss of suit to be awarded in favor of the defendant's lawyer should observe the economic benefit obtained, reached by the difference between the excessive amount claimed and the amount awarded in the judgment as non-economic damages.

This understanding was ratified by Ruling 14/15 of the National School for Training and Improvement of Judges (Enfam),^[10] approved by about 500 judges during the seminar The Judiciary and the new CPC, held from August 26 to 28, 2015, at the seat of the STJ itself.

In summary, we start from the premise that bringing suit in court involves risks, among them the burden of loss of suit. In this context, the procedural subjects, including the judge, have the duty to cooperate with each other to enable delivery of judicial relief (article 6 of the CPC).

On the one hand, it is incumbent on the plaintiff to prudently set the amount claimed for non-economic damages, under penalty of, failing to do so, bearing part of the burden for loss of suit. On the other hand, it is the judge's role, weighing the defendant's allegations to the contrary, to examine the reasonableness of the amount of compensation sought, taking into account the factual situation and the existing case law on the subject.

This is the co-participative and collaborative model of proceedings,^[11] founded on the principles of legal security and due process of law provided for in article 5, XXXVI and LIV, of the Federal Constitution, which also lends itself to improving the case law.

Regardless of sympathy for one view or the other, the fact is that the CPC does not provide an express solution for the controversy. Considering that article 292, V, of the CPC deals specifically with actions for compensation based on non-economic damages, the best way to settle the issue might be to seek the adaptation of the procedural law through the ordinary pathway of the constitutional legislative process, through the popular participation of all interested parties.

Until this occurs, or the matter is submitted for judgment under the system of repetitive appeals provided for in articles 1036 et seq. of the CPC, the result of the judgment in the STJ will continue to be the target of reasoned criticism, especially in light of the robust case law and scholarly divergence on the subject.

^[1] "In the action compensation of non-economic damages, the judgment at a lower amount than that requested in the complaint does not imply reciprocal loss of suit" (Special Court, decided on June 7, 2006).

^[2] Article 292. The value of the cause shall be established in the complaint or counterclaim and shall be: (...) V - in actions for compensation, including those based on non-economic damages, the sum sought;

^[3] In the appeal briefs, the appellant indicates violation of articles 186 and 927 of the Civil Code (CC) and of articles 85, paragraph 2, and 86 of the CPC.

^[4] “An interesting position has been adopted by the case law regarding the action for compensation for non-economic damage. As the award of the amount of the compensation is of the judge's exclusive competence, the understanding of the Superior Court of Appeals has been fixed to the effect that, 'in actions compensation of non-economic damages, the judgment at a lower amount than that requested in the complaint does not imply reciprocal loss of suit’ (Precedent 326/STJ)." (THEODORO JÚNIOR, Humberto. Course on Civil Procedure Law. 56th ed. Rio de Janeiro: Editora Forense, 2015, p. 308).

^[5] STJ, REsp 579.195-SP, opinion drafted by Justice Castro Filho, 3rd Panel, decided on October 21, 2003; TJMG, Motion for Clarification-Cv 1.0000.22.037448-2/002, opinion drafted by Appellate Judge José Augusto Lourenço dos Santos, 12th Civil Chamber, decided on September 2, 2022; TJSP, Civil Motion for Clarification 1000476-56.2017.8.26.0412, opinion drafted by Appellate Judge Coelho Mendes, 10th Chamber of Private Law, decided on February 5, 2019.

^[6] "A problem that deserves careful analysis is that of a generic claim in actions for non-economic damages: should the plaintiff quantify the amount of the compensation in the complaint or not? The answer is in the affirmative: the claim in these lawsuits must be certain and determined, limiting the plaintiff in how much he seeks to receive as compensation for the non-economic damage he has suffered. Who, other than the plaintiff himself, could quantify the 'non-economic pain' he claims to have suffered? How could a stranger, and therefore unaware of this 'pain', assess its existence, measure its extent, and quantify it in money? The judge's job is to judge whether or not the amount requested by the plaintiff is due; it is not incumbent on him, without a provocation from the plaintiff, to say how much the amount should be. Furthermore, if the plaintiff requests that the judge determine the amount of the compensation, he will not be able to appeal decisions that, absurdly, set it at one Brazilian Real (R$ 1.00), since the claim would have been fully granted, with there being no way to find an interest on appeal. Article 292, V, of the CPC seems to go in this direction, by imposing as the amount in controversy the amount of the prayer for relief in actions for compensation, 'including those based on non-economic damage'. The illiquidity of the claim is only possible, in these cases, if the act that caused the damage may also have repercussions in the future, generating other damages (e.g.: a situation in which the non-economic damage is continuous, such as undue registration in personal credit history or continuous offense to one's image); then, one would apply subsection II of paragraph 1 of article 624, commented here. Outside this case, the formulation of an illiquid claim is unacceptable" (DIDIER JÚNIOR, Fredie. Curso de direito processual civil: introdução ao direito processual civil, parte geral e processo de conhecimento [“Course on civil procedural law: introduction to civil procedural law, general part and cognizance process”], 17th revised ed., expanded and current. Salvador : JusPodivm, 2015, p. 581).;

^[7] TJRJ, Appeal 0002064-42.2017.8.19.0079, opinion drafted by Appellate Judge Alexandre Câmara, 2nd Civil Chamber, decided on September 16, 2020.

TJSP, Appeal 1002707-40.2016.8.26.0655, opinion drafted by Appellate Judge Antonio Rigolin, 31st Chamber of Private Law, decided on January 23, 2018. TJ-MG, Appeal 10000191312040001, opinion drafted by Appellate Judge Lílian Maciel, decided on January 20, 2020. TJ-DF, 0723140-23.2018.8.07.0001, opinion drafted by Appellate Judge Leila Arlanch, 7th Civil Panel, decided on July 24, 2019.

^[8] STJ, AgRg no Ag 459.509-RS, opinion drafted by Luiz Fux, 1st Panel, decided on November 25, 2003

^[9] Article 21. The decision that, in the administrative, oversight, or judicial spheres, orders the invalidation of an act, contract, adjustment, process, or administrative rule must expressly indicate its legal and administrative consequences.

^[10] Enfam Ruling 14/2015: "In the event of reciprocal loss of suit, the difference between what was claimed by the plaintiff and what was granted, including with regard to awards of non-economic damages, shall be considered the defendant's economic benefit, for purposes of article 85, paragraph 2, of the CPC/2015" (emphasis added)

^[11]DIDIER JR, Fredie "The three models of procedural law: inquisitive, dispositive, and cooperative." Revista de Processo: RePro, v. 36, n. 198, p. 213-225, Aug. 2011.

Category: Capital markets

The Securities and Exchange Commission of Brazil (CVM) published CVM Guidance Opinion 40, approved by its joint committee, on October 11th. The document makes public the regulator's consolidated understanding of the rules applicable to cryptoasset securities. The aim of the agency is to guide market participants and bring legal security and predictability to development of the sector.

Cryptoassets, or virtual assets, are divided into cryptocurrencies, such as bitcoin, altcoins, and stablecoins, and tokens, such as utility tokens, security or equity tokens, and non-fungible tokens (NFT).

CVM's position is that bitcoins and most other cryptocurrencies are outside its regulatory scope, as they are not considered securities or financial assets.^[1] The competence of the agency, therefore, does not cover service providers that perform administration, management, custody, or operate exchanges on which only cryptocurrencies are traded.

Tokens, in turn, may fall under the regulatory reach of the CVM, provided they are classified as securities. When this occurs, all service providers involved in the issuance, public distribution, centralized deposit, clearing and settlement, bookkeeping, and issuance of certificates, custody, as well as brokers that act, directly or indirectly, in the secondary trading of these tokens must comply with CVM regulations applicable to the respective professional activities performed.

Currently underway in the National Congress, Bill 4,401/21,^[2] known as the Legal Framework for Cryptocurrencies, proposes regulation of virtual asset service providers. Its main regulatory focus, however, is virtual assets used for investment or payment that are not considered securities, since there is no regulation of their activities or supervision by a regulatory body.

The bill expressly excludes regulation of virtual assets considered securities, which are already subject to Law 6,385/76 (Capital Markets Law) and to the CVM’s supervision.

There is, therefore, complementarity between the initiatives of the CVM and the Legislative Branch regarding the regulation of the cryptoasset sector (virtual assets) as a whole. The Legal Framework for Cryptocurrencies bill even makes it clear that the CVM's jurisdiction over tokens considered securities should remain unchanged.

Regarding CVM Guidance Opinion 40, we highlight the main guidelines:

• Technological neutrality: following the international trend, the CVM adopts a neutral posture in relation to the technologies employed and is receptive to new technologies. The technologies behind cryptoassets (e.g. blockchain or other DLT) are not subject to regulation in the capital markets, nor are they relevant to the process of classifying an asset as a security or for submitting a certain activity to CVM regulation.

• Cryptoasset categories: the CVM chose to adopt a functional approach in categorizing cryptoasset to indicate their legal treatment, classifying them among:

• Payment tokens: their functionality replicates that of currencies, as a unit of account, medium of exchange, and store of value.

• Utility token: their functionality is to purchase or access a certain product or service.

• Asset referenced token: their functionality is to represent one or more assets, which can be tangible or intangible, such as, for example, security tokens, stablecoins, non-fungible tokens (NFT), and other assets subject to tokenization operations.

A single cryptoasset may fall into more than one category according to the functions performed and the associated rights. Furthermore, tokens may or may not be characterized as securities, depending on the analysis of each case, based on the guidelines explained below.

• Classification of cryptoassets as securities: the classification of cryptoassets as securities is important as this brings about the CVM's jurisdiction over issuers and public offerings of these virtual assets, as well as the agents involved in the brokerage, bookkeeping, custody, centralized deposit, registration, clearing, and settlement of transactions involving cryptoassets considered securities, in addition to the administration of organized markets for secondary trading of this type of cryptoasset.

According to the CVM’s guidance, cryptoasset securities should be considered securities in the following cases:

• If the token is characterized as a publicly offered collective investment contract that generates holding, partnership, or remuneration rights, including those resulting from the provision of services, whose income arises from the efforts of the entrepreneur or third parties, as set forth in subsection IX of article 2 of the Capital Markets Law.

This can occur even if the collective investment vehicle invests in or takes on exposure to cryptoassets that are not considered securities, such as bitcoin or other cryptocurrencies. According to the administrative case law of the CVM, the characterization referred to in the above paragraph does not depend on a prior opinion of the CVM but on the application of the Howey Test, which will be explained below.

• If the token is the digital representation of any of the securities provided for in subsections I to VIII of article 2 of the Capital Markets Law, that is:

• shares, debentures, or subscription warrants;
• coupons, rights, subscription receipts, and certificates of splitting of such receipts;
• certificates of deposit of securities;
• debenture notes;
• quotas of securities investment funds or investment clubs in any assets;
• commercial notes;
• futures, options, and other derivatives contracts, whose underlying assets are securities; and
• other derivative contracts, regardless of whether or not the underlying assets are cryptoassets.

• If the token is the digital representation of certificates of receivables offered publicly or admitted for trading on a regulated securities market, as provided for in article 20, paragraph 1 of Law 14,430/22 (Legal Framework of Securitization Companies).

• Collective investment contracts and the Howey Test to characterize a publicly offered cryptoasset as a collective investment contract under the terms of subsection IX of article in order to classify a security as a marketable security, the CVM uses the Howey Test, inspired by the method used by the U.S. Securities and Exchange Commission (SEC).

The CVM lists the characteristics that must be taken into consideration for classification purposes when analyzing a case:

• investment;
• formalization;
• collective nature of the investment;
• expectation of economic benefit by entitlement to some form of holding, partnership, or remuneration, which must result from the efforts of the entrepreneur or a third party, and not from external factors, such as, for example, equity participation or redemption rights, remuneration agreements, and receipt of dividends;
• entrepreneurial or third-party effort, such as when the entrepreneur's or the third party's actions are necessary for the creation, improvement, operation, or promotion of the enterprise; and
• public offering.

• Public Offering: the public distribution of cryptoassets considered securities in the capital markets is subject to prior registration with the CVM, as provided for in article 19 of the Capital Markets Law, except in situations in which the distribution is expressly exempted under the terms of the infra-regulatory rules issued by the CVM, as delegated to the agency by articles 8, I, and 19, paragraph 5, of that law.

At the infra-legal level, issues and offers for public distribution of securities are currently regulated by the CVM in CVM Instruction 400/03 and in Instruction 476/09. These two instructions, however, will be replaced and repealed on January 2, 2023, with the entry into force of CVM Resolution 160/22, which will inaugurate a new regulatory framework for public offerings of securities.

In addition, as the public offering of cryptoasset products is common through the internet and without geographic restrictions, the CVM advises that, in this case, one must observe the parameters of CVM Guidance Opinion 32 and CVM Guidance Opinion 33, both of 2005 and applicable to public offerings of securities issued abroad for a target public residing, domiciled, or incorporated in Brazil.

In the new opinion, the CVM supplemented the guidelines given in 2005 with information regarding the criteria to be taken into consideration in the evaluation of the:

• effectiveness of measures to prevent the general public from accessing the page containing a private offering of securities; and
• irregularity of public offerings of securities abroad, without the due registration with the CVM, and of brokerage of transactions with securities issued abroad, including derivatives, intended, in both cases, to the general public resident in Brazil.

• Informational framework and valuing of of transparency: based on the principle of wide and adequate disclosure that guides the information framework adopted by the CVM, the agency has guided the participants of the cryptoasset market classified as securities to value maximum transparency in their issuance, public distribution, and trading in the secondary market.

It recommended that the applicable regulation on this subject be observed and pointed out as an example CVM Resolution 80/22, CVM Resolution 86/22, and CVM Resolution 88/22, as applicable in view of the characteristics of the cryptoassets and the issuer, under the terms of articles 19 and 21 of the Capital Markets Law. As explained above, the current regulations applicable to public offerings of securities must also be complied with.

Regarding the admission for trading in the secondary market, the agency guided that cryptoassets classified as securities must be traded in organized markets that have authorization from the CVM, pursuant to CVM Resolution 135/22.

In a complementary way, it highlighted as an example a minimum set of information related to the rights of crypto holders and to trading, infrastructure, and ownership of cryptoassets, the provision of which in language accessible to the target audience of the offering was considered important by the agency.

The regulator has indicated that it may evaluate the creation of a more flexible framework in the future depending on the evolution and development of the issue. For now, it recommended that market participants give preference to broad transparency and observe all the rules that guide the disclosure of information in effect regarding their respective activities, so that the investor can make a more informed investment decision.

• Role of brokers: the CVM highlighted the role of brokers that act, directly or indirectly, in the secondary market for trading of cryptoassets considered securities. In addition to the duty to observe applicable regulations, the agency again emphasized the importance of disclosing information to investors.

It recommended that, within their area of expertise, these participants act to ensure an adequate level of transparency and information regarding the characteristics and risks associated with virtual assets in trading, especially when cryptoassets are offered directly, rather than through a regulated product such as, for example, investment funds and ETFs - these investment vehicles are already required to comply with a fairly comprehensive information arrangement.

In the case of business partnerships conducted by brokers, the CVM’s guidance is that they promote due diligence on the internal controls of business partners to mitigate risks and assess whether the investor should be informed about the nature and extent of the business partnership. It also directed that they have segregations and safeguards of an operational, structural, and regulatory nature to prevent any problems arising from a non-security cryptoasset trading environment from impacting on the business of brokers.

Brokers must also, if trading partners offer cryptoassets that are not securities or provide services outside the cryptoeconomy, inform the target audience of the associated risks.

• Investment funds: the CVM allows indirect investment in crypto assets abroad by investment funds, pursuant to article 98 et seq. of CVM Instruction 555/14.^[3] Direct investment, on the other hand, is not allowed, as the regulator has ruled out the possibility of cryptoassets being considered financial assets for the purposes of article 2, subsection V, of CVM Instruction 555/14.^[4]

In CVM Guidance Opinion 40, the agency maintained its understanding on the matter, reporting that the evolution of the treatment of the topic depends on the deepening of studies and interactions with the market.

The regulator's focus was to convey guidance for fund administrators and managers to adopt new criteria and take the steps necessary to increase the level of transparency, and to adequately disclose the risks linked to cryptoassets in the funds' mandatory disclosure materials, with an emphasis on describing the risks related to virtual assets based on innovative technologies, such as NFTs.

The CVM also addressed the Regulatory Sandbox experience, reporting that three projects related to tokenization of securities have been approved and given temporary permits to be tested in the market with regulatory waivers. For the regulator, this initiative is a tool that allows evaluation of the need for revision and regulatory updating to accommodate new technologies.

As explained in CVM Guidance Opinion 40, the regulator is tracking the evolution of innovative technologies and use cases for cryptoasset securities classified as securities in the capital markets and related activities. The agency has anticipated that it may regulate this new market, within the limits of its competence, if it sees the need, based also on the experience of the Regulatory Sandbox. Approval of the opinion by the joint committee consolidates the regulator's understanding on the subject and also points in this direction.

The CVM took advantage of the communication with the market to alert participants that it is vigilant and will take the appropriate measures for the prevention and punishment of violations of the laws and regulations of the securities market in the cryptoasset market that may be identified.

We are at your disposal for any further clarifications on this subject.

^[1] According to Circular Letter 1/2018/CVM/SIN, of January 12, 2018.

^[2] After being approved in the House of Representatives, the text was approved in the Federal Senate, with amendments to the merits, and, therefore, was sent back to the House of Representatives, where it awaits approval on the floor.

^[3] As per Circular Letter 11/2018/CVM/SIN, of September 19, 2018.

^[4] According to Circular Letter 1/2018/CVM/SIN, of January 12, 2018.

Category: Banking, insurance and finance

Accompanying global technological development, Brazilian contract law was successful in regulating electronic signatures for digital contracts through Executive Order 2,200/01. Besides standardizing electronic signatures, this MP also created the Brazilian Public Keys Infrastructure (ICP-Brasil) as a way to certify the validity of the documentation.

However, even in the face of these innovations, there was still a major obstacle in the notary industry, which remained for a long time oblivious to the developments in the electronic world. This obstacle was the apostille process. Since then, the creation of the digital apostille in Brazil has been understood as an agenda of great importance.

The electronic apostille agenda began to take shape in 2021. Since 2016, Brazil has issued the Hague Apostille in the 188 countries that are members of the Hague Apostille Convention. The apostille process, however, was still done exclusively via physical documents and only through authorized notaries. Even documents signed electronically needed to be materialized in order to receive the Hague Apostille seal, which maintained much of the slowness of the process.

To circumvent this challenge, in 2021, the National Council of Justice (CNJ) put on the agenda the possibility of digitizing apostilles, which was approved at the 86th Virtual Session of the CNJ. The electronic apostille now has its procedure provided for in a normative act (Resolution 392/21), which amended Resolution 228/16 (Apostille Convention). The following are important additions made to the convention:

Article 7. The apostille must be in accordance with the model in Annex I of this Resolution, with the following characteristics:

Paragraph 2. The National Judicial Board shall define the security, validity, and effectiveness standards for the placement of the apostille on documents signed electronically and for the issuance of an apostille in electronic media. (included by Resolution 392/21)

Article 8. The apostille shall be issued and registered in an electronic system. (as amended by Resolution 392/21)

Paragraph 1. The apostilles shall be signed with a digital certificate and registered by the issuer. (as amended by Resolution 392/21)

Paragraph 2. The apostille shall be issued after confirming the authenticity of the signature, the function or position held by the signer of the document, and, when applicable, the authenticity of the stamp or seal affixed to it. (as amended by Resolution 392/21)

These changes made it possible to combine the security of the apostille with an unprecedented agility in this process. According to the National Judicial Board, Justice Maria Thereza de Assis Moura, during her speech at the 1st National Forum of the Hague Apostille: "In 2021, we had a 35% increase in apostilles, 1.6 million documents apostilled. In March of 2022, we recorded a monthly record of 206,000 apostilles."

Although impressive, these numbers were not the goal for the document digitization process in Brazil. On June 3, 2022, the 1st Hague National Apostille Forum took place, where another step was taken towards evolution in the issuance of apostilles. As a result of a joint demand from the National Judicial Board and the Brazilian Notary College (CNB), the Electronic Apostille System (Apostil) was created, which finally allowed the electronic and agile apostille of documents through a national platform.

Its operation is similar to the process we observe daily in Brazilian notary offices. The electronically signed document is sent to the Apostil platform. Then, instead of what would originally be authentication of signature, the platform verifies the legal validity of the signatures, done necessarily by means of a digital certificate. Finally, once the validity of the document is confirmed, Apostil generates and issues the final document, the Hague Apostille, accepted as an extrajudicially enforceable instrument.

The digitally issued apostille is similar to the physical one requested from the notary. The difference is only its electronic format and the speed generated by the possibility of validating documents via QR Code or CRC Code.

Apostil will be used both for making and looking up and managing apostilles throughout the country, thus unifying services and information on apostilles in a single, easily accessible location.

We believe there will be no difficulty in accepting digital apostilles. As the platform was created only three months ago, there are still no court decisions that attest to their validity as extrajudicially enforceable instruments. It is already possible to observe, however, the use of the Apostille by notary offices all over Brazil, something that should increase exponentially with time.

The considerations made here are valid for the purposes of Brazilian law. If this document involves the jurisdiction of other countries, all the checks described and the apostille process must be done by professionals qualified by the respective jurisdiction.

Category: Litigation

In the Brazilian legal system, there are three types of precatórios: small value obligations, precatórios of a priority nature, and ordinary precatórios.

The precatórios of a priority nature are those that, as provided for in the first paragraph of article 100 of the Federal Constitution, derive from "salaries, wages, earnings, pensions and their supplements, social security benefits, and compensation for death or disability, based on civil liability, by virtue of a final and unappealable decision."

The attorney's fees for loss of suit awarded by the Judiciary against a public entity (Federal Government, states, municipalities, as well as their independent agencies and foundations) are also considered priority precatórios.

Priority precatórios have preference in the order of payment over precatórios of a common nature. Holders of priority precatórios who are at least 60 years old or have a serious illness or disability will be given special preference within the system itself.

Since precatórios can take years to be paid and there are still many uncertainties related to the constant legislative changes in the framework for these securities, assignments of precatórios entered into by their original holders with third parties are common.

Through the assignment of a precatório, the assignor benefits from the advance - partial - receipt of his receivable, while the assignee purchases the precatório at a discount, i.e. for a lower amount, in order to receive, in the future, full payment of the precatório to be made by the public entity.

Many investors have doubts about the maintenance of the priority nature of the precatório after its assignment to a third party. This would be the case, for example, of an investment fund in credit rights that, by means of assignment, acquires a precatório relating to a receivable for loss of suit fees held by a lawyer or law firm. In such a situation, would the priority of the precatórios be maintained, even if the purchaser is not a lawyer or a law firm?

After several contradictory decisions handed down by the Judiciary, this impasse was resolved by the Federal Supreme Court (STF), which granted relief to Extraordinary Appeal 631.537 and unanimously defined Topic 361 of general repercussion. According to the court's decision, the change in the ownership of the priority precatório by means of assignment does not imply a change in its nature, and the precatório continues to have, therefore, its original preferential nature.

According to the vote of the reporting justice, Marco Aurélio, there is no rule in the legal system that mandates change in the priority nature of the precatório after its assignment. The Judiciary and the public debtor entity, therefore, could not modify this intrinsic preferential characteristic of the priority precatório, which would directly interfere in its payment system.

According to the Supreme Court, if the precatório lost its preferential quality, there would evidently be less interest from investors in its acquisition and a decrease in its market value, which would be harmful to those creditors considered preferential by the Federal Constitution.

The court ruled for the application of articles 286 and 298 of the Civil Code, to the effect that there is no impediment on assignment of a priority precatório. When acquiring a claim by assignment, the assignee assumes the legal position of the assignor, and the assignment covers the ancillary rights. Thus, for purposes of assignment of the precatório, the objective or subjective conditions of the new creditor are irrelevant, since it is subrogated to the same and exact conditions as the original creditor.

In addition, article 42, paragraph 1, of the National Judicial Board Resolution 303/19 already established that assignment does not alter the nature of the precatório and that the assignee may enjoy a preferential condition resulting from its priority nature, maintaining the original chronological position of the precatório.

The judgment by the Federal Supreme Court in Extraordinary Appeal 631.537 is considered a leading case that has brought legal security to investors interested in acquiring priority precatórios and to their original holders.

Category: Banking, insurance and finance

The National Agency for Supplementary Health (ANS) has recently put in public consultation draft normative resolution that should havecriteria for defining the regulatory capital of health care plan operators. If approved in the terms proposed, the text will modify Normative Resolution 515/22 and revoke Normative Resolutions 526/22 and 514/22, as well as Ans Normative Instruction 22/22.

The public consultation will be open for contributions until October 29, 2022. The subsidies on the subject, specifically regarding the text proposed by the draft normative resolution, should be forwarded directly through the ANS website.

To propose the standard in question, the ANS claims to have considered international discussions that resulted in the progression and updating of prudential regulation models in Brazil, for the banking and insurance sectors, as well as internationally applied models for some regulated sectors.

The improvement of prudential regulation for the banking sector was due to the Basel agreements (Basel I, II and III – 1998, 2004 and 2010, respectively), whose main intention was to adapt the capital of financial institutions to the risks actually faced by them.

The regulators of the insurance market acted in the same direction. The International Association of Insurance Supervisors (IAIS), of which the ANS is a part, has promoted a very extensive review, proposing to the sector and its supervised entities to meet the relevant and material categories of risks to which they may be subject to the application of solvency rules.

Both sectors also migrated to the model now considered by the ANS, which takes into account qualitative criteria for the identification of the minimum regulatory capital required.

The current model of regulatory capital definition of health plan operators considers the solvency margin for its calculation. However, because it is a variable amount and defined according to the volume of indemnified payments and events measured by the regulated entities, this capital could sometimes not be congruent with the risks to be mitigated.

Thus, the main intention of the ANS with the proposed adjustments, in summary, is to replace the current model with a more modern one, which will effectively consider the risks to which the regulated entities are subject, according to the calculation carried out in the terms established by the regulator itself.

In addition to the migration of the regulatory capital definition model explained above, the draft new normative resolution also proposes to update the value of the reference capital, which will increase to R$ 10,883,087.01 (ten million, eight hundred and eighty-three thousand, eighty-seven reais and a penny).

If approved without reservation, the provisions will come into force on 1 January 2023.

Category: Digital Law

The year 2022 has been very promising in terms of regulating technologies. Some legislative projects have been highlighted in regulating the use of artificial intelligence mechanisms, cryptoactives and social media.

In this scenario, there is great expectation of the market in relation to the advance of the regulation of sports betting, especially because we are in world cup year.

This activity is successful in several countries, with very expressive numbers. In the United States, the practice generated more than $4 billion in revenue in 2021, a growth of almost 180% compared to 2020.

Sports betting (sports betting) are just one of the gaming practices species. Its regulation needs to be considered, alongside, for example, the regulation of lotteries, animal racing betting, physical and online casinos, fantasy games, poker or other games understood to be skill, games and applications.

In Brazil, the modality is already usual and practiced on platforms hosted outside the country, which does not violate rules associated with the practice of games, such as the Law of Criminal Misdemeanors, which in its art. 50 considers the practice of gambling a criminal offense.

Before dealing with the regulation of sports betting in the country, however, it is worth examining two points:

• the reasons why the Gambling it is regulated; and
• the main issues justifying legal concern with the subject.

Among the reasons for regulating the Gambling, stand out:

• the interest in the tax profitability provided by the activity;
• economic development promoted by the evolution of trade interrelations; and
• protection of the rights of vulnerable publics (children, the elderly, etc.).

Regarding the concerns and risks involved, the need to:

• protect responsible gambling;
• bring legal certainty to investors in the sector and other services involved (financial institutions, advertising agencies, etc.);
• establish standards of compliance robust;
• protect users (consumers) in matters relating to fraud, vulnerable public and processing of personal data;
• avoid the use of platforms for the commission of crimes (especially money laundering);
• follow appropriate advertising standards;
• provide legal-contractual and intellectual property protection in all industry relations;
• contain the increase in cases of pathological gamblers and the resulting social problems; and
• mitigate the practices of match fixing.

The regulation of online sports betting in Brazil has begun more markedly with the Law 13,756/18. In article 29, this lottery modality is defined as fixed quota bets:

"Art. 29. Lottery is created, in the form of an exclusive public service of the Union, called fixed quota bets, the commercial exploitation of which will take place throughout the national territory. § 1 - The lottery modality of which the Caput this article consists of a betting system related to real sports-themed events, in which it is defined, at the time of the bet, how much the bettor can win in case of correct prognosis".

Regardless of the discussions on the definition established in the law (bets would not exactly be a lottery mode, for example), the fact is that fixed quota bets (or sports bets, online or not) are defined in the order as betting systems related to real sports-themed events, in which, at the time of the bet,  the bettor knows how much he can win if the prognosis of the bet is confirmed.

By detailing the concept a little, you can extract the following elements:

• there is a bet contract signed with the promise of a payment to the user, if the prognosis is confirmed;
• the bet must be tied to a real sports-themed event, which includes any sporting event – such as football, chess, e-sports –, but excludes fanciful or non-real situations;
• the activity must be done by a physical or digital system (set of organized elements), usually supported by the well-known betting platforms that exploit the business (bookmakers); and
• when the bet is made (either before the sporting event or during), the bettor already knows what amount he will receive if the prognosis of his bet (future results of the sporting event) is confirmed (staked result is equal to the final actual result).

Paragraphs 2 and 3 of Art. 29 defined that such bets will be authorized or granted by the Ministry of Finance, which must regulate the subject within two years after the publication of the law, a renewable term for up to two more years. That is, the maximum deadline is December 2022.

The regulation is in charge of the Secretariat of Evaluation, Planning, Energy and Lottery (Secap) of the Ministry of Economy, and some drafts of the regulatory decree have already circulated.

One of the points that should be addressed in this regulation is the legal definition of the agents involved in this market – who are the regulator, the bettor, the operator, those who provide services to operators, resellers etc.

Another point is how the authorization of the exploitation of the activity will be made:

• monopoly (most unlikely), limited number of players or open number of players (global trend in Europe, for example, 25 out of 29 countries follow this form);
• under authorisation, authorisation or concession scheme (the tendency is to be by the authorisation scheme);
• for how long; and
• under what criteria.

A third aspect concerns the definition of the powers of the Ministry of Economy and Secap in the regulation, supervision and supervision of this market and how this will be done.

The decree should also establish the obligations of the agents involved in the exploitation of sports betting, such as ensuring responsible gambling and the integrity of betting, mitigating the risks mentioned above and respecting appropriate advertising parameters.

It is also expected that the regulatory decree will regulate the tax operationalization of the collection of the amounts involved in the exploitation of bets.