Publications

Category: Capital markets

The joint committee of the Brazilian Securities and Exchange Commission (CVM) approved, on January 25, 2022, the execution of a settlement agreement within the scope of an administrative sanctions proceeding (PAS CVM SEI 19957.011341/2018-77) filed against officers and directors ofa company in the pulp and paper sector. The charge was for breach of duty of care, as per article 153 of Law 6,404/76 (the Brazilian Corporations Law - LSA), and misuse of power, pursuant to article 154, paragraph 2, due to the fact that the accused had signed loan agreements, representing the company, to transfer funds to its CEO.

The proposal of a settlement agreement was made by the accused jointly and after the expiration of the statutory period to submit it or even for an expression of interest in submitting it (that is, during the 30 days after the service of process). The Federal Attorney General's Office Specialized in the CVM (PFE-CVM) found that it was possible to accept the proposal after the deadline, given the authorization granted by the regulations,^[1]which was ratified by the Settlement Agreement Committee and by the joint committee of the CVM.

The company's bylaws and shareholders' agreement mandated that the execution, amendment, or extinguishment of contracts with related parties be previously approved by the Board of Directors (BD), an approval that was not obtained by the officers who signed the loan agreements for the transfer of funds to the CEO, in the amount of R$24.5 million, according to the explanatory notes in the financial statements.

The signing of the contracts is said to have been attended by the CEO (beneficiary of the funds), the chairman of the BD, and two other corporate officers (chief commercial officer and chief forestry officer). Once the investigation carried out by means of an administrative inquiry was completed, the technical area proposed to hold the chief executive officer and the chairman of the BD responsible for misuse of power,^[2] by lending the company's funds without the authorization of the competent bodies. The other officers were accused of breaching the duty of care^[3] by failing to check whether the requirements necessary for signing the loan agreements had been met.

Initially, the proposed settlement agreement contemplated payments of R$350,000 for the CEO and the Chairman of the BD, and R$100,000 for each of the other officers. In commenting on the initial proposal, the PFE-CVM considered that there was no legal impediment to the execution of the settlement instrument, since the requirements to cease the irregular practice and correct the irregularities had been met. However, it reinforced that the analysis of the sufficiency of the proposed amounts would be up to the Settlement Agreement Committee, which is responsible for deciding on the advisability and expedience of entering into the settlement agreement.

In a first opinion, the committee believed it would be possible to evolve in the negotiations with the corporate officers as a way of terminating the PAS, by means of a settlement agreement, increasing the initial proposal to R$ 350 thousand to be paid by each proponent in a single installment. On the same occasion, it deemed it inadvisable to accept the individual payment of R$350 thousand proposed by the CEO and the chairman of the BD, considering the difference in relation to the amount that the committee believed to be reasonable in view, also, of the background of the accused.

During the negotiation, the corporate officers tried to maintain the amount proposed by the committee, but with payment in installments, which was denied by the body, maintaining its initial decision on its own grounds. In the negotiation with the CEO and the chairman of the BD, it was argued, in a meeting with the committee members, that the loan contracts were remunerated at rates higher than those contracted under market conditions, the funds had already been repaid to the company, and that, while in effect, the loans were duly recorded in the financial statements. Even so, the fine proposed was raised to R$1.050 million in a new proposal by the CEO and the chairman of the BD.

At the last meeting, the committee reexamined the case in light of the new proposal and found that the enhancement met the necessary sufficiency of values in deciding on advisability and expedience, since "the facts are prior to the entry into force of Law n. 13,506, of November 14, 2017" and there was "representativeness of the amount offered, equivalent to three (3) times the amount negotiated with each of the other two proponents in the case," justifying the "appropriate and sufficient outcome to discourage similar practices, in compliance with the preventive purpose of the settlement in question, including because CVM has, among its legal objectives, promotion of expansion and efficient operation of the capital market.”  The joint committee followed the committee and accepted the settlement.

^[1] Article 84, CVM Resolution 45: "In exceptional cases, in which it is found that the public interest favors the analysis of a proposal for the execution of a settlement agreement submitted after the deadline referred to in article 82, such as those of offering full compensation to those harmed by the conduct that is the subject of the proceeding and of modifying the factual situation existing at the expiration of said deadline, the analysis and negotiation of the proposal may be carried out by the Reporting Board Member."

^[2] Article 154, paragraph 2, b and c: “Officers are prohibited from: b) without prior authorization from the general meeting or the board of directors, borrowing funds or assets from the company, or using, for their own benefit, from a company in which they have an interest, or from third parties, its assets, services, or credit; c) receiving from third parties, without authorization in the by-laws or from the general meeting, any type of personal advantage, direct or indirect, due to the exercise of their position.”

^[3] Article 153: “Officers and directors of the company must employ, in the exercise of their functions, the care and diligence that every active and upright man usually employs in the administration of his own affairs.”

Category: Litigation

The Third Panel of the Superior Court of Justice (STJ) recently set an important precedent for litigants in arbitration proceedings, judging special appeal 1.900.136-SP, whose opinion was written by Minister Nancy Andrighi.^[1] At the time, the STJ confirmed (unanimously) judgment of the Court of Justice of São Paulo (TJSP) that rejected the challenge to enforcement of arbitration award, recognizing that the right of action had expired. The challenge, although based on a hypothesis of nullity set out in article 32 of Law 9307/96 (Arbitration Law - LArb) and filed within the defense period provided for in article 525 of the Code of Civil Procedure (CPC), was filed after the 90-day statute of limitations for filing an action for annulment of an arbitration award.

In September 2021, the findinding was ratified by the same panel in the judgment of Special Appeal 1.862.147-MG, under the rapporteurship of Justice Marco Aurélio Belizze.^[2] The judgment confirmed the decision of the Court of Appeals of Minas Gerais - rendered before the judgment reported by Justice Nancy Andrighi - by rejecting the appellants' challenges to the enforcement of the arbitration award on the grounds of statute of limitations.

The debate arose from by the lack of express reference to the limitation in § 3 of Article 33 of the LArb, which deals with the declaration of nullity of the arbitral award in the context of challenge to the enforcement of judgment. The LArb indicated the period of 90 days only in § 1 of the same Article 33, regarding the "claim for the declaration of nullity of the arbitral award". This made room for the interpretation that this nullity could be alleged in defense of the enforcement of judgment, regardless of when the creditor filed the execution. However, according to the perspective adopted in the judgments of the Third Panel of the STJ, there is no such differentiation.

The judgment whose opinion was written by Justice Marco Aurélio Belizze was didactic when he explained that the 90-day statute of limitations for filing an action for annulment of an arbitration award should also be observed in the event of a request for declaration of nullity of the award in the event of an challenge to enforcement of the award, which is made possible by § 3 of the same article 33. Also in this sense, the Justice noted that the defense to the enforcement of an arbitration award based on one of the circumstances set out in Article 32 of the LArb must observe, in addition to the period of 15 days designated by the CPC for the presentation of the challenge to the enforcement of the award (from the subpoena in the file of enforcement of the award), the period of 90 days, counted from the notification of the respective judgment or the decision of the request for clarification.

As grounds for the decision, Justice Marco Aurélio Belizze pointed out that "the claim for annulment of the arbitral award must be filed immediately", in respect of celerity, effectiveness and legal certainty, objectives dear to the parties who choose to submit their dispute to arbitration. He also said that there is no legal support to support a distinction between the procedures provided for by law to obtain the declaration of nullity of an arbitral award, in order to allow only the annulment action to be subject to a statute of limitations for its filing. Justice Marco Aurélio Belizze had already formulated on previous occasions some of the concepts that led to his conviction. In the judgments of Special Appeal 1.519.041-RJ, on September 1, 2015, and Special Appeal No. 1.543.564-SP, on September 25, 2018, both under its rapporteurship, the Third Panel of the STJ rejected the theory that the declaration of nullity of a partial arbitral award by annulment action could only be obtained after the rendering of the final arbitral award. On the contrary, it held that the action for annulment of a partial arbitral award must be brought within the limitation period counted from the date of notification of the award. In those opportunities, the rapporteur's vote wrote, as in the recent decision, that the annulment action must be filed immediately and that the parties to the arbitration agreement deserve to have ensured speed, effectiveness and legal certainty.

In the judgment under the rapporteurship of Justice Nancy Andrighi, it was highlighted that the statute of limitations only prohibits only the challenge to the enforcement of an arbitration award based on the hypotheses defined by Article 32 of LArb, and that the defendant remains fully able to defend itself against the enforcement of an arbitration award as to the matters strictly specified in Article 525, § 1, CPC.The STJ seems to have established an understanding on the conformity of the 90-day statute of limitations, confirming a position that had already been defended by the state courts. The aforementioned STJ rulings upheld the lower court rulings with an identical interpretation of Article 33 of LArb and its paragraphs.^[3]

The plaintiff's prerogative to choose the date to file the enforcement of the arbitral award, provided that the applicable statute of limitations is respected, is not mirrored for the debtor and defeated party of the arbitration proceeding. If the execution is distributed after the 90 days provided for in the LArb, the debtor will not have the possibility to argue the nullity of the arbitral award to defend itself against the enforcement of the award. Despite the two ways provided by LArb to challenge the validity of the arbitral award, in practice, it will only be ensured by filing an annulment action, since the date of the filing of the compliance with the award is not under the control of the losing party.

^[1]Trial on April 6, 2021, published on April 15, 2021.

^[2] Trial on September 15, 2021, published on September 20, 2021.

^[3] In a research, it is possible to find judgments to the contrary, by not applying the statute of limitations period to the challenge to enforcement of award. However, they contain certain particularities, in addition to having been uttered in previous years. For example, in a decision of the TJSP, it was understood that the debtor was not aware of the arbitration award, which is why the statute of limitations period could not have started (AI 2224065-17.2018.8.26.0000, Judge Antonio Rigolin, Thirty-First Chamber of Private Law, judged on 29/04/2019, DJe 02/05/2019). In a decision issued by the Court of Justice of Paraná (TJPR), the statute of limitations was ruled out on the understanding that the challenge to enforcement of an arbitral award had been based on one of the hypotheses provided for in the CPC, of non-enforceability of the award (Article 475-L, II, of the CPC/73, then in force), although the lack of enforceability, in turn,  resulting from the alleged nullity of the arbitral award (Apl Civ 0016842-46.2014.8.16.0001, Eleventh Civil Chamber, Judge Eduardo Novacki, tried on 03/08/2020).

Category: Tax

The constitutionality control of all the norms introduced in the system of brazilian positive law is ultimately conferred on the Supreme Federal Court (STF).^[1] The compatibility of the norms with the most appropriate interpretation of the Federal Constitution is an important means to assess their validity before the Brazilian order, hence the relevance of the role of the Court.

The Constitution is at the apex of the legal system, so that all the rules introduced in the system, so that they can be considered valid and, consequently, take effect, must keep strict compliance with the constitutional text. This is relevant because, on certain occasions, there may be a confrontation between principles and/or rules inserted in the Federal Constitution. In such cases, all the values involved and the protected legal object must be investigated in order to achieve a solution according to the Constitution, that is, the hierarchically higher value should be considered.

Strict compliance with the commands of the Constitution constitutes a measure of legal certainty, since it prescribes the essential rules of the order and any violation of its determinations constitutes serious offense to its fundamental bases. It is for no other reason that the rules that have vices before the Constitution are invalid. The declaration of unconstitutionality of a law has retroactive effect, as a rule, which, at least in the case, implies the withdrawal of all the consequences arising from its application from the legal world. In practice, after the declaration of unconstitutionality of the rule, the previous situation should be restored.

Although the recognition of the unconstitutionality of the law or rule departs from the effects of the conduct based on it (retroactive effect of the declaration of unconstitutionality), these effects have the presumption of constitutionality, provided that they are emanating from the competent body and according to the rite provided for. This means that, until the unconstitutionality of the law or the normative act is declared by the competent body, its effects must be observed.

It can be affirmed that the control of constitutionality of laws and norms is, in fact, the investigation of their compatibility and validity before the system in which it was inserted. The reference for this evaluation is the constitutional text and the interpretation given by the Supreme Court in force when a new rule is introduced into the system.

The so-called supervening constitutionality is not admitted in the Brazilian order. This would occur if an introduced rule did not find a basis for validity in the constitutional text in force at the time of its introduction into the system, but, due to a modification of the Federal Constitution or even a law of higher hierarchy (complementary law, for example), had its compatibility attested later, as if the defect inherent in the legislative diploma at the time of its edition could be corrected.

The Supreme Court has already had the opportunity to address the issue in some opportunities and we will pay special attention to some cases involving tax matters.

At the judgment of Extraordinary Appeal 390,840,^[2] the Supreme Court analyzed the constitutionality of Article 3, § 1, of Law 9.718/98, which altered the basis for calculating contributions to PIS and Cofins.

Law 9,718 was published on November 28, 1998, at which time Article 195, item I of the Federal Constitution, authorized the creation of a social contribution on the billing of the legal entity. At that time, it was understood that billing comprised the revenues inferred by the legal entity as a result of the sale of goods or the provision of services.

However, the amendment promoted by Article 3, §1, of Law 9.718/98, provided that, for the purposes of the calculation of the PIS and Cofins, the billing would comprise the gross revenue of the legal entity, understood as the total revenues. With this, there was the expansion of the calculation base of the PIS and Cofins, without the constitutional text having authorized the creation of contribution on revenue.

Before the effects of Article 3, §1, of Law 9,718/98 began, in February 1999, constitutional amendment 20 of December 15, 1998 was promulgated, which modified the wording of item I of Article 195 of the Federal Constitution, adding that a social contribution could also be instituted on the revenue of the legal entity.

In assessing Extraordinary Appeal 390,840, the Supreme Court ruled that Article 3, §1, of Law 9,718/98 was unconstitutional, since, at the time of its publication, which marks its introduction into the system, the Federal Constitution did not authorize the incidence of social contribution on the revenue of the legal entity. Moreover, the fact that Constitutional Amendment 20/98 was promulgated before the beginning of the production of the effects of the device does not affect the examination of constitutionality, which returns to the instant of the entry of the norm into the system. Therefore, the Supreme Court was precise in stating that "the Brazilian legal system does not contemplate the figure of supervening constitutionality".

It should be added that, at the judgment of Extraordinary Appeal 1,221,330,^[3] the constitutionality of state law was debated^[4] issued after the promulgation of Constitutional Amendment 33 of December 11, 2001. This constitutional amendment included among the hypotheses of incidence of ICMS the importation of goods by a non-taxpayer of the tax.

However, before Complementary Law 114 of December 2002, which amended Complementary Law 87/96 and added this new hypothesis of incidence of ICMS, some states modified their domestic legislation. Thus, the core of the discussion was: the state law edited on the basis of the constitutional amendment, but before the amendment of the complementary law, is it constitutional?

The Supreme Court prevailed the understanding that state laws are constitutional, since the constitutional text, with the modifications of constitutional amendment 33/01, authorized the incidence of ICMS on the import of goods by non-taxpayer. However, in view of Article 155, § 2, item XII, point 'a', of the Federal Constitutional, which requires complementary law to define the taxpayer of the tax, only after the entry into force of Complementary Law 114/02 would state laws take effect.

In this case, the Supreme Court adopted an intermediate position on the supervening constitutionality with which we do not agree. The premise that the new law should be in line with the provisions of the Federal Constitution at the time of its introduction into the system was maintained, in the part concerning the hypothesis of incidence of the ICMS. However, the requirement of supplementary law was made more flexible so that the states of the federation could modify their domestic legislation.

In other words, the Supreme Court ruled that the condition of Article 155, § 2, item XII, point 'a', which provides that the supplementary law will define the taxpayer of the ICMS, would be a requirement of effectiveness (to allow the production of effects) of state laws. Therefore, it is concluded by the constitutionality of state laws, which would only take effect after the edition of Complementary Law 114/02.

Our disagreement concerns the flexibility adopted by the Supreme Court regarding the fulfillment of all constitutional commandments that deal with the matter. For the states to institute the ICMS in their territories, the hypotheses provided for in the Federal Constitution must be observed and, likewise, the complementary law that will deal with the topics listed in the fundamental text itself. That is, for this analysis, the constitutionality of a state law is conditional on meeting both requirements. If anyone has been complied with, state law will be flawed and therefore should be declared unconstitutional.

These are cumulative requirements for the measurement of the constitutionality of the law, and it is inappropriate to consider the requirement of complementary law as a condition for state laws to begin to take effect.

The theme of the possibility of supervenient constitutionality should be reconsidered by the Supreme Court in the judgment of Extraordinary Appeal 592.152.^[5] The discussion, in this case, is about the constitutionality of state laws that instituted State Funds to Combat Poverty, financed with an additional iCMS rate, without compliance with Article 82 of the Transitional Constitutional Provisions Act, with the drafting of constitutional amendment 31/00, but which came to be validated by Article 4 of Constitutional Amendment 42/03.

Considerations on the subject should also be made taking into account the recent Supplementary Law 190, published on 5 January 2022.

At the judgment of Extraordinary Appeal 1,287,019,^[6] theme 1,093 of the general repercussion, the Supreme Court ruled that the requirement of the iCMS rate differential in the sale of goods to non-taxpayer final consumer of the tax located in a state other than the sender, since, at the time of the trial, complementary law had not yet been issued. Constitutional Amendment 87/15 modified Article 155 of the Federal Constitution and established that, in interstate operations with non-taxpayer final consumer of ICMS, the state of destination could charge the tax rate differential. Until then, the rate differential could be charged only in interstate operation with tax taxpayer.

However, before the issue of supplementary law to amend the text of Complementary Law 87/96, many states introduced state laws with the collection of the ICMS rate differential in interstate operations with non-taxpayers.

In the judgment in Extraordinary Appeal 1.287.019, the Supreme Court recognized the unconstitutionality of the collection of the rate differential until a supplementary law is created to dispose of this requirement. In order to prevent the determination of numerous actions with a request to repeat the values collected up to that moment, there was the modulation of the effects of the decision in that part, so that the orientation would take effect from 2022. The decision was delivered on 24 February 2021 and published on 25 May 2021.

In line with the Supreme Court's decision, the expectation was that a complementary law would be edited and published in 2021, so that, from 2022, the rate differential in interstate operations with non-taxpayer iCMS could be validly demanded by the states, after the modification of their respective internal laws.

That's not what happened. Only on January 5, 2022 was the publication of Complementary Law 190, which reproduced the new hypothesis for charging the ICMS rate differential in interstate operations with non-taxpayer. As for the production of effects, Article 3 of Complementary Law 190/22 provides that Article 150( III, paragraph 'c', of the Federal Constitution (principles of general and nonagesimal precedement) must be observed.

All these circumstances lead to the conclusion that Complementary Law 190/22 will take effect from January 1, 2023. In addition, the state laws that provide for the requirement of the ICMS rate differential in interstate operations with non-taxpayers issued before the publication of the complementary law contain the vice of unconstitutionality, which is why, in order for states to collect the tax, they must create new norms, since, as demonstrated, the supervening constitutionality is not admitted in Brazil.

It is concluded, therefore, that the so-called supervening constitutionality is not supported by the Brazilian order, and the jurisprudence of the Supreme Court confirms this position. The measurement of the constitutionality of a new law should be made on the basis of the constitutional text in force at the time of its introduction, so that any subsequent modifications do not have the power to correct an existing defect in the norm since its creation.

^[1] This function is also performed by all members of the Judiciary, but in this text we will focus on the performance of the Supreme Court.

^[2] RE 390840, rapporteur min. Marco Aurélio, Tribunal Pleno, tried on 09/11/2005, DJ 15/08/2006.

^[3] RE 1,221,330, Rapporteur Min. Luiz Fux, Rapporteur for Judgment Min. Alexandre De Moraes, Full Court, tried on 16/06/2020, DJ 17/08/2020.

^[4] In this case, the discussion was related to the Law of the State of São Paulo, number 11.001/2001. However, considering the national character of the ICMS and requirement by all States of the Federation, the rational is applicable for all.

^[5] The rapporteur is the min. Ricardo Lewandowski.

^[6] RE 1287019, rapporteur min. Marcus Aurelius, rapporteur for min judgment. Dias Toffoli, Full Court, tried on 02/24/2021, DJ 25/05/2021.

Category: Digital Law

If 2021 was a year of challenges for businesses, 2022 brings a number of excellent business prospects. Many of them related to the use of artificial intelligence (AI) based mechanisms.

The possibilities are many: systems that perform predictive analysis from a large mass of data, mechanisms that perform facial recognition for various purposes (such as releasing access to the user, access to physical environments, searching for people in public spaces), as well as automated tools for decision making, use of autonomous vehicles, programs capable of analyzing large amounts of texts, which optimize prices of products and services for consumers and systems dedicated to solving problems with customers.

The massive presence of AI tools in our daily lives has its impact on legal regulation, leading to the creation of standards to establish rules for the use of this technology. The big challenge is how to use these tools without them attracting more risks than profits for the business. From a legal point of view, it is important to assess the form and purpose of using technology so that a powerful and promising resource does not become a threat. Companies should be aware of compliance issues.

The use and processing of personal data, for example, requires attention to the General Data Protection Act (LGPD) - Law 13.709/18. When using AI-based tools that hand over personal data, it will be necessary, above all, to define the precise purpose of the operation, to ensure the use only of the data necessary for this purpose and to understand what legal justification supports the use of the tool.

The preparation of a specific Personal Data Protection Impact Assessment, with risks and safeguards adopted, can be very useful, demonstrating the company's concern and diligence in relation to the subject. In automated decision-making processes using personal data, it is important to ensure mechanisms that allow the review of the decision, as this is a right of the data subject (art. 20 of the LGPD).

It is also important to rely on frameworks ethical-legal development and use of artificial intelligence tools, which allow greater transparency, ethical application and elimination of any discriminatory practice in processes.

Some questions need to be answered. For example, how the tool receives the data it will use (in an automated manner, collects on open sea and in public bases, through inputs employees of the company, etc.)? There is a risk that inputs contaminated by a high degree of discrimination? Is the application of the tool supervised? Is there transparency in the processes developed? Have deviations been detected in the (often illegal) results that recommend better design of the mechanism?

The preparation of an Algorithimics Impact Assessment - AIA can be useful in these cases, as it helps in the analysis of the consequences of the use of artificial intelligence technology, from the development phase to effective use.

It is also worth mentioning the recent ISO IEC 24027:2021 Standard, from November 2021, which provides guidelines regarding the existence of vieses in artificial intelligence technologies, especially considering tools used for decision making.

These vieses can be understood as structural deficiencies in the design of the tool or inputs provided by humans who feed it or the data collection ecosystem itself.

The regulation of the theme advances in the country and 2022 should prove to be a decisive year, as the implementation of the Brazilian Artificial Intelligence Strategy – Ebia will continue. In the National Congress, the expectation is that the debates on the regulatory frameworks of artificial intelligence continue and define the standards that will be applied in Brazil.

Category: Environmental

On December 6, 2021, the Superior Court of Justice (STJ) published Precedent 652, establishing the court's understanding on civil liability of the Public Administration for environmental damage in the event of omission ("civil liability of the Public Administration for damages to the environment, resulting from omission in observing its duty of supervision, is of a joint nature, but of subsidiary execution").^[1]

Precedents summarize the understandings that have been consolidated in the decisions rendered by STJ and serve as guidelines for the legal community and for the standardization of interpretation of federal laws.

According to the National Environmental Policy Law, established by Federal Law n. 6.938/81, civil environmental liability is strict, therefore does not depend on the existence of fault to be triggered. In order to hold a party liable for an obligation to redress the environment, the causal nexus between the damage and the activity developed by a party must be demonstrated. Article 225^[2] of the Federal Constitution also establishes the obligation to redress any damage caused to the environment, regardless of the enforcement of other penalties.

The Federal Union, the states, the Federal District and the municipalities have a concurrent competence to supervise and license potentially polluting activities or activities employ natural resources (Article 23, item VI, of the Federal Constitution). Complementary Law 140/11 regulates the exercise of such competences, setting forth licensing hypotheses by federal, state or municipal entities - it should be highlighted that environmental licensing must be carried out before a single entity – in its Article 13. Thus, the Public Power, as well as private individuals, must observe certain duties and obligations related to the defense and conservancy of the environment. In theory, it is possible to hold public authorities responsible for occasional environmental damage, especially in cases that it should have acted to prevent the occurrence of a result, but omitted from its supervisory duty.

Environmental legislation also provides for joint and several liability amongst polluters.^[3] This means that the victim of the occurrence of an environmental damage, or whoever the law authorizes, is not required to sue all polluters in the same lawsuit, being able to choose one amongst all polluters.

Bearing in mind the context of environmental civil liability, we return to the theme of Precedent 652, which was substantiated on some decisions, amongst which we highlight:

"[...] DAMAGE TO THE ENVIRONMENT. CIVIL LIABILITY OF THE STATE BY OMISSION. ARTICLES 3rd, IV, COMBINED WITH 14, § 1, OF LAW 6.938/81. DUTY OF CONTROL AND SUPERVISION. [...] The prevailing understanding in the STJ provides for, in the field of environmental protection, civil liability of the State when failure to adequately comply with its duty to supervise is decisive for the occurrence or intensification of the damage caused by its direct causative agent. It is, however, a subsidiary liability, the execution of which may be enforced if the direct polluting agent does not comply with the obligation, 'either by total or partial depletion of its assets or insolvency, or due to impossibility or incapacity, for any reason, including technical, of compliance with the judicially imposed obligation,^[4] guaranteed, always, the right of recourse (art. 934 of the Civil Code), with the disregard of legal personality, as provided for in Article 50 of the Civil Code." (REsp 1,071,741/SP, 2nd T., Min. Herman Benjamin, DJe of 16/12/2010)."^[5]

"[...] ENVIRONMENTAL DAMAGE. JOINT AND SEVERAL LIABILITY OF SUBSIDIARY EXECUTION. [...] The State's responsibility for damages to the environment arising from its omission in the duty of supervision is of solidary nature, but of subsidiary execution, in the condition of a subsidiary debtor.^[6] Precedents."^[7]

The concern of the Supreme Court to hold the main causative agent of the damage in the execution process responsible is visible, in order to avoid the indiscriminate imposition of responsibility to the State for omission, which would harm society as a whole. This is what is extracted, for example, from the following excerpt from one of the rulings:

"does not fall within the aspirations of joint and several liability and subsidiary execution of the State – at the risk of doubly burdening society, severing the equation of the polluter-pays principle and preventing the internalization of negative environmental externalities –^[8] to replace, mitigate, postpone or hinder the duty, to which the actual or main polluter is entitled,^[9] of redressing the affected environment and compensating for whichever damages have been caused".^[10]

Therefore, even though the public authorities have contributed to the occurrence of damage by omission in the exercise of its duty of supervision and prevention, the STJ understands that the burden arising from its redressing should not be equally divided between public and private entities.

It is also interesting to mention the decision rendered by the STJ in the Appeal 1.612.887-PR,^[11] which established that a misjudgment by the government in granting an environmental license does not exclude the company’s liability for the occurrence of an environmental damage. In the referred decision, it was acknowledged that the company under discussion had built a gas station accordingly to a valid environmental licenses, issued by environmental agencies. Still, the company was sentenced to pay a compensation for the damage caused to the Atlantic Rainforest vegetation.

Precedent 652 of the STJ consolidates the court's understanding that, even in the event of joint and several liability, the duty to redress environmental damages must be enforced primarily upon the direct polluter. The burden of reparation can only be attributed to public authorities in the event of impossibility of the actual causative agent to repair the damage. Although it is possible to jointly and severally condemn the State for omission and lack of compliance with its supervisory duty, the obligation to execute redressing and/or compensation related measures arising from environmental damage will only be required from public authorities when the possibility of requiring redressing measures/indemnification from the party who effectively caused the environmental damage is exhausted.

^[1] Summary 652, First Section, judged on 02/12/2021, DJe 06/12/2021.

^[2] "Art. 225. All have the right to an ecologically-balanced environment, which is a good for the common use of the people and essential to a healthy quality of life; the government and the collectivity have the duty to defend the environment and to preserve it for present and future generations”.

(...)

• 2 - The person who exploits mineral resources is obliged to recover the degraded environment, according to technical solution required by the competent public agency, in the form of the law.
• 3 - Actions and activities considered harmful to the environment shall subject offenders, individuals or legal entities to criminal and administrative penalties, regardless of the obligation to repair the damage caused."

^[3] Federal Law No. 6,938/1981 defines polluter as "a natural or legal person, organized under public or private law, that is responsible directly or indirectly, for activities that cause environmental degradation". In this sense, courts have established the understanding that the polluter is the party "who performs and action, who refrains from acting when they should, who allows others to do it, who does not care about others doing, who finances the action, and who benefits from others’ doing".

^[4] Emphasis added.

^[5] AGRESP 1001780 PR, rel. Minister Teori Albino Zavascki, First Section, judged on 09/27/2011, DJe 04/10/2011

^[6] Emphasis added.

^[7] AIRESP 1362234 MS, rel. Minister Og Fernandes, Second Class, judged on 05/11/2019, DJe 11/11/2019

^[8] Emphasis added.

^[9] Emphasis added.

^[10] RESP 1071741 SP, rel. Minister Herman Benjamin, Second Class, judged on 03/24/2009, DJe 12/16/2010

^[11] STJ, 3ª T. REsp 1.612.887/PR, rel. Min. Nancy Andrighi, judged on 04/28/2020, DJe 05/07/2020

Category: Labor and employment

Following our series on the Infralegal Labor Regulatory Framework, we discuss in this article its impacts on the situation of employees hired or transferred to provide services abroad, in accordance with the provisions of paragraph 2 of Art. 5, art. 9 and art. 12 of Law 7,064/82.

Initially, this law had limited application to cases of expatriation of employees of companies providing engineering and related services. However, with Law 11,962/09, its application was expanded to all sectors of the economy, aligning its determinations with the predominant understanding of Brazilian case law until then.

Currently, Law 7,064/82 regulates the situation of all employees who were:

• removed to work abroad and whose agreements were being executed in Brazil;
• transferred to a company based abroad to work abroad, provided that the employment relationship with the Brazilian employer is maintained; and
• hired by a company based in Brazil to work at its service abroad, except for the employee designated to provide services of a transitional nature for up to 90 days who has express knowledge of the transience and receive, in addition to the round trip, daily during the period of work abroad.

Law 7,064/82 establishes that the company responsible for the employment agreement of the employee transferred abroad must assure him, regardless of the compliance with the legislation of the place the services are executed, the rights provided for therein and the application of Brazilian labor and employment laws, if more favorable to the employee when compared to the laws of the place of provision of the services, taking into account the set of standards and each subject. Thus, Law 7,064/82 guarantees a number of rights to employees hired or transferred to provide services abroad.

Up to the Infralegal Labor Regulatory Framework, Decree 89,339/84 was responsible for regulating the Law 7,064/82.

This decree, however, was repealed by Decree 10,854/21, which regulates the subject in the same terms as Decree 89.339/84, only with language changes, without substantial changes.

One of the changes brought by the Infralegal Labor Regulatory Framework concerns the procedure for authorizing the hiring of the employee by a foreign company. Article 12 of Law 7,064/1982 determines that the hiring of workers by a foreign company to provide services abroad is conditional on the authorization of the Ministry of Labor. Decree 10,854/21 replaced Decree 89,339/84 to regulate, in the same terms, the authorization of hiring a worker by foreign company to work abroad. The two decrees delegate the act of regulating the application for authorisation to the Minister of Labor.

With the Infralegal Labor Regulatory Framework, the hiring authorization, which was regulated by Ordinance 21/06 of the Ministry of Labor and Employment, is now regulated by Ordinance 671/21 of the Ministry of Labor and Social Security. The subject, however, has also not been substantially changed.

Ordinance 21/06, for example, used to establish that the application for authorization should be formulated to the General Coordination of Immigration, while Ordinance 671/21 requires that the application to be forwarded to the Subsecretariat of Labor Relations of the Labor Secretariat of the Ministry of Labor and Social Security, via the Internet.

In general, therefore, we do not identify significant impacts that require review of expatriation practices currently adopted by companies. But it is important to be mindful of the normative changes and peculiarities related to the provision of services abroad so that the practices adopted by companies are always in accordance with applicable standards.

We will continue to publish, in the coming weeks, articles with the objective of exploring, in a simple and practical way, the main changes brought by the decree, ordinances and normative instructions, and clarify ing the main impacts of the regulatory framework for companies.

Click here to read the other articles in the series.