Publications

Category: Labor and employment

Federal Decree No. 10,470/20, published on August 25, extended the time limits for employers to suspend their employees' employment contracts or to reduce, proportionally, working hours and salaries.

Created by Executive Order No. 936/2020 (later converted into Law No. 14,020/20), these two labor instruments are part of a range of emergency measures promulgated by the federal government still during the beginning of the crisis caused by the covid-19 pandemic to confront the state of public calamity.

The authorization to negotiate individually the reduction of salary and working hours or to suspend employment contracts was well received by employers throughout Brazil, in the face of the abrupt stoppage of the national productive sector caused by the social distancing measures decreed by states and municipalities. With the extension of the time needed for social distancing, the time limit for implementing these measures has recently also had to be extended.

On April 1, the date of the publication of MP 936/2020, the Executive Branch had believed it sufficient to provide for the possibility of proportional reduction of working hours and salary for 90 days and suspension of employment contracts for 60 days. Soon, however, a need was found to extend the measure in order to combat the crisis and the sudden rise in unemployment. Thus, on July 13, Decree No. 10,422/20 increased by 30 days the possibility of reducing working hours and salaries and by another 60 days the possibility of suspending employment contracts, equalizing the terms of the two instruments, each of which became effective for 120 days in total.

However, the Executive Branch made it clear that if the employer chose to implement both measures for the same employee, their total duration could not exceed 120 days. In other words, the employee could only be affected by changes in salary and working hours or suspension of contract for a maximum period of 120 days.

However, faced with the maintenance of the state of public calamity, the different stages of the pandemic throughout Brazil and, especially, the low median business activity, the federal government decided to issue a new decree (10,470/20), extending the time limits of these instruments for another 60 days. Thus, employers are now allowed to use such legal tools for up to 180 days, subject to the decreed deadline of the public calamity.

Decree 10,470/20 also provides for the payment of the Emergency Benefit for a further two months to employees with an intermittent employment contract. Considering the four months already granted, this group of workers will be covered by the Emergency Benefit for a total period of six months.

The mechanisms in question are combined with the payment of the Emergency Benefit to employees who have had their employment contracts changed. In other words, employees who have had their salaries reduced and contracts suspended continue to receive the benefit as long as the change in the employment contract persists.

Category: Litigation

On August 26, 40 restatements of law were published, after approval at the 1st Working Group of Administrative Law, held by the Center for Judicial Studies (CEJ) of the Federal Judiciary Council (CJF) between August 3 and 7. Among them, three stand out regarding strategic partnerships entered into by state-owned companies, which help in understanding various legal issues that have arisen since the enactment of Law No. 13,303/16 (the State-Owned Enterprises Law).

The working group was held in a virtual format, due to the coronavirus pandemic (COVID-19) and aimed at consolidating interpretations of current administrative law rules. Hundreds of experts participated, including university professors, federal and state judges, members of the Public Prosecutor's Office and the Federal Auditing Court (TCU), as well as public and private lawyers. All the restatements of law approved are available for consultation at the CJF website.

The restatements on strategic partnerships entered into by state-owned companies are based on article 28, paragraph 3, subsection II, and paragraph 4 of the State-Owned Enterprises Law. The text expressly sets aside the public tender process “in cases where the choice of the partner is associated with its particular characteristics, linked to defined and specific business opportunities, justified by the unfeasibility of a competitive procedure.”

As a result of the work done during the event, three restatements on the subject were approved:

• Restatement No. 30[1] establishes the understanding that the "unfeasibility of a competitive process" provided for in article 28, paragraph 3, subsection II, of Law No. 13,303/16, does not mean the existence of a single party interested in entering into the strategic partnership. The interpretation of the provision of law, with which one agrees, shows that plurality of competitors is irrelevant, because the state-owned company must choose the private partner capable of offering the business opportunity best suited to the purposes of the partnership intended.

• Restatement No. 22,[2] in turn, expressly provides for a scenario of a "business opportunity": the participation of a state-owned company in the capital of a private company that is not a part of the Public Administration. To this end, the relevant provisions of the state-owned company’s bylaws must be observed.

• On the other hand, Restatement No. 27[3] provides that, for the "unfeasibility of competition" resulting from a business opportunity to be established, it must be impossible for there to be an objective comparison between interested parties, in the case of a partnership and corporate restructuring proposals, or, further, the need for a competitive procedure, when the proposal can be offered to all interested parties.

The approval of such restatements signals a certain easing of the resistance that still exists in relation to the signing of strategic partnerships between state-owned and private enterprises, reinforcing the spirit of the State-Owned Enterprises Law: to innovate, to make the management of public enterprises and government-owned companies more flexible and efficient, especially in relation to the rules on bidding and contracting. Precisely because of the search for efficiency, the exploration of economic activity often demands a combination of efforts between public and private economic agents in a less hierarchical manner and with a more balanced allocation of risks between the parties, as occurs in strategic partnerships.

Moreover, the approval of such restatements indicates an effort to achieve the precise meaning of normative concepts that are often obscure for those applying the law, such as the terms "business opportunities" and "unfeasibility of the competitive procedure".

The issue related to the execution of strategic partnerships by state-owned companies was addressed by the TCU within the scope of Representation No. 022.981/2018-7, made by the Bureau of Inspection of Water Infrastructure, Communications, and Mining (SeinfraCOM) of the TCU and authored by Justice Benjamin Zymler. The purpose of the representation was to analyze the legality of the partnership agreement entered into by the state-owned company Telecomunicações Brasileiras S.A. (Telebras) and the Brazilian subsidiary of the American company Viasat,[4] to operate the Ka band (non-military) of the first national Geostationary Defense and Communication Satellite (SGDC-1).

The strategic partnership agreement was signed in accordance with the rules of private law, as provided for in article 68 of the State-Owned Enterprises Law, expanding Telebras' negotiating freedom, removing red tape from the public contracting system, and benefiting the parties in the pursuit of their particular objectives, also associated, however, with public purposes.

The TCU en banc found that the execution of a strategic partnership agremeent without a prior bidding procedure is supported by the State-Owned Enterprises Law, not because it was a case of waiver or unenforceability of bidding (provided for in articles 29 and 30), but due to the fact that the bidding procedure was unfeasible in the case, due to the existence of a defined business opportunity and the unique characteristics of the private partner, which would meet the interests of Telebras in the operation of the satellite.

Justice Benjamin Zymler highlighted that Telebras was able to establish objective criteria to evaluate the existence of a business opportunity, related to the achievement of the purposes of public policies involved in the scope of the partnership, such as the National Broadband Program (PNBL). The judgment, which took place on October 31, 2018,[5] marked a milestone in the TCU's confrontation of the issue and will certainly serve as a precedent for the analysis of issues related to strategic partnerships.

Combined with the unprecedented decision by the TCU in the judgment of the representation mentioned above, restatements No. 22, 27, and 30 further broadened the understanding regarding the possible application of private law rules in matters of public procurement, contributing to dispel the (non-existent) "general principle of bidding processes" and giving precedence to the efficiency of the Public Administration, through the dissemination of the understanding favorable to the application of direct contracting modalities.

[1]"The 'unfeasibility of a competitive procedure' provided for in article 28, paragraph 3, subsection II, of Law No. 13,303/2016, does not mean that, in order to establish a business opportunity, there can only be one party interested in establishing a partnership with the state-owned company. It is possible that, even in the presence of more than one interested party, a competitive procedure is unfeasible."

[2]"The participation of a state-owned company in the capital of a private company that is not a part of the Public Administration fits within the scenarios of 'business opportunities' provided for in article 28, paragraph 4, of Law No. 13,303/2016, and decisions in favor of such participation must comply with the legal dictates and regulations issued by the state-owned company regarding this possibility."

[3] "The contract for entering into business opportunities, as provided for in article 28, paragraph 3, II, and paragraph 4 of Law No. 13,303/2016 must be evaluated in accordance with the practices of the sector in which the state-owned company operates. The mention of the unfeasibility of competition for the realization of the business opportunity should be understood as being impossibility of objective comparison in the case of partnership and corporate restructuring proposals and as an unnecessary competitive procedure when the opportunity can be offered to all interested parties."

[4]Viasat Brasil Serviços de Telecomunicações Ltda. was represented by Machado Meyer before the TCU.

[5] Appellate Decision No. 2,488/2018.

Category: Tecnology

The General Personal Data Protection Law - LGPD (Law No. 13,709/18), which brings in rules on how personal data shall be processed, will enter into force within the next few days, as soon as the bill of law converting Executive Order No. 959/20 is signed by the Brazilian President.

LGPD brought in a new system of rules for the processing of personal data in Brazil and was scheduled to be implemented on August 16, 2020. Because of the covid-19 pandemic, debates and initiatives related to a potential postponement of the LGPD have been taking place within the Brazilian Congress since March of 2020. On April 29, the Executive published Executive Order 959 to put into operation the monthly emergency benefit paid due to the pandemic and to extend the LGPD implementation to May 3, 2021.

In an extraordinary deliberative session of the House of Representatives held on August 25, the conversion into law of Executive Order 959 was approved, contemplating an amendment that established the entry into force of LGPD by the end of this year. However, during a virtual floor session held on August 26, the Speaker of the Federal Senate received a question of order considering the pre-judgment of the matter by the floor previously. Thus, the provision in Executive Order 959 dealing with the extension of the LGPD was recognized as moot and withdrawn from the text.

Given that scenario, the effective entry into force of the LGPD will occur after signature or veto of the conversion bill that amended the original text of Executive Order 959, as per article 62, paragraph 12, of the Federal Constitution, which should occur in the coming days. Articles 52, 53, and 54 of the LGPD, which deal with administrative sanctions, will only enter into force on August 1, 2021, as set forth in Law No. 14,010/20.

Also, on August 26, the Federal Executive issued Decree No. 10,474/20 approving the regulatory structure and the statement of commission positions and functions of trust of the National Data Protection Authority (ANPD). The decree will enter into force on the date of publication of the appointment of the ANPD's chief executive officer in the Federal Official Gazette.

Under the terms of the LGPD, the ANPD's president and the other members of the ANPD's executive board shall be chosen by the President of Brazil and appointed after approval by the Federal Senate.

What to do?

It is important to resume or accelerate ongoing adequacy projects and work with contingency scenarios, depending on the degree of maturity of the respective projects. It will also be advisable to monitor the developments of the implementation of the ANPD in the coming days, including the profile of the Executive Board.

The LGPD will enter into force without further regulation by the ANPD and with the chance that it will not even have its executive board appointed. Although administrative sanctions are postponed until August of 2021, the entry into force of the law makes its obligations enforceable, including allowing for the civil liability of processing agents vis-à-vis the personal data subjects. In addition, other administrative sanctions in the Brazilian legal system, such as those provided for in the Consumer Protection Code or the Brazilian Civil Rights Framework for the Internet, are in force and can be fully applied when connected to violations related to personal data.

Category: Litigation

The most varied and possible crisis scenarios are always cause for concern and planning. Companies focus on numbers, goals, contracts, reputation, inventory, sales, tangible and intangible risks, natural and technological accidents, criminal actions, and data protection. Individuals impacted by economic instability, to a lesser or greater degree, worry about jobs, investments, debts, and so many other commitments. Public authorities demand an immediate response from individuals and companies to minimize (and sometimes resolve) disputes and ensure social welfare. That is what we have seen since the beginning of the year 2020. The effects of the poignant world crisis unleashed by the covid-19 pandemic are immeasurable and have affected all sectors of society.

In this context of so many uncertainties, it is important to reflect on the movement of the already troubled Judiciary for resolution of disputes resulting from the crisis we are experiencing. The economic recession faced by companies and the citizens’ loss of income are directly proportional to the increase in the number of new disputes of all kinds: family, consumer, labor, contractual, corporate, bankruptcy, judicial reorganization, etc.

In addition to the losses resulting from the stoppage or reduction in operating activities with the unpredictable quarantine period, companies’ problems can be greatly aggravated by cases that last for years on end. Disputes demand a rapid response from institutions in order to allow resources to circulate and, with this, for companies to resume the course of business and for citizens to honor their commitments. At stake are not only the allocation of endless resources (of the parties and the Judiciary) to litigation over the years, but also the wear and tear of those involved, the credibility of the company, the viability of the business, and, ultimately, the generation of jobs.

The traditional method of resolving disputes with the filing of claims, an adversarial process, production of evidence, judgment, and appeals should be the last way to resolve disputes related to the present moment in which we live.

Without the purpose of pointing out alternative methods of dispute resolution as a remedy for the pathologies of the Judiciary, the objective of this article is to demonstrate the importance and advantages of reaching good solutions via mediation, especially in times of crisis. In the absence of precedents that apply to the situation we live in (nothing is found in the courts that serves as a guide for resolution of judicial disputes related to the pandemic), it is not possible to predict the probability of success of this or that judicial measure. The unpredictability of the outcome of judicial measures, combined with the need for rapid circulation of resources, considerably increases the advantages of using mediation as a means of dispute resolution.

One of the most relevant factors associated with the effectiveness of mediation is the voluntary settlement by the parties without direct and partial interference by the mediator. They can engage a professional specialized[1] in the dispute, raising the level of discussions and contributing to the dialogue. Reaching a settlement is the common goal of the parties, which contributes to mutual satisfaction and provides greater chances for fulfillment of the agreement. There is no need to point to who was right or wrong, who lost or who won, the important thing is to reconcile interests and allow both parties to continue their activities.

Surveys confirm that mediations in countries with broad adherence to this private method have very high rates of success, around 89% in the United Kingdom and 75% in the United States in 2017.[2] The same studies estimate that roughly 70% to 90% of the cases litigated in the United States end in settlement. Also, in terms of satisfaction, a study conducted with 368 companies in the "Fortune 1000" ranking in 2011[3] indicates that 98% would used mediation in the prior three years and 89% indicate likely use of mediation in the future.

Unlike mediation, traditionally litigious dispute resolution, through a judge in the Judiciary and arbitrator or arbitral tribunal in arbitration, rarely resolves the real dispute and adapts to the interests of the parties. Dissatisfaction and reluctance with respect to the judicial relief results in the lodging of appeals and the use of other manoeuvres which may delay the outcome of the dispute for years, causing immense wear and tear for the parties.

Time is another extremely relevant factor to consider in the use of mediation in an attempt to resolve a dispute. According to data published in the "Justice in Numbers" report in 2019,[4] the average duration of a private mediation proceedings is up to four and a half months, while arbitration, in turn, may take up to two and a half years to result in an arbitral judgment. Judicial proceedings, the longest, take on average four years and ten months until a trial judgment is issued. When the nature of the cause is bankruptcy or judicial reorganization, the time for an outcome is doubled or tripled.

The consequences of the exacerbated volume of claims and structural deficiencies in the Judiciary are disastrous when considering the time factor for dispute resolution. Often, judicial relief may no longer suit the interests and factual reality of companies when it is pronounced, resulting in inestimable practical consequences. In this crisis scenario, it is not out of line to say that many companies may not survive the time of waiting on these claims.

The speed of the mediation process naturally means a reduction in the costs incurred by the parties. It is worth mentioning that the sums involved in mediation proceedings, both in private chambers and in the Judiciary, are remarkably low compared to the costs of a lawsuit or arbitration proceedings. Many private chambers also have special conditions with the possibility of reducing costs if the mediation fails or if the proceeding is conducted during the course of an arbitration.

In addition, the rationalization of costs is considerable when considering, globally, the impacts of a successful mediation, such as the prevention of repetitive claims in court, which, in addition to overloading the Judiciary, requires funding expenses, costs, payment of judgments, fees for loss in suit, etc. In this regard, it is relevant to mention that there are emblematic and complex cases that have been resolved by means of chambers for compensation involving mediation. This experience has already been seen in air accidents (Chamber of Compensation 3054, related to the compensation of the relatives of the victims of flight JJ3054, and Compensation Program 447, related to the compensation of the relatives of the victims of flight AF 447); environmental accidents (PIM - Mediated Compensation Program, related to the compensation of those affected by the breach of the Fundão Dam, and CIB - Dam Compensation Center, related to the compensation of those affected by the breach of the Brumadinho Dam); mass consumer issues involving telecommunications services; and even issues involving the negotiation of telephone company claims under judicial reorganization, as determined by the 7th Business Court of the Rio de Janeiro State Court of Appeals in 2017.

In the midst of the crisis caused by the covid-19 pandemic, the São Paulo State Court of Appeals' Internal Review Board, per Provision No. 11/2020, instituted a pilot project for conciliation and pre-trial mediation for business disputes resulting from the pandemic. Innovative, the resolution includes judges in the pre-trial phase to hold a conciliation session with the parties, who must be referred to mediation if the attempt is unsuccessful. The mediator shall be chosen by common agreement of the parties and, in the event of disagreement, appointed by the judge. The parties only have to prepare an application to initiate the procedure, via e-mail, with the appropriate party information/identification, claim, and cause of action. The sessions must be conducted in electronic format, through Microsoft Teams. The provision does not, however, provide for the use of the method in matters involving applications for judicial reorganization and bankruptcy, which has already been applied by the Rio de Janeiro State Court of Appeals.[5]

In the same vein, the National Council of Justice (CNJ) announced in May of this year the launching of an online platform for mediation, precisely to avoid a build-up of post-pandemic lawsuits.

Although there may be cultural resistance, it is necessary to carefully analyze all the advantages that the mediation procedure offers and may come to offer to companies and businesses, including structural aspects that do not seem to make up the conflict in question, but which constitute a broader and more contemporary view of access to justice.

The current crisis scenario requires the Judiciary, more than ever, to focus on the adoption of preventive measures to avoid the filing of many cases to litigate contracts and claims for the application of disclaimers of liability due to force majeure or unforeseeable circumstances, for example. In essence, the effective economic recovery of companies and businesses is a condition for Brazil’s economic recovery and social peace. In this scenario, mediation constitutes an essential and undeniably practical tool for achieving these objectives, contributing to the management of crises such as the current one and others of so diverse a nature. In the end, every crisis brings to light forced structural changes which, despite the difficulties, certainly contribute to the cultural evolution of society and institutions.

[1] In addition to the various national and international private institutions focused on the expertise of professionals to act as mediators in business disputes, the courts maintain agreements with training courses so that professionals can act in Cejuscs.

[2] https://www.german-resolver.de/resources/The_Eighth_Mediation_Audit_2018-2.pdf

[3] Cornell’s Survey Research Institute, 2011.

[4] CNJ, Justice in Numbers 2019, https://www.cnj.jus.br/wp-content/uploads/conteudo/arquivo/2019/08/justica_em_numeros20190919.pdf

[5] All the information regarding the procedure is available at Provision No. 11/2020 of the TJSP's Internal Review Board https://www.tjsp.jus.br/Download/Portal/Coronavirus/Comunicados/Provimento_CG_N11-2020.pdf.

Category: Environmental

Brazil signed the Nagoya Protocol on February 2, 2011, but its contents remained with the House of Representatives for eight years until it was referred to the Federal Senate for review on July 9 of this year. Last August 6th, the Senate approved Draft Legislative Decree No. 324/20, which ratifies the protocol. The text is now going for promulgation.

Signed at the 10th Meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD) - COP-10, held in October of 2010, the Nagoya Protocol attends to three objectives discussed at the CBD: (i) conservation of biodiversity; (ii) sustainable use of natural resource components; and (iii) fair and equitable sharing of the benefits arising out of their use.

The agreement is considered a milestone in the international management of biodiversity, with the aim of promoting its sustainable use and creating a social and environmental apparatus of retribution for the communities and peoples with associated traditional knowledge.

Among the various rules brought in by the protocol, the sovereignty of countries over their genetic resources stands out. Thus, any exploitation by foreign companies or organizations is subject to the express authorization of the countries holding these resources. Part of the profits from the production and marketing of products resulting from the exploitation of genetic resources should also be shared with the country of origin.

The ratification of the Nagoya Protocol will reinforce the provisions of Federal Law No. 13,123/15, which deals with access to genetic heritage and associated traditional knowledge, as well as the sharing of benefits for conservation and sustainable use of biodiversity.

After the enactment of the ratification of the protocol, Brazil may also participate in international deliberations on the protection of biodiversity, any national interests, and obtaining new genetic resources from countries that are already party to the treaty.

It is expected that the ratification of the protocol will also allow access to genetic heritage from other countries and effective sharing of benefits from technological developments involving Brazilian biodiversity, with scientific advances in Brazil and promotion of economic development.

Category: Labor and employment

The 2^nd Section of the Superior Court of Justice (STJ) reaffirmed the understanding that it is incumbent on the courts of common jurisdiction (Justiça Comum) to decide claims related to self-managed corporate health insurance plans, except when the benefit is instituted in an employment contract or collective bargaining agreement. In this case, Labor Courts will have jurisdiction to rule, even if a retired worker or dependent of the worker appears as a party of the dispute.

The matter was decided in Incidental Proceeding for Assumption of Competence (IAC) No. 5/STJ[1] and, as it is a qualified precedent, it will guide the lower courts.

In the judgment, the Justice writing for the court, Paulo de Tarso Sanseverino,  who had proposed resumption of the case law that prevailed in the STJ[2] until 2018 recognizing the jurisdiction of the Labor Courts to rule claims in which the health insurance plan is operated by the company that hired the worker (self-management) due to the understanding set by the Supreme Court (STF) in the judgment of RE No. 586.453/SE under the general repercussion regimen, dealing with the competence of the Labor Courts for claims related to supplemental retirement, did not prevail.

According to the Justice writing for the court, in the absence of a rule analogous to article 202, paragraph 2, of the Brazilian Federal Constitution (FC) (which provides for the autonomy of supplementary pension plans in relation to the employment contract) to specifically deal with supplementary health plans, it would not be possible to exclude the direct relationship between the employment contract and the health insurance plan contract, from the standpoint of worker and their dependents, in view of article 114, I and IX, of the FC.

However, the position captained by Justice Nancy Andrighi prevailed by maintaining the current case law of the STJ[3] to the following effect:

• the jurisdiction of the Labor Courts is restricted to disputes where the health insurance plan is (i) corporate self-management and (ii) instituted through an employment contract or a collective bargaining agreement. This is because such circumstance binds the health insurance benefit to the employment contract and calls for the application of article 114 of the FC and article 1 of Law No. 8,984/95; and

• in all other cases, the courts of common jurisdiction have jurisdiction.

Justice Nancy Andrighi highlights that, just as the STF held with respect to supplementary pension plans, the central foundation of the STJ's current understanding is the autonomy of health insurance plan contracts in relation to employment contracts in view of the elevated regulation of the supplementary health sector, which is not appropriate to the labor courts, nor can it be placed within "other controversies arising from the employment relationship," per article 114, IX, of the FC.

Therefore, in the absence of dispute regarding the employment contract or labor rights, it is a matter of an eminently civil nature, which calls for the competence of the courts of common jurisdiction, even in the case of corporate self-management health insurance plans, a modality in which the operation of the health plan is carried out by the Human Resources department of the company that hired the worker, in attention to article 2, I, of Normative Resolution No. 137/06 of the National Supplementary Health Agency (ANS).

The current understanding of the STJ (now in a qualified precedent) affirming the jurisdiction of Labor Courts only in disputes where the rules regarding the health insurance involves self-management corporate plans and are provided for in an employment contract or collective bargaining agreements seems to us the to be the most correct, whether due to its observing constitutional competence or due to its respect for the autonomy of the legislation governing health insurance contracts, therein resolving once and for all all doubts regarding the competent court and bringing legal certainty for companies.

Besides guiding state courts, the precedent is relevant because it tends to eliminate the great waste of time caused by the repetition of procedural acts when there is a finding of lack of jurisdiction for the Labor Courts in actions relating to a health insurance plans that would be within the competence of the courts of common jurisdiction, especially because it deals with a right inherent to the very dignity of the human person, such as health care.

Decisions that do not comply with the STJ's understanding may be challenged directly in court through a complaint (article 988, IV, of the Code of Civil Procedure). There is no need to wait for a potential claim of conflict of jurisdiction or for a special appeal in an interlocutory appeal, as occurred in the case under examination.

[1] Issue examined in Special Appeal No. 1.799.343/SP and Conflicts of Competence No. 165.863/SP and 167.020/SP

[2]AgInt no REsp 1.630.686/SP, opinion drafted by Justice Moura Ribeiro, Third Panel, decided on March 21, 2017, published in the Electronic Gazette of the Judiciary on April 3, 2017

[3]CC 157.664/SP, opinion drafted by Justice Nancy Andrighi, Second Section, decided on May 23, 2018, published in the Electronic Gazette of the Judiciary on May 25, 2018; REsp 1.695.986/SP, Justice Ricardo Villas Bôas Cueva, Third Panel, decided on February 27, 2018, published in the Electronic Gazette of the Judiciary on March 6, 2018.