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.

Category: Labor and employment

The new text of Regulatory Standard 1 (NR-1) entered into force on 3 January 2022 and brought several amendments to the old text. In this article, we will discuss the main ones and their impacts on companies.

NR-1 provides for the application, terms and definitions regarding occupational safety and health, occupational risk management guidelines and requirements, and occupational safety and health prevention measures.

Among the novelties, we highlight the inclusion of Operational Risk Management (GRO). The GRO, through the Risk Management Program (PGR), aims to prevent and manage occupational risks and replaces the Environmental Risk Prevention Program (PPRA). Therefore, currently there is no longer the requirement to prepare a PPRA, but the PGR.

The document should be adopted by the company in an establishment where it develops its activities, that is, if the company has subsidiaries, in addition to the headquarters, the document should also be implemented for each subsidiary. In addition, at the company's discretion, the implementation can be done by operating unit, sector or activity of the establishment.

The PGR should be composed of plans, programs, schedules and other documents provided for in OSS legislation, including those described in the other Regulatory Standards (NRs), in order to include the management of all types of existing risks (physical, chemical, biological, ergonomic and accident), as provided for in NRs 15 and 16.

According to NR-1 updates, companies must:

• avoid occupational risks that may arise at work;
• identify hazards and possible injuries or health problems;
• assess occupational risks, indicating their level;
• classify occupational risks to determine the need for prevention measures;
• implement prevention measures in accordance with the risk classification and in the order of priority established; and
• control of occupational risks.

In order to identify occupational risks and evaluate them, NR-1 determines that the company must consider the provisions of the NRs and other legal requirements of safety and health at work, conducting a preliminary survey of hazards. This survey should be made before the start of operation of the establishment or new facilities, for all existing activities and in case of changes and introduction of new activities.

When, in the preliminary hazard assessment phase, the risk cannot be avoided, the company should adopt a process of hazard identification and occupational risk assessment.

At the company's discretion, the preliminary hazard survey step may be included in the identification stage, which should include:

• description of hazards and possible injuries or health problems;
• identification of sources or circumstances; and
• indication of the group of workers subject to risk.

When assessing and identifying risks, the company shall determine and inform all preventive measures so that such risks are eliminated, reduced or controlled. For each identified risk, its level of occupational risk should be informed, which is the result of the combination of the possibility of injury or health injury with the chance of its occurrence.

To verify the gradation of the probability of occurrence of injuries or health problems, account should be taken of:

• the requirements set out in the NRs;
• the preventive measures implemented;
• the requirements of the work activity; and
• the comparison of the occupational exposure profile with reference values established in NR-09, according to annexes I and III of the standard.

And for the gradation of the severity of injuries or health problems, account should be taken of the magnitude of the consequence (according to technical evaluations) and the number of workers possibly affected.

The company shall draw up a document, the Action Plan, in which all preventive measures to be introduced, improved or maintained by it will be indicated. The Action Plan should contain the schedule for the implementation of prevention measures, as well as ways of monitoring and measuring their results. In the event of a negative result, prevention measures shall be corrected.

Furthermore, the company may have to establish, implement, train and maintain response procedures to emergency scenarios, depending on the activities developed. These procedures should provide for the means and resources necessary for first aid, referral of injured and abandonment plan, if necessary, with the necessary measures for major emergency scenarios.

The PGR shall contain:

• Occupational Risk Inventory: includes the characterization of processes, work environments and activities, description of hazards and possible injuries or injuries to workers' health, with the identification of sources and risks and indication of groups of workers subject to risks and description of prevention measures implemented; preliminary analysis data on exposures to physical, chemical and biological agents, including the ergonomics assessment provided for in NR-17, and criteria adopted to assess risks and make decisions.
• Action plan.

The preparation of these documents, which must be dated and signed by the person who prepared them, is the sole responsibility of the company, respecting the provisions of the other NRs, being certain that they must be dated and signed by the person who prepared them.

Both the Occupational Risk Inventory and the Action Plan should be available to workers, their representatives and the Labor Inspectorate. The Occupational Risk Inventory must be kept up-to-date and its history kept for at least 20 years or for the period established in a specific standard.

The PGR should be reviewed every two years or after the following situations:

• implementation of prevention measures for the assessment of residual risks;
• innovations and modifications in technologies, environments, processes, conditions, procedures and work organisation that pose new risks or modify existing risks;
• inadequacies, weaknesses or ineffectiveness of prevention measures have been identified;
• occurrence of work-related accidents or illnesses;
• change in applicable legal requirements.

If the company has certifications in SST management systems issued by the National Institute of Metrology, Standardization and Industrial Quality (Inmetro), based on ISO 45001, the review period of the PGR may be three years.

In the event that several companies develop their activities in the same place, they must carry out integrated actions to implement prevention measures, with the aim of protecting all workers exposed to occupational risks.

In the case of outsourced services, the PGR of the contracting company may optionally include the preventive measures that should be adopted by the contracted companies when operating on their premises. However, the contractor is obliged to provide contractors with information on occupational risks that may affect their activities. In the same sense, contractors must provide the contractor with the Occupational Risk Inventory specific to their activities carried out in the contractor's premises or in a place previously agreed in contract.

The Individual Microentrepreneur (MEI) is exempted from the preparation of the PGR, but this exemption does not apply to companies that hire individual microentrepreneurs. The company that hires the MEI must include it in its prevention actions and in its PGR when it uses the contractor's premises.

Micro enterprises (ME) and Small Businesses (EPP) that are not obliged to constitute SESMT and choose to use risk assessment tools provided by the Special Secretary of Social Security and Work (SEPRT) may structure the PGR considering the report produced by these tools and the action plan.

The MEs and EPPs will be exempt ed from elaborating the PGR provided that they are framed as degrees of risk 1 and 2, no exposures to physical, chemical and biological agents are identified in the preliminary hazard survey and declare the information digitally, as provided for in NR-1 itself. In the same case, MEIs, MEs and EPPs are free to prepare the Occupational Health Medical Control Program (PCMSO), but not to perform medical examinations and issue Occupational Health Certificates (ASOs).

The exemption from preparation of the PGR for MEIs and, eventually, MEs and EPPs does not exempt them from the fulfillment of the other obligations provided for in the NRs.

The new text of NR-1, in Annex I, also brought the concepts of biological agent, physical agent, chemical agent and dangerous event.

All changes in the obligations relating to NR-1 came into force on January 3 of this year. Therefore, it is extremely important that companies analyze changes and regularize their situation immediately.

The theme of health and safety at work is of paramount importance and deserves the attention of companies. To ensure greater legal certainty and avoid health and safety problems and penalties for non-compliance with the standards, it is necessary to comply with the criteria stipulated and comply with the technical requirements set out in the NRs, with an impact assessment that considers the need of each company.

Category: Labor and employment

The Interministerial Ordinance MTP/MS 14, published on January 25, amends Annex I of the Joint Ordinance 20/20, and updates the measures to be observed to prevent, control and mitigate the risks of transmission of covid-19 in work environments.

Among the main changes, the following stand out:

• updating the concepts of confirmed and contacting cases;
• reduction of the period of leave of workers;
• exclusion from sorting at the entrance of establishments;
• recommendations on remote work;
• ventilation in the work environment;
• mandatory supply of PFF2 masks to risk groups; and
• increase from three to four hours of mask change time.

In the comparative table, we indicate the main changes:

The other measures remain in force and must be fully observed by companies in order to minimize the risks of transmission and contagion among workers. We highlight below the main measures provided for by the ordinance:

Guidance measures

— Mandatory to disseminate informative guidelines or protocols to workers, indicating the necessary measures for the prevention, control and mitigation of the risks of transmission of covid-19. The guidelines should include:

• prevention measures in work environments, in common areas, such as in cafeterias, bathrooms, changing rooms, rest areas and in the transportation of workers, when provided by the employer;
• actions for early identification and removal of workers with signs and symptoms compatible with covid-19;
• procedures for workers to communicate, including remotely, signs or symptoms compatible with covid-19 or possible contact with confirmed case of covid-19;
• instructions on hand hygiene and respiratory label; and
• forms of contagion, signs, symptoms and care needed to reduce transmission in the workplace and in the community.

The organization should extend this information to outsourced workers and other organizations that enter the facility.

Instructions to workers can be transmitted during training or through security dialogues, physical or electronic documents, posters and internal regulations, avoiding the use of pamphlets.

Conduct that should be adopted in confirmed, suspected and contacting cases

— Immediately remove workers with confirmed cases, suspected cases and contacting cases close to cases confirmed for covid-19 from face-to-face work activities for a period of ten days.

For the purposes of the period of removal:

• in confirmed cases, the day following the onset of symptoms or molecular method test collection (RT-PCR or RT-LAMP) or antigen test should be considered;
• in suspected cases, the day following the onset of symptoms should be considered; and
• in cases of close contactants, it should be considered from the last day of contact with the confirmed case.

The period of leave may be reduced to seven days in the following cases:

• confirmed – provided they have been without fever for 24 hours, without the use of anti-thermal medication, and with remission of respiratory signs and symptoms;
• close contactants – provided molecular method test (RT-PCR or RT-LAMP) or antigen is performed from the fifth day after contact, if the test result is negative; and
• suspected – provided they have been without fever for 24 hours, without the use of anti-thermal medicine, and with remission of respiratory signs and symptoms.

— Guide workers away on the need to remain in their residence, maintaining remuneration during the period of leave.

— Establish procedures for identifying suspected cases, including communication channels for workers to report the appearance of compatible signs or symptoms and contact with confirmed or suspected case of covid-19.

— Collect information on contactants, activities, the workplace and common areas frequented by the suspected or confirmed worker of covid-19.

— Guide contactants close to suspected cases of covid-19 about contact and the need to report immediately to the company the emergence of any signs or symptoms related to the disease.

— Keep record up to date with the following information:

• workers by age group;
• workers with clinical conditions at risk for the development of complications related to more severe conditions of covid-19 (no specification of the disease, preserving confidentiality). Clinical conditions at risk for the development of complications of covid-19 are considered: severe or decompensated heart diseases (heart failure, infarcted, revascularized, patients with arrhythmias, decompensated systemic arterial hypertension); severe or decompensated pneumopathy (oxygen-dependent, moderate/severe asthma patients, Chronic Obstructive Pulmonary Disease – COPD); immunosuppressed; advanced-stage chronic renal patients (grades 3, 4 and 5); diabetics, according to clinical judgment, and high-risk pregnant women;

• suspected and confirmed cases;

• close contactants on/who were on leave; and

• measures taken to adapt working environments to prevent covid-19.

— Forward suspected cases to the organization's medical outpatient clinic, when available, in order to carry out appropriate evaluation and follow-up. The care of symptomatic workers should always occur separately from the other workers, providing masks to all those present in the outpatient clinic.

— When the activities of a given sector or of the establishment itself are stopped as a result of covid-19, the following procedures shall be adopted before the return of activities:

• ensure the adoption of the preventive measures provided for in the annex to the Ordinance and the correction of situations that may have favoured the contamination of workers in the working environments;
• sanitize and disinfect the workplace, common areas and vehicles used;

• strengthen communication to workers; and

• strengthen the monitoring of workers to ensure the removal of confirmed, suspectedand contacting cases close to confirmed cases of covid-19.

Hygiene and cleanliness of the environments

— Sanitize and disinfect workplaces frequently, by cleaning the surfaces of tables, countertops and chairs in the interval between shifts or whenever there is the designation of one worker to occupy the job of another. The cleaning and disinfection of keyboards, handrails, door handles, payment terminals, elevator buttonens, tables and chairs should also be cleaned and disinfected.

Hand hygiene and respiratory label

— Guide employees to frequent hand hygiene, with the provision of resources for this purpose close to workplaces, including water, liquid soap, disposable paper towel and trash can (with manual contact-free opening) or hand-appropriate sanitizer, such as 70% alcohol.

— Advise on not sharing towels and personal products.

— Procedures should be adopted to ensure that, as far as possible, workers avoid touching surfaces with high frequency of contact, such as lift buttons, door handles and handrails.

— Workers should be instructed to avoid touching the mouth, nose, eyes and face with their hands and to practice respiratory label, including wearing disposable handkerchief for nasal hygiene, covering the nose and mouth when sneezing or coughing and sanitizing their hands after sneezing or coughing.

— Specialized Services in Safety Engineering and Occupational Medicine (SESMT) and the Internal Commission for Accident Prevention (Cipa) should participate in the prevention actions implemented by the organization.

Social distancing

— Adopt measures to increase distance and reduce personal contact between workers and between them and the external public, with guidelines to avoid close contacts such as hugs, handshakes and unnecessary conversations.

— Establish a minimum distance of one metre between workers and between workers and the public. If the physical distance of at least one meter cannot be implemented to reduce the risk of transmission between workers, customers, users, contractors and visitors, it should be:

• for activities carried out in fixed work posts, maintain the use of surgical mask or fabric and adopt waterproof partitions or provide facial protection of the type plastic visor (face shield) or goggles; and
• for other activities, maintain the use of surgical mask or tissue.

— Adopt measures to limit the occupancy of elevators, stairs and restricted environments, including sanitary facilities and changing rooms.

— Demarcatise and rearrange the places and spaces for queues and waits at least one meter away between people.

— Take measures to avoid agglomerations in working environments.

Personal Protective Equipment (PPE) and other protective equipment

— Create and review procedures for the use, hygiene, packaging and disposal of PPEs and other protective equipment used, and employees are oriented on the use, cleaning, disposal and replacement of masks, hand hygiene before and after their use and even limitations of their protection against covid-19.

— Provide surgical or tissue masks for all workers, with required use in shared environments or in those where there is contact with other workers or the public (it is mandatory to use the masks and replace them every four hours or when they have been dirty or damp).

— Professionals of the medical service of the organization, when any, should receive PPE or other protective equipment, according to the risks, including respiratory protection mask type PFF2 (N95), in accordance with the guidelines and regulations of the Ministry of Labor and Welfare and the Ministry of Health.

Ventilation of workplaces and common areas

— Natural ventilation in workplaces or measures should be taken to increase the number of air exchanges in the enclosures as much as possible, bringing clean air from outside and avoiding the recirculation of air conditioning.

— When split-type air conditioning system is used, it is recommended that doors and windows be kept open or that an air renewal system be added, in view of technical or operational feasibility.

— The exhaust systems installed must be kept in operation during office hours.

Risk groups

— Workers aged 60 years or older or presenting clinical conditions at risk for the development of complications of covid-19 should receive special attention, and telework or remote work may be adopted at the employer's discretion.

— Surgical masks or masks of type PFF2 (N95) or equivalent shall be provided when not adopted telework or remote work.

Common areas of the company

For the common areas, the published Ordinance updated the obligations and recommendations to be followed by employers, ranging from cafeterias to the transportation offered to workers.

Lunchrooms

— The sharing of glasses, plates and cutlery without sanitization is sealed.

— Self-service should be avoided or, where it cannot be avoided, control measures such as:

• hand hygiene before serving or supplying disposable gloves;
• hygiene or frequent exchange of kitchen utensils for shared use, such as shells, handles and spoons;

• installation of salivary protector on self-service structures; and

• use of masks and guidelines to avoid conversations during the service.

— Provide frequent cleaning and disinfection of the surfaces of tables, countertops and chairs, as well as adopt in the cafeterias minimum spacing of one meter between people in line and on the tables, guiding compliance with respiratory etiquette recommendations and the need to avoid conversations. When the frontal or transverse distance is not observed, a physical barrier should be used on the tables with a height of at least one and a half meters in relation to the ground.

— Distribute workers at different times at the places of meal.

— Deliver set of sanitized utensils, packed individually.

— Inclined jet drinkers should be adapted so that water consumption can only be used with the use of a disposable cup or individually used container.

Locker rooms

— Avoid crowding of workers at the entrance, exit and during use of the dressing room.

— Guide workers to keep the distance of one metre from each other during their use.

— Guide workers on the order of deparamentation of clothing and equipment, so that the last protective equipment to be removed is the mask.

— Provide a sink with water and liquid soap, as well as disposable towel or hand-appropriate sanitizer dispensers, such as 70% alcohol, at the entrance and exit of the changing rooms.

Transportation offered by the employer

— Implement procedures for communication, identification and removal of workers with symptoms before boarding, thus preventing the entry of symptomatic or contacting patients close to confirmed cases of covid-19 in the vehicle.

— Lay down the obligation to wear protective masks when boarding workers in the vehicle and use throughout the stay.

— Guide workers to avoid crowding in the boarding and disembarkation of transport, with the implementation of measures to ensure minimum distance of one meter between each person.

— Comply with the maximum capacity of passengers, limited to the number of seats of the vehicle.

— Maintain natural ventilation inside vehicles and, where the use of the air conditioning system is necessary, air recirculation should be avoided.

— Seats and other vehicle surfaces most often touched by workers should be sanitized regularly.

— Drivers should frequently sanitize their hands and their workstation, including the steering wheel and surfaces most often touched.

— Keep a record of workers using transport, listed by vehicle and travel.

Category: Infrastructure and energy

Law 14,301, of January 7, 2022 (Cabotage Law), passed with vetoes by the President of Brazil, establishes a new regulatory framework for cabotage in Brazil with different innovations and performance alternatives within the shipping  sector.

Since the first half of 2019, the Brazilian shipping industry has been following the development of the agenda around the BR do Mar project, prepared with the purpose of increasing the use of cabotage in Brazil. With an extensive coastline, Brazil has only 11% of cargo transported between Brazilian ports.^[1]

Initially prepared jointly by the Investment Partnerships Program (PPI), the Ministry of Economy, and the Ministry of Infrastructure, the BR do Mar Project brought together technical studies, responses from the sector, and administrative decisions that pointed to the need to establish new guidelines for the cabotage sector. Regulatory inefficiencies, high operational costs, and low competitiveness were pointed out as factors that limited investments and restricted the diversification of the Brazilian logistics matrix, which is substantially based on road transport.

The measures contained in the Cabotage Law intend to expand the supply and improve the quality of cabotage transport in Brazil, encourage more competition in the sector, and stimulate the development of the cabotage naval industry. According to studies by the Logistics and Planning Company (EPL), linked to the Ministry of Infrastructure, it is expected that this set of changes will be able to provide reductions of more than 15% in the cost of cabotage freight in Brazil. We highlight some of the changes brought in by the law:

Fleet

Chartering of foreign vessels. The Cabotage Law expanded the possibilities for chartering foreign vessels provided for in Law 9,432/97 (Waterway Transport Regulation Law).

With the Cabotage Law, foreign vessels were added to the list of possibilities for chartering, regardless of authorization by the National Waterway Transport Agency (Antaq):

• chartering in the modalities by time or by voyage, to operate in cabotage shipping, in substitution for a vessel of similar type, own or chartered, that is under jumbling, conversion, modernization, docking, or repair, be it in Brazil or abroad, limited to up to 100% of the deadweight tonnage; and

• the chartering of foreign vessels on bareboat, regardless of other requirements, up to the initial limit of one foreign vessel for cabotage shipping, which will progressively increase until, as of the 48th month of the Cabotage Law, there is no longer a limit for chartering foreign vessels on bareboat.

The main consequence of the changes in the charter rules is that Brazilian Shipping Companies (EBNs) will be able to operate without their own vessels, since it will no longer be necessary to link charters of foreign vessels to Brazilian vessels.

Subsidiaries abroad for fleet. According to the Cabotage Law, EBNs that qualify for the Cabotage Transportation Incentive Program (BR do Mar) will be able to charter vessels from wholly-owned subsidiaries abroad or wholly-owned subsidiaries of other EBNs abroad. A time charter of the foreign vessels of wholly-owned subsidiaries abroad can be carried out in five cases:

• increase in the deadweight tonnage of its own vessels, in a proportion still to be defined by an act of the Federal Executive Power;
• replacement of vessels of similar type under construction in Brazil in the proportion of up to 200% of the deadweight tonnage of the vessel under construction for a period of 6 months extendable to 36 months;

• replacement of a vessel of similar type under construction abroad in the proportion of up to 100% of the deadweight tonnage of the vessel under construction for a period of 6 months, extendable to 36 months;
• exclusive service for long-term transportation contracts, a case to be regulated by the Federal Executive Power; and
• exclusive provision of regular operations for the transport of cargoes in type, route, or market that do not yet exist or are not consolidated in Brazilian cabotage, for a period of 36 months, extendable for up to 12 months, as regulated by the Federal Executive Power.

The qualification of the EBNs interested in the Incentive Program for Cabotage Transport (BR do Mar) will be carried out by an act of the Minister of Infrastructure and will depend on the regulations to be issued.

EBN-i. The Cabotage Law provides for the creation of the Empresa Brasileira de Investimentos em Navegação (Brazilian Shipping Investment Company - EBN-i), exclusively for chartering vessels to EBNs or foreign shipping companies.

Tax benefits

Tax incentives. Although the Tax Arrangement for the Incentive for Modernization and Expansion of the Port Structure (Reporto) has not been determined, the Cabotage Law created a tax benefit specifically for foreign chartered vessels authorized to operate in cabotage transport. These vessels will automatically be submitted to the temporary admission arrangement, without registration of the import declaration, with total suspension of different taxes: Import Tax (II), Tax on Industrialized Products (IPI-Import), PIS/Pasep-Import, Cofins-Import, Contribution for Intervention in the Economic Domain levied on the import and sale of oil and its derivatives, natural gas and its derivatives, and ethyl alcohol fuel (Cide-Fuels), and the Additional Freight for the Renovation of the Merchant Marine (AFRMM).

AFRMM

Use of the AFRMM. Some of the most relevant changes in the Cabotage Law are related to the procedures and rules for using the funds collected by AFRMM, which, according to a report prepared by the National Bank for Economic Development (BNDES) at the end of 2021, amount to about R$585 million deposited into escrow accounts in the name of EBNs and R$24.9 billion in the credit portfolio of the Merchant Marine Fund (FMM).^[2]

The Cabotage Law made more restricted the possibilities of using AFRMM financial resources for vessel acquisitions or construction. The credits can be used for the purchase or construction of vessels of the same type that originated the AFRMM funds deposited in the EBN's escrow account. Thus, an EBN operating in cabotage shipping can no longer use the AFRMM funds collected in this activity to finance vessels that will operate in other modes of shipping (for example, port support and maritime support).

On the other hand, the Cabotage Law now allows the use of AFRMM funds to perform maintenance and overhaul services by specialized companies, a possibility that was previously restricted to shipyards. The AFRMM funds deposited into escrow accounts may be used to provide a guarantee for the construction of a vessel in a Brazilian shipyard and annual reimbursements of amounts related to insurance and reinsurance purchased to cover hulls and machinery of own or chartered vessels.

AFRMM and incentives for port infrastructure. The Cabotage Law now also allows the use of AFRMM funds by the FMM for financial support by granting loans in financing and contracting engineering works services by port authorities, lessees, and terminals for private use, up to 100% of the approved project.

Partial vetoes

Although the above changes were passed and approved by the President of Brazil, there was a partial veto to the bill that had been approved by the Brazilian Congress. With this, the part of Bill 4,199/21 passed and published in the Cabotage Law is already in effect, while the issues vetoed are still to be addressed by senators and representatives in a joint session and may return for presidential sanction, if the vetoes are rejected by an absolute majority of congressmen.

Among the vetoes of major importance are the following:

Reporto Veto. The Reporto, established by Executive Order 206/04 and with successive extensions, was in force until December 31, 2020. According to the wording of the bill of the Cabotage Law project was approved in Congress, the Reporto would be back in force for the period from January 1, 2022, to December 31, 2023, suspending federal taxes such as II, IPI-Import, PIS/Pasep-Import, and Cofins-Import for the import of machinery, equipment, and spare parts for the modernization and expansion of port structures. However, the President of Brazil vetoed the new Reporto's validity, and the benefit will no longer apply.

Changes in AFRMM rates. The bill approved by Congress provided for changes in the AFRMM rates applicable to long haul and cabotage shipping. On the remuneration for waterway transport, the rates of 40% would be applied in river and lake shipping, in the case of liquid bulk transport in the North and Northeast regions, and 8% in long haul, cabotage, and river and lake shipping, in the case of solid bulk transport and other cargoes in the North and Northeast regions.

Requirement of 2/3 of the crew as a minimum quantity of Brazilian seafarers on vessels. As a measure to preserve jobs for Brazilian crewmembers, the bill provided that foreign vessels of EBNs qualified under the BR do Mar program should be required to have:

• crew composed of, at least, 2/3 Brazilians in each technical level of the officer corps, including senior or junior officers, and in each branch of activity, including deck and engine, on a continuous basis; and
• Brazilian captain, coastmaster, chief engineer, and engine driver. In cases where there are not enough Brazilian seafarers to make up the minimum proportion required, the qualified company may apply to Antaq for authorization to operate the specific vessel with a foreign crew, on a temporary basis, for a fixed period, not exceeding 90 days, or in a single operation, in the event that the execution requires more time than the maximum period established. The discussions around the minimum quantity of Brazilian seafarers on foreign vessels enrolled in the BR do Mar program was one of the main points of controversy among government technicians, congressmen, union representatives, and businessmen from the sector.

The Cabotage Law went into effect on January 7, 2022, the same date it was passed and published. In addition to the new rules applicable, the EBNs should evaluate whether they consider it pertinent to qualify for and join the BR do Mar program, an optional part of the Cabotage Law that will offer greater flexibility in chartering foreign vessels from subsidiaries abroad. As for the presidential vetoes, they are expected to start being processed soon after the end of the parliamentary recess in February of 2022. Considering the public responses regarding these topics, it is possible that there will be various debates before a new definition is provided.

^[1] Source: TKU of Inland, Cabotage and Long-haul Shipping on Inland Waterways - 2019. Brasília: Antaq, 2020. Available at: http://sophia.antaq.gov.br/index.asp?codigo_sophia=28203. Accessed on: Jan. 3, 2022.

^[2] Source: https://www.bndes.gov.br/wps/wcm/connect/site/c359b9a0-3595-4694-a1df-3a5c1f6d5566/Relat%C3%B3rio+financeiro+do+FMM+3+tri+2021+Internet.pdf?MOD=AJPERES&CVID=nTzd5Tk. Accessed on January 11, 2022.

Category: Intellectual property

The trial of the special appeal 1881149/DF,^[1] which dealt with the validity of the franchise contract without signature of the parties, exposes the weight that some principles expressed in the law may have in the resolution of legal disputes.

The contract dealt in the special appeal was signed under the old Franchise Law (Law 8,955/94), which was in force until March 26, 2020, when it was replaced by the new Franchise Law (Law 13,966/19). For this reason, the old law was used to resolve the dispute.

Article 6 of Law 8.955/94 required the franchise to be written and signed by the parties in the presence of two witnesses. Although the principle of freedom of form in the Brazilian legal system is in force, thus admitting verbal contracts in which the consent of the parties may be issued tacitly or even by silence – as per Article 107 of the Civil Code – the law may expressly require special form (e.g. in private writing or public instrument), as law 8,955/94 did and Law 13,966/2019 does.^[2]

In the case in question, at the beginning of 2016, the franchisor forwarded the contractual document so that the franchisee would sign it, which was not done. Nevertheless, the parties put into practice the provisions of the contractual instrument and, at the end of that year, agreed on a contractual amendment, which was also not signed. The relationship between the parties remained being executed until the judgment by the local court, which recognized the contractual default of the franchisee, declared the termination of the contract and ordered the franchisee to pay the franchisor the amount of R$ 57,500.00, referring to the contractual fine.

The contractual fine was reduced to 50% of the amount provided for in the contract, because it was understood that the franchisor contributed to the establishment of a franchise relationship in verbal form, thus justifying the fine reduction.

The franchisee appealed to the Superior Court of Justice (“STJ”) seeking to declare the contract null and void. At the trial, the court sought to ascertain:

• the existence of a tacit manifestation of the parties' willingness to conclude the contract, despite the defect of form resulting from the absence of signature; and
• provided there was this tacit will, if there is a rule in the Brazilian legal system that justifies overcoming the defect of form.

The judgment ended up being based on two main aspects:

• the tacit declaration of the will of the franchisee; and
• the prohibition of contradictory behavior, in full observance of contractual good faith. The principle of contractual good faith, provided in Article 422 of the Civil Code, imposes on contractors the duty to act correctly so as not to frustrate the legitimate expectations of the contractual parties.

The decision states that the expression of will of the franchisee occurred in a tacit manner, with a behavior opposite to what would constitute the "non-acceptance" of the contract. This occurred through the opening of subsidiaries, use of the licensed trademark and the fulfillment, by the franchisee, of contractual obligations, until the violations that led to the lawsuit were found.

The STJ understood that the claim of formal defect by the franchisee, with the aim of achieving the nullity of the contract, pursuant to Article 166, item IV, of the Civil Code, was not sustained, given its behavior contrary to the principle of contractual good faith.

It is worth noting that the judgment was not intended to validate null contract, but to keep the business, understanding that, in the present case, the franchisee gave reasons to the franchisor to trust the agreement that both parties had signed.

Despite the understanding of the Superior Court of Justice, which denied the invalidity of the franchise contract due to lack of signature, it is important that the parties formalize their contracts in writing to ensure greater legal certainty. The measure shall be taken where necessary by legal requirement or if the contracted operation involves risks or complexity. In this way, the parties may have greater predictability on what they have agreed upon and are able safeguard their interests in the face of non-compliance or other adverse contractual situations.

^[1]STJ - Resp 1881149 DF 2019/0345908-4. Rapporteur: Minister Nancy Andrighi, date of publication: DJ 02/02/2021.

^[2]The new Franchise Law, however, no longer provides for the need to sign two witnesses (Article 7, I).

Category: Digital Law

Data Protection Day was established by the Council of Europe in 2006. It is celebrated on January 28th, when the signatures to the Council of Europe Convention No. 108/1981 on the protection of individuals with regard to automatic data processing were opened. Closing out the global initiative of Personal Data Protection Week, the date is celebrated to encourage and foster a culture of data protection around the world.

This is a great opportunity to discuss important points about the subject and to identify the main issues that companies will have to face in 2022. Starting with business, many companies are already in a new phase with regard to the topic. They have gone through the initial stage of implementing legislation, in particular the General Personal Data Protection Law (LGPD), and now need to maintain a privacy and data protection management system that is consistent with and capable of meeting the requirements of the law.

What Data Protection Day reminds us is that the task can be made simpler if a culture of privacy is actually implemented. The topic is alive. More than well-defined policies and goals, the adoption of daily activities in favor of privacy is a must.

In the current phase, privacy by design becomes even more relevant. In addition to reviewing and updating risk matrices and records of processing activities, or even seeking a greater level of detail in contracts, personal data protection is expected to be a hallmark of every initiative. Decisions about the purpose of the use of personal data, identification of what data is needed, ways to achieve maximum transparency with the data subject, and ways to establish high levels of security are good examples. To do this, privacy professionals need to be involved from the beginning of each action.

The role of Data  Protection Officer (DPO) is becoming more and more established. Parameters on how to structure the exercise of the function become clearer every day.

The sanctions applied in Europe in the last few months may have important consequences in Brazil. In addition to cases of non-appointment of the professional,^[1] sanctions have confirmed the importance of the foreman being sufficiently involved in the matter. They also recommend that there should be no accumulation of functions or situations of lack of administrative structure and autonomy. Potential conflicts of interest should also be avoided.

For example, in December, the Belgian data protection authority (APD) recognized the conflict of interest and imposed a fine of 75,000 euros to a financial institution because the DPO appointed was also head of the department to which the DPO should report. In another case, the Luxembourg authority (CNPD) imposed a fine of 15 thousand euros due to the DPO's lack of involvement in all matters related to personal data, his lack of autonomy in the exercise of the function, and the fact that the professional had not received adequate training to perform his activities.

The year also tends to bring in an increasingly active National Data Protection Authority (ANPD). The ANPD is expected to issue new guidance guides with nuances of its interpretation of the LGPD, along the lines of what was done with the Processing Agents and Data Protection Officer Guide and the publication Information Security for Smaller Processing Agents.

Moreover, in yet another commendable pedagogical stance, the Authority began its first monitoring cycle in January of 2022, with a review of companies' compliance and regulatory risks and adoption of practices to curb irregularities and foster a culture of data protection.

Of particular note is the fact that 2022 is also an election year. It becomes very relevant to understand the protection of personal data in this context, considering that the political and electoral process involves the circulation of a large volume of personal data and will be the first in the country after the LGPD came into effect, which must be fully complied with.

It is fundamental to understand the main points to be considered by all the key players in this process (candidates, political parties, etc.). To help in this task, the ANPD and the TSE have jointly launched the guide on the Application of the General Personal Data Protection Law (LGPD) by Data Processors in the Electoral Context. Among other points, the publication explores the scenario, the main legal bases that support operations, and accountability guidelines for channels to exercise data subject rights and for prevention and security.

Compliance with the LGPD in the election context involves defining the role of the processing agent (whether controller, operator, or co-controller). Political parties and groups that carry out party political campaigns are structured in many different ways, and the roles of the agents must be precisely defined in order to know what must and must not be fulfilled.

It is also important to be aware of the use of personal data in political campaigns if this data has been collected before for other purposes (for example, data present in collective petitions - indicated below - on a given issue). In such cases, care must be taken to avoid the risk of misuse of purpose. Data may be used only in situations where the purposes are closely related to the reasons for the collection or where the data subject has consented for campaign purposes.

Another sensitive issue is profiling by political parties or candidates. This is when voters are classified into different groups or sectors, through the use of algorithms that identify relationships between different behaviors and characteristics of personal data subjects. This allows one to target political advertising much better.

The situation is not forbidden, but it is relevant that the processing agent adopt safeguarding and compliance measures. Among them, it is important that one review one’s policies to make the situation very clear to the data subjects, pay attention to the correctness of the data used, not collect data beyond what is necessary, and not keep it longer than necessary for that purpose.

The foreign experience also provides interesting guidelines on the topic. Noteworthy, for example, are the UK data protection authority (ICO) guidelines and the recent Opinion 2/2022 of the European Data Protection Supervisor (the European Union's independent data protection authority) on the subject.

Another increasingly relevant topic that is directly associated with the purpose of Data Protection Day is privacy incidents. Depending on the profile, it is better known as data leakage, but it represents any situation, of low or high significance, in which the confidentiality, integrity, or availability of personal data is compromised.

With the growth in the number of situations in the last year, it is highly relevant that companies adopt preventive measures, not only regarding information security, but also regarding governance, having an incident response and remediation plan that is able to mitigate the risks and contain the damage.

Well-defined roles in identification and response, simulation exercises, pre-hired service providers for crisis management, and a correct assessment of the severity of the incident based on reliable criteria are some of the measures increasingly adopted.

Topic affects all new technologies

Data Protection Day also reminds us of one of the most relevant features of the topic: its general applicability in relation to all new technologies and practices. This is the case, for example, with the increasing use of mechanisms that make use of artificial intelligence and that have personal data as raw material. If personal data is processed, the LGPD will need to be respected, especially by defining the precise purpose of the operation, the use of only the data necessary for the purpose, and the understanding of the legal justification supporting the use of the tool.

The preparation of specific Personal Data Protection Impact Reports, with risks and safeguards adopted, can be very useful, demonstrating the company's concern and diligence on the topic. Furthermore, it is important that automated decision processes that make use of personal data have mechanisms for reviewing the decision, since this is a right of the holder of the personal data involved, pursuant to article 20 of the LGPD.

There is also the risk of abusive or illegal discriminatory practices arising from the automated processing of personal data, which is prohibited by article 6, IX, LGPD. This requires definition of frameworks for such mechanisms, as well as supervision not only of the data collected or reported to the tools, but of the entire processing. The recent ISO IEC 24.027:2021 standard brings about important parameters to mitigate the risk of biased results.

Let us celebrate the culture of personal data protection in the best way: by remembering its importance and understanding its moment for business.

^[1] Available at: https://www.aepd.es/es/documento/ps-00231-2021.pdf. Accessed on: January 24, 2022;

Category: Tax

The covid-19 pandemic intensified the adoption of remote work, through which the employee performs his duties without physically attending the company. From the perspective of social security contributions, the place where the employee performs his/her duties is of little relevance, as long as this place is in Brazil. However, if the employee resides in another country and there develops his activities, the situation requires additional attention.

As a general principle, social security contributions should be required only in the country in which the employee provides his services. After all, it is in this country that he will probably seek access to the benefits of social security, funded by the contributions. However, Law 8,212/91, which establishes and regulates these contributions, does not bring any exception as to the country in which the services are provided. Therefore, a preliminary analysis indicates that social security contributions are due if the professional has a job relationship with a Brazilian company, regardless of the place in which he/she performs his services.

Brazil, however, has a broad network of international treaties concerning social security. These agreements regulate from access to security benefits, including total contribution times for those who have made contributions in more than one country, to the imposition of social security contributions on wages received by employees residing abroad. While there may be controversy as to the nature of these agreements and their status before domestic law, Article 85-A of Law 8,212/91 determines their insertion as a special law. In other words, even if the Brazilian legislation has a general normative provision on the subject, if it is contrary to the provisions of the treaty, the treaty must prevail because it is a special rule.

As the page of the Secretariat of Social Security of the Ministry of Labor and Social Security indicates, Brazil has 18 international agreements in force that regulate these aspects and 6 more international agreements – on the same theme – in the process of ratification by the National Congress. Among the 18 agreements in force, some were established with countries that have a strong migratory relationship with Brazil, including the United States, Portugal and Spain. Also among these agreements are the Ibero-American and Mercosur conventions, which cover a multiplicity of countries.

Unlike treaties to avoid double income taxation, which have the UN and OECD model conventions as standard, social security agreements do not follow a pre-established standard. The analysis on a case-by-case basis, therefore, becomes more important, and it is necessary to verify, first, the country to which the employee moving and, also, how long this employee will reside there. As a general rule, treaties signed by Brazil that the employee is subject to social security legislation (which, in our view, may include the obligation to pay social security contributions) of the country in which he/she performs his/her work.

This general rule is, for example, article 9 of the Ibero-American Multilateral Convention on Social Security, promulgated in Brazil by Decree 8,358/14:

Article 9 General rule

Without prejudice to Article 10, persons to whom this Convention applies shall be subject exclusively to the social security legislation of the State in whose territory they are active, dependent or independent, which allows them to be included in the scope of that legislation.

From this provision, it is possible to understand that the employee and his employer must contribute to the social security of the country in which the employee carries out his activities.

At a domestic level, however, there may be doubts as to the imposition of social security contributions due by the employer on the wages paid to that employee. This is because Article 22, items I and II, of Law 8,212/91 does not seem to distinguish between people who carry out their activities in Brazil and people who carry out their activities abroad. Notwithstanding, Section 22 of Law 8,212/91 only determines the imposition of the contributions over wages paid to workers that are included in Brazilian social security. As the treaties usually determine that a worker must be included only in the social security system of its residence State, we understand that there are arguments to sustain that the person subject to this general rule should not be subject to social security contributions in Brazil.

Despite the relevance of the issue, there are no clear guidelines from th tax authorities or case law regarding the imposition of social security contributions due by the employer in the case of employees of a Brazilian company who carry out their activities outside Brazil. There are, however, answers to consultations issued by the Federal Revenue Service of Brazil (RFB) on the reverse scenario, in which the employee of a foreign company comes to work in Brazil. In these consultations, there are indications of the social security treatment to be applied in the case where the employee of the Brazilian company starts working abroad.

Issued by the Taxation Division of the Regional Superintendences of the Federal Revenue of Brazil (Disit), the SRRF06 76/13 Consultation Solution (SC Disit SRRF06 76/13), analyzed the case in which workers temporarily moved from Japan to Brazil. Similar to Article 9 of the Ibero-American Multilateral Convention on Social Security transcribed above, Article 6 of the treaty signed between Brazil and Japan, promulgated by Decree 7.702/12 (Brazil-Japan Agreement), provides, as a general rule, that the employee will be subject exclusively to the legislation of the country in which he carries out his activities. In Article 7, however, the Brazil-Japan Agreement provides special provisions, applicable to cases of temporary displacement, in which the employee remains subject to the legislation of his country of origin.

Because it is temporary displacement, tax authorities concluded that there should not be the imposition of social security contributions over the wages paid to them, provided that the requirements of the Brazil-Japan Treaty were met.

Based on The SC Disit SRRF06 76/13, it is worth highlighting two conclusions. The first is that the worker's subjection to the social security legislation of one of the countries implies the need to collect social security contributions in that country. The second, less obvious, conclusion is that both social security contributions due by the employer and by the employee are covered by the agreement. In other words, if the employee is subject to the social security legislation of only one of the countries, his employer must also collect social security contributions only to that country. Another highlight is that SC Disit SRRF06 76/13 also states that there is no imposition of contributions to third parties, based on the understanding that these contributions "must follow the same legal design given to social security contributions, because, in relation to this matter, there are no specific rules".

Subsequently, the General Coordination of Taxation (Cosit) issued Answer to Consultation 360/17 (SC Cosit 360/17), in which it analyzed the application of the social security treaty signed between Brazil and South Korea, promulgated by Decree 9.751/19 (Brazil-Korea Agreement).

The Brazil-Korea Agreement also includes the general rule that the employee must be subject to the social security legislation of the country in which he works and to exceptions regarding the temporary displacement of employees between the two countries. Thus, SC Cosit 360/17 also points out that, provided that the requirements laid down in the treaty are fulfilled, employees temporarily displaced from South Korea to Brazil are not subject to the collection of Brazilian social security contributions.

Like SC Disit SRRF06 76/13, SC Cosit 360/17 recognizes that contributions to third parties (specifically, salary-education and contribution to the National Institute of Colonization and Agrarian Reform – Incra) do not affect the case. However, the rationale is different: SC Cosit 360/17 states that such contributions cannot be charged because employees displaced to Brazil, in the case analyzed, are not included in the General Social Security System. In a very similar sense, Answer to Consultation 454/17, also issued by Cosit (SC Cosit 454/17), presented the same understanding.

SC Cosit 360/17 and SC Cosit 454/17, in addition to analyzing the case of the employee temporarily displaced to Brazil, are dealing with the possibility of requesting the refund of amounts unduly paid as social security contributions on the wages granted to these employees. In both answers, it was concluded that restitution may be authorised. Cosit's Answer to Consultation 278/18 (SC Cosit 278/18) confirms the possibility of offset of improperly collected employer contributions being made against debits of those contributions in later periods.

None of these manifestations of the tax authorities addresses the case in which the Brazilian company employee is moved abroad. They deal only with cases where employees of foreign companies temporarily come to provide services in Brazil.

We believe, however, that it is possible to extend its legal foundations to cases in which the employee of a Brazilian company starts to develop its activities abroad. As seen, Art. 22 only allows the imposition of social security contributions due by the employer in the case of workers who are included in the Brazilian social security. The answers to consultations, however, make it clear that the subjection of the exclusive worker to the social security legislation of one country excludes its link to the social security of the other country.

When the employee moves to a country that has a social security treaty with Brazil, we understand that there may be arguments not to collect social security contributions on the wages paid to that employee. This possibility, however, depends on the terms of the treaty with the country of destination. It should be checked, in particular, whether it contains the general rule of subjection to the legislation of the country in which the services are performed and whether there are exceptions applicable in the case.

Category: Litigation

The breach of data confidentiality of social networks users has raised relevant debates in the legal and social environments. If on the one hand it is recognized that the user of social networks can freely exercise their freedom of speech, on the other hand it is certain that this freedom is limited by the personality rights of other people.

Recently, the Superior Court of Justice (STJ) published the newsletter 720, which highlights the trial of REsp 1.914.596/RJ, rapporteurship of Minister Luis Felipe Salomão. In this trial the Fourth Panel unanimously decided that internet access providers must provide the registration data (name, address, identity and CPF) of users responsible for posting videos with slanders to the memory of former councilwoman Marielle Franco.

Although the judgment has not yet been drawn up, it is possible to draw some relevant conclusions from the judgment, which is fully available in the stj channel in the YouTube. The first concerns the discussion about the breach of confidentiality of an internet user's registration data when they have committed an unlawful act, which could allow victims to use that data to exercise their rights.

In the specific case, Marielle Franco's family filed a lawsuit against Google (administrator of YouTube) asking for the removal of offensive videos to the former councilwoman, which was granted in the District Court and confirmed by the Court of Appeal of  Rio de Janeiro (TJ /RJ). Google was also requested to break the confidentiality of data of those who carried out the offensive postings, which was denied by the court.

The state court rejected the request for a letter dispatch to internet access providers to provide the full identification of those responsible for the postingof the videos, under the following arguments:

• judicial intervention for the identification of connection providers should be unnecessary;
• the breach of data confidentiality must occur through criminal procedure;
• impossibility of conviction outside of what was requested by the author; and
• impossibility of convicting third parties who did not join the court.

However, the minister rapporteur Luis Felipe Salomão rejected, one by one, all these arguments, being established that, in the face of evidence of illegality, the only way to obtain data protected by secrecy, as a way to instruct civil and criminal proceedings, is through judicial intervention. The position reaffirmed what is already expressly provided for in Article 22 of the Civil Framework of the Internet – MCI (Law 12.965/14) and is in line with the recent jurisprudence of the Supreme Court on the subject (

According to the minister if you have an ongoing court case, this doesn’t breach the data protection act because it doesn’t fall within the definition of protection of the flow of information, outlined in law 9.296/96, but the court proceedings assesses the level of indemnification for the breach of the data protection act.

In relation to the third argument, the minister clarified that the request for user identification  is in full line with the cause of the action and even added that the jurisprudence of the Supreme Court allows the magistrate to extract from the logical-systematic interpretation of the application what the party intends to obtain from the action.

Another relevant point highlighted by the Minister concerns the need to prove the evidence of illegality in the user's conduct and that the request for breach of confidentiality is specific. In the specific case, the request was specific to provide the data of the users who actually posted the offensive videos, whose IPs had already been provided by Google. It is worth remembering that the STJ has already dismissed a claim to breach the confidentiality of data of users who shared a video which speech that later was considered offensive (REsp 1.859.665/SC).

For the minister there is no need to talk about conviction of third parties because the case refers to the hypothesis of duties imposed on third parties in order to assist the fulfillment of court orders, as stipulated by the arts. 77 and 139 of the Code of Civil Procedure.

There is a more recent understanding of the STJ (REsp 1,306,157/SP) that the access provider is obliged to identify, based on IP, internet user author of an illegal act, when provoked by the Judiciary, even if the act was practiced before the validity of the Civil Framework of the Internet.

In giving the special appeal, the minister stressed that such conclusions do not conflict with the General Data Protection Law - LGPD (Law 13.790/18), because it does not exclude the breach of confidentiality. In addition, the provision of information by internet connection providers should comply with the rules provided for in the arts. 23 and following the LGPD.

With this decision, Minister Luis Felipe Salomão reaffirms the position he already held in 2014, when he declared that "the judiciary can and should be inducing civilizing agendas of behaviors in the world computer network".^[1] The breach of data secrecy thus becomes an important mechanism for the enforcement of the right of those who have their personality rights violated in social networks. It is also relevant the indication of the STJ that such a mechanism can be exercised in civil claims and does not contradict the LGPD.

^[1] REsp 1,306,157/SP

Category: Tax

One of the greatest virtues of the Judiciary is to pacify social relations through the jurisprudence it creates on the various themes that are submitted to it. It happens that, in Brazil, even today, attempts to resurrect issues already faced by the courts are recurrent.

As an example, we can mention Law 4.117/03 of the state of Rio de Janeiro, which aimed to create the ICMS on oil extraction, a theme addressed in the Direct Action of Unconstitutionality (ADI) 3,019/RJ in 2005.

Years later, another law in Rio de Janeiro, Law 7.183/15, intended to reestablish the collection of ICMS on oil extraction, which was rejected by the Supreme Court (STF) in 2021 in ADI 5.481/RJ.

The same happened with the so-called Environmental and Regulatory Surveillance Fee of Oil and Gas Exploration and Production Activities (TFPG). Created by State Law 7.182/15 - RJ, the fee should be paid by taxpayers who exploited the extraction and production of oil. By law, its value would have to be fixed according to the amount extracted from barrels of oil.

Faced with widespread protests against the requirement of the fee, which followed a pattern quite similar to that of other police power charges, it was up to the Supreme Court to examine the subject, as it had done in relation to the Control Fee, Monitoring and Supervision of Activities of Exploitation and Use of Water Resources (TFRH).

In one of the pioneering cases about the unconstitutionality of police power charges that do not observe the equivalence between what is collected and the cost of state service to be remunerated, we advocate from the court of the plenary of the Supreme Court.

In the trial of ADI 6.211/AP, which specifically involved the collection of TFRH created by the state of Amapá, the minister rapporteur Marco Aurélio Mello voted for the unconstitutionality of the collection, because there is no obligation / referable character, and its collection is confiscatory. In his vote, the minister rapporteur stressed that "the rate always presupposes a cost to be satisfied, and must have an intimate relationship with the activity performed by the State".

Based on this understanding, soon after, Law 7.182/15 was deemed unconstitutional by the Supreme Court in ADI 5.480 / RJ, putting an end to TFPG.

The state of Rio de Janeiro, however, again intends to reinstitute the very same TFPG, through Bill 5.190/21, which was pending only the government sanction. The curious thing is that the new TFPG basically repeats the old TFPG. The only differences between the two refer to the following points:

• the calculation basis of the new TFPG is a fixed value per month, while in the old TFPG the value fluctuated according to the amount of barrels produced; and
• the new TFPG provides for the allocation of part of its collection to the state environmental agency, in addition to the State Attorney General's Office and the State Treasury Department.

We understand that the new rate, in the same way as the old one, incurs in unconstitutionality, because its collection needs to be compatible with the cost of state activity to be remunerated, an indispensable requirement of validity and adaptation to the constitutional precepts of any rate of police power.

Unlike taxes (“impostos”), charges are taxes linked and referable precisely because they aim to remunerate a certain state activity.

By being calculated in very high monthly fixed value (about R$ 5 million per month, per concessionaire), the new TFPG is far from the cost of state activity to be developed with the resources from its collection. Proof of this is that the supervision of oil exploration and production activities are already developed at the state level by the State Institute of the Environment (Inea), whose collection obtained with all fees for the exercise of police power in the years 2017, 2018 and 2019 totaled, respectively, R$ 11,462,499.23, R$ 15,855,731.62 and R$ 11,310,219.51, as disclosed in the last Inea/2019 Activity Report.

If we consider the number of concessionaires authorized to carry out research, mining, exploration and production of oil and gas existing in Rio de Janeiro, we will have a collection of R$ 150 million only by concessionaires in the Campos Basin – according to the National Petroleum Agency (ANP), only in this basin there are 30 authorized concessionaires in the state. This amount represents about 388% of the revenue obtained by Inea with all police power fees in the years 2017, 2018 and 2019.

The constitutional principles of transparency, good faith and morality require public managers to decline and share with society and parliament itself all empirical data examined and weighted for the creation of new taxes. It would therefore be commendable if the legal justification of the new TFPG was accompanied by this information, in particular, the estimated cost of state activity to be remunerated.

In addition, by establishing as a taxable person of the rate any and all "legal entity that is, in any capacity, authorized to carry out research, mining, exploration, and production of oil and gas resources", the new TFPG ceases to observe and considers that several concessionaires, although authorized by the ANP to explore and produce oil and gas, are not carrying out these activities at the moment.

It makes no sense to establish the collection of a fee for the exercise of police power over taxable persons who are not even in the full exercise of the activity to be supervised. In this case, there is no necessary accountability/referable nature of the fee.

Another issue that draws a lot of attention in the new TFPG is the fact that part of its collection is destined to the State Attorney General's Office and the State Department of Finance.

These bodies have unique relevance in the collection and judicial representation of state agencies. However, both have no direct and reference relationship with the police power to be remunerated with the new TFPG.

Initiatives like these scare away new investors and shake the confidence of those who already make their investments in Rio de Janeiro, as well as go against the desired economic recovery of the state's troubled public accounts.

It is an anima to know that, apparently, the governor of Rio de Janeiro did not sanction the bill, a measure agreed to retain the investments already made by oil and gas concessionaires in the state and avoid the unwanted flood of litigation that will come, if the Rio de Janeiro State parliament keep the governor´s rejection.

Category: Infrastructure and energy

2021 ended bringing a new package of changes for Brazilian aviation, which is still suffereing the consequences of the significant demand recudtion caused by the pandemic. The changes were implemented through Provisional Measure (MP) 1,089/21, edited in the context of the Simple Flight Program (Programa Voo Simples), a partnership between the National Civil Aviation Agency (Anac) and the Federal Government created in 2020 to modernize and simplify the national aviationsector.

MP 1,089/21 amended and revoked articles of the Brazilian Aeronautical Code (Law 7.565/86 – CBA), the law that created Anac (Law 11.182/05) and Law 6.099/73, which regulates the use and operation of airports in Brazil. Law 5.862/72, which provides for the creation of the Empresa Brasileira de Infraestrutura Aeroportuária (Infraero), also had a small change, with the extinction of the mandatory intervention of the Federal Government in lawsuits in which Infraero is a party.

The main objective of the changes implemented by MP 1.089/21 is to make issues related to the aeronautical sector less bureaucratic and costly. One of the most significant changes was the revocation of  articles of the CBA that required foreign airlines interested in operating international flights in Brazil to obtain authorization from the Ministry of Foreign Affairs (or other competent body) of their country of origin and an operating authorization issued by Anac, as a representative body of the Federal Government.

According to the new provisions, to operate international air transport services, foreign companies must obtain only one operating authorization, to be issued in accordance with regulations issued by Anac. The simplification of the process should attract new investments for the sector and may promote the entry of new airlines into the market, increasing competition and  the provision of services.

Another measure to reduce bureaucracy was the revocation of the CBA article which determined the revalidation of operating authorizations of companies providing domestic air transportation services every five years. It also worth mentioning that the new wording given to Article 40 of the CBA, which now exempts air service providers from the public bidding process for the use of areas for dispatch services, office, workshop, warehouse or shelter, repair and refueling of aircraft. In relation to airports , one of the main amendments was the revocation of Article 34 of the CBA, which required prior authorisation from the aeronautical authority before an airport could be built.

Relevant changes have also been implemented in relation to the concession regime previously applicable to airlines. As a result of the revocation of Articles 177 to 191 of the CBA, the concession regime is no longer applicable and air services will now be considered as economic activities of public interest subject to the regulation of the civil aviation authority in accordance with the new wording of Article 174. The revocation of the above mentioned articles excluded the legal definitions of the concepts of public air service and private air service. According to the new sole paragraph of Article 174, issues relating to sceduled and non-scheduled air services will be regulated with exclusively through regulatory rules issued by Anac, in compliance with the international agreements to which Brazil is a signatory.

In practice, the revocations and amendments to the CBA transferred to Anac the competence to decide on operational and procedural issues through infralegal rules that, in theory, can be changed more easily and, therefore, adapt more quickly to the constant changes required by market dynamics.

MP 1,089/21 also deals with a series of revocations and inclusions of new provisions to simplify aircraft registration and certification procedures and processes at the Brazilian Aeronautical Registry (RAB), as well as creating new categories of civil aviation taxes and inspection fees (TFAC).

The amendments introduced by MP 1089/21 came into force on 30 December 2021 (except for the annex dealing with the new supervisory fees, which will enter into force 90 days after publication). According to constitutional rules, the provisional measure must be converted into law within 60 days from its issuance, being such period extendable once for another 60 days if the voting process  in the Senate and the House of Representatives has not been completed. If the legislative decree is not issued within the legal period, the provisional measure loses effectiveness, and only the acts performed during its validity will remain governed by it.

The Brazilian aviation sector is still recoveringand the changes introduced by MP 1,089/21 indicate a willingness of the Federal Government and Anac to reduce bureaucracies in the sector to boost activities and enable the survival of airlines and other air service companies.

Category: Real estate

The promotion of agribusiness connected to environmentally sustainable development issues gains a new instrument with the regulation of Law 8,929/94 by Decree 10,828/21 published on October 4th of this year.

The Rural Product Note (“Cédula de Produto Rural” -CPR) is a credit instrument used by rural producers to enable the production and commercialization of their products. The CPR was instituted by Law 8,929/94, and Decree 10,828/21 regulates issuances for rural products obtained through activities of conservation and recovery of native forests and their biomes, which earned it the title of Green CPR.

According to article 2, subsections I to VII, of the decree, the issuance of Green CPRs is authorized, provided that these rural products are able to reduce greenhouse gas emissions, maintain or increase forest carbon stock, reduce deforestation and degradation of native vegetation, conserve biodiversity, water resources, soil, or provide other ecosystem benefits.

The decree puts into practice the regulation provided for in article 42 of Law 13,986/20, known as the Agro Law, which, in turn, amended article 1, paragraph 2, subsection I, of Law 8,929/94. The change included the list of activities through which rural products are obtained for the issuance of CPRs. The regulation is a way to encourage the preservation of the environment in rural areas and to value sustainable practices.

According to information on the federal government’s website “the instrument will allow companies interested in mitigating their greenhouse gas emissions to acquire the securities upon the commitment of the producer to maintain the conserved area. A Green CPR connects the company that wants to be environmentally sustainable with the rural producer. Thus, at the same time that rural producers finance their activities, there is a financial incentive to preserve rural areas.

The legislation provides for other modalities of CPR. However, while in Physical CPR’s the obligation is to deliver the product and in Financial CPR’s it is to pay the amount provided for in the security, in Green CPR’s the producer commits to environmental preservation in exchange for the financial resources it needs.

Those who conserve water resources, soil, and biodiversity and reduce greenhouse gas emissions, among other benefits stipulated in article 2 of the decree, may receive financial resources to make their production viable.

According to article 3 of Decree 10,828/21, this type of CPR must be certified by a third party, to indicate and specify the rural products that back it. This certification aims to ensure the objective of environmental preservation to which the issuer of the CPR has committed itself. Thus, it seems to us that the Green CPR market will also encourage the development of environmental preservation certification activities in rural areas to back the issuance of the security.

Considering that the decree has only four articles, the expectation is that soon new information and guidelines for issuing Green CPR’s will be published. However, despite the concise regulation, the provision for this credit security represents an advance in the promotion of agribusiness in line with environmental preservation in the rural environment.

Category: Tax

Historically, case law has tended to reduce the influence of tax liabilities on judicial reorganizations, with the recurrent relaxation of the rules on mandatory proof of good tax standing for companies petitioning for judicial reorganization (articles 191-A of the National Tax Code^[1] and 57 of Law 11,101/05).^[2] Thus, reorganization plans used to be granted regardless of the existence of material tax debts. Due to a new regulatory and tax scenario, combined with the advent of Law 14,112/20, there has been a change in this system, with a much stronger presence of the tax authorities in the judicial reorganization proceedings.

Initially, the Superior Court of Appeals (STJ) set aside the requirement for good tax standing in judicial reorganizations, based on a teleological interpretation: based on the premise, which is true, that companies resorting to judicial reorganization had high tax liabilities, the requirement of a certificate of good tax standing could make any reestablishment of a company in crisis unfeasible, especially in a scenario in which the legislation did not provide for special measures aimed at tax recovery of the company in crisis.

In effect, although Law 11,101/05 and article 155-A, paragraph 3, of the National Tax Code^[3] enunciate the possibility for the Public Treasuries to grant installment payments of their debt claims in the context of judicial reorganizations,^[4] initially, there was no specific legal provision to institute this type of installment payment. In the legislative scenario at the time, the STJ decided^[5] that the requirement for a clearance certificate (or positive certificate with effect of clearance) for tax debts represented an affront to the very purpose of the concept of judicial reorganization, which is “to make it possible to overcome a situation of economic and financial crisis on the part of the debtor, in order to allow maintenance of the source of production, employment of workers, and the interests of creditors, thus promoting the preservation of the company, its social function, and stimulus of economic activity.”^[6] Given the lack of a specific law regulating the installment payment of tax and social security debts of companies under judicial reorganization, therefore, the requirement for good tax standing is now waived.

Even the legislative innovation promoted by Law 13,043/14, which inserted a special installment plan for the judicial reorganization context, was not enough to change the guidance established by the STJ.

Since the inclusion of article 10-A in Law 10,522/02 (inserted by Law 13,043/14 and repealed by Law 14,112/20), there is now a specific installment payment plan for companies under judicial reorganization:^[7] the payment of debts could be made within up to 84 consecutive monthly installments calculated in increasing amounts, from the 1st to the 12th installment: 0.666%; from the 13th to the 24th installment: 1%; from the 25th to the 83rd installment: 1.333%; and the remaining balance due on the 84th installment.

Despite this legislative innovation, the STJ has repeatedly maintained the position that good tax standing is not necessary for the judicial reorganization purposes. The reasoning behind the decisions evolved along the lines that it would be more appropriate to give prevalence to judicial reorganization, and its intention to effectively ensure the reorganization of companies in crisis, to the detriment of tax regularization.

In some decisions, the unreasonableness of the good tax standing requirement was highlighted because: "the legal requirement is not adequate for the purpose it pursues, to guarantee payment of the tax debt, nor does it seem necessary to achieve this purpose: (i) inadequate because, by preventing the granting of judicial reorganization to a debtor in an irregular tax situation, it imposes an even greater difficulty for the Tax Authorities, in view of the classification of the tax debt, in the event of bankruptcy, in third place in the order of preference; (ii) unnecessary because the means for collection of tax debts are not suspended with the granting of the application for reorganization."^[8]

As a result of the jurisprudential guidance for the setting aside of the good tax standing requirement, controversies have arisen with regard to the simultaneous processing of judicial reorganizations and tax executions.^[9]

In particular, situations were discussed in which a judicial reorganization was negatively impacted by foreclosure measures determined by the courts in tax foreclosures: not infrequently, assets of entities undergoing judicial reorganization, relevant to the fulfillment of the plan approved by the general meeting of creditors, were seized to guarantee or even pay tax debts.

In analyzing this aspect of the debate on judicial reorganization and the collection of tax debts, the First Section of the STJ held that "tax enforcement is not stayed by the granting of judicial reorganization, allowing the performance of constrictive acts, especially when it is evidenced that the company under reorganization failed to take the measures necessary to suspend the enforceability of tax debts, especially through the special installment plan governed by article 10-A of Law 10,522/2002, included by Law 13,043/2014."^[10]In turn, the Second Section of the STJ has held that “the granting of judicial reorganization does not suspend tax enforcement, but acts involving attachment or disposal of the assets of the company under reorganization must be submitted to the bankruptcy court (...) the enactment of Law 13,043/2014 - which added article 10-A to Law 10,522/2002 and disciplined the installment payment of debts of companies under judicial reorganization - does not (...) have the power of altering the jurisprudential understanding highlighted."^[11]

Thus, the First and Second Sections of the STJ have established divergent positions on the subject by drafting decisions according to the limitations of their competencies. Faced with the clash of public vs. private interests, the First Section, which is competent to judge public matters (especially in disputes over tax foreclosures), emphasized the jurisdiction of the tax foreclosure court to the detriment of the judicial reorganization court. Meanwhile, the Second Section, which decides on private matters (including disputes arising from judicial reorganizations), has favored the opposite: the superimposition of the judicial reorganization court over the tax foreclosure court.

This jurisprudential disagreement justified: (i) the filing of a conflict of jurisdiction to define which Section of the STJ had jurisdiction to decide on conflicts between the tax enforcement and the judicial reorganization courts; and (ii) the allocation, by the First Section, of appeals for judgment under the system of repetitive appeals to decide on Topic 987:^[12] "possibility of performing constrictive acts against a company under judicial reorganization in the tax enforcement system."

The jurisdiction of the Second Section was established as prevailing^[13] to “try and decide conflicts of jurisdiction between the court of judicial reorganization and that of tax foreclosure, whether by the criterion of specialty or by the need to avoid disparate judgments and the consequent legal insecurity.

As a consequence, Topic 987 ended up being withdrawn^[14] due to the recognition of the competence of the Second Section to decide the dispute (remember that the allocation of the appeals had been undertaken by the First Section) and for an additional reason: the supervening enactment of the changes made by Law 14,112/20 in Law 11,101/05, which now sets forth that the granting of judicial reorganization does not hinder collection through tax foreclosures, "admitting, however, the competence of the judicial reorganization court to mandate the substitution of the acts of constriction that fall on capital assets that are essential to maintain the business activity until the termination of the judicial reorganization, which shall be implemented through jurisdictional cooperation, pursuant to article 69 of Law No. 13,105, of March 16, 2015.” This provision resolved the conflict between judicial reorganization and tax foreclosure courts.

This digression on the STJ case law regarding the topics of judicial reorganization, tax compliance, and tax foreclosures is fitting to elucidate the intrinsic relationship between them and the fact that Law 14,112/20 has already had repercussions in the STJ. The issue is that other provisions of Law 14,112/20, linked to recent tax rules, are impacting other aspects of the processing of judicial reorganizations, in particular the restricted applicability of the understanding on the mitigation of the requirement for a tax clearance certificate in judicial reorganizations.

Since Law 14,112/20 made changes to the Company Reorganization and Bankruptcy Law, there has been an increasing participation by the tax authorities in judicial reorganization. This change is in line with the fact that the new legislation established rules for the installment payment of debts of companies under judicial reorganization and referenced the alternative ways of settlement and procedural legal transactions to settle tax liabilities.

Law 14,112/20 inaugurated new modalities of special installment plans for companies under judicial reorganization (and repealed the installment plan then provided for by Law 13,043/14), namely:

• Within up to 120 installments, from the 1st to the 12th, 0.5%; from the 13th to the 24th, 0.6%; and from the 25th onwards, a percentage corresponding to the remaining balance, within up to 96 successive monthly installments;
• Settlement of up to 30% of the debt with credits arising from tax losses and negative basis of the Social Contribution on Net Income or with other own credits related to the taxes managed by the Special Bureau of the Federal Revenue of Brazil and installment payment of the remaining balance within up to 84 installments, from the 1st to the 12th, 0.5%; from the 13th to the 24th, 0.6%; and from the 25th onwards, a percentage corresponding to the remaining balance, within up to 60 successive monthly installments;
• Taxes, as a rule, that cannot be paid in installments: subject to withholding, discount from third parties or subrogation, as well as IOF withheld and not paid to the National Treasury (article 14 of Law 10,522/02).

Moreover, Law 14,112/20 incorporated into the judicial reorganization legislation a reference to the alternative of tax debt equalization through a settlement proposal related to debt claims, under the terms of Law 13,988/20. In this case, the maximum payment term can reach 145 months, with reductions of up to 70%.

Both the special installment payment modalities for companies under judicial reorganization and the framework for tax settlements were regulated by the Brazilian Federal Revenue Service and/or the National Treasury Attorney's Office, so that they can already be implemented by companies under judicial reorganization.^[15]

Added to this regulatory context is the recent regulation of the institute of procedural legal transactions, which may deal with the acceptance, evaluation, substitution, and release of guarantees or settlement of debts recorded as collectible debt of the Federal Government and the FGTS. This alternative is supported by the supplemental legislation^[16] and Law 10,522/02^[17] and was disposed of by the Attorney General’s Office for the National Treasury through Ordinance PGFN 742/18.

As can be seen, at present (and contrary to what prevailed at the time when the STJ's understanding was established for waiving the requirement of good tax standing in judicial reorganization), companies under judicial reorganization have means, in conceptual terms, even significantly beneficial and comprehensive, for regularization before the tax authorities. This is why there is a more incisive role for the tax authorities in judicial reorganizations, and the validation of this stance by court decisions for which the legal requirement for a tax clearance certificate in judicial reorganizations is no longer justified.

The appellate judge Cesar Ciampolini, from the 1st Chamber Reserved for Business Law of the Court of Appeals of the State of São Paulo, issued a sole judge decision accepting the treasury’s petition for the suspension of the judicial reorganization until the tax liabilities are settled.^[18] In this case, the judicial reorganization plan had been ratified without the presentation of a tax clearance certificate, under the theory that evidence of "positive conduct of the debtor that does not have its tax situation solved" would be sufficient for granting judicial reorganization, with the proviso that such a measure would not be appropriate only in the case of a delinquent debtor or one that proves to be negligent with regard to the obligation to pay what it owes to the tax authorities. The decision was reversed in court based on Law 14,112/20: it was established that the advent of the law imposes the requirement for clearance certificates for the granting of judicial reorganization, as an important legislative initiative to restructure the judicial reorganization procedure and prevent public claims from being placed in second place and settled after the payment of private creditors.

In the case of the judicial reorganization of Maralog Distribuição S.A., the 2nd Chamber Reserved for Business Law of the Court of Appeals of the State of São Paulo granted the interlocutory appeal filed by the Federal Government (National Treasury) against a decision that had dismissed the requirement of proof of good tax standing of the company under reorganization.^[19] In this case, Maralog supposedly went from a situation of giid tax standing, in effect at the time the judicial reorganization was granted, to a situation of tax irregularity. In hearing the case, the court found that equalization of the tax debt was mandatory, especially based on the rules introduced in the legal system by Law 14,112/20 (which allowed the installment payment of debt claims of businessmen or business companies whose judicial reorganization has been granted), under penalty of conversion of the judicial reorganization into bankruptcy.

The Attorney General's Office for the National Treasury of the Regional Office of Uberlândia/Minas Gerais filed a complaint in the record of the judicial reorganization of Samarco Mineração S. A.^[20] to request its inclusion in the case as an interested third party, stating the amount of the debts recorded as overdue federal liability in an irregular situation and the instruments available for negotiation of the debt, and requesting that the company be summoned to procure equalization of the tax liability. After the judge ordered Samarco to be heard,^[21] the company reported that it was in talks with the Public Prosecutor's Office to enter into a legal procedural settlement and, subsequently, attached to the record of the judicial reorganization the instrument of the legal procedural settlement in camera.^[22] In hearing the company's petition, the judge order that the confidentiality of the terms agreed upon "is incompatible with the judicial reorganization process, since knowledge about the tax liabilities is of interest to all the participants in the proceeding," ordering the document to be made available to the parties.^[23] Samarco's court-supervised reorganization plan was still pending review in the court at the time of this article's publication.

In the case of Odebrecht S. A. and other companies, before the advent of Law 14,112/20, the judicial reorganization was granted with the proviso that the company in reorganization should adjust its tax liabilities within one year.^[24] in order to avoid probable controversy on the subject, the companies that had not yet attached their tax clearance certificate to the case record did so.^[25]

In Rio de Janeiro, the decision that had ratified the judicial reorganization of Hotéis Othon S/A and others^[26]  was annulled by the 16th Civil Chamber of the Court of Appeals to enforce the requirement of the tax clearance certificate, because, for the reporting judge, the denial of the application of such provision, together with the restrictions on the seizure of assets of the company under reorganization, would lead to undue reduction of the “tax debt, ignoring its dignity and the relationship between taxes and fundamental rights.” Pursuant to the appellate decision, one emphasized the constitutionality of article 57 of Law 11,101/05, especially under the "new clothing" given to it by Law 14,112/20, which maintained the requirement of tax compliance for the granting of judicial reorganization, guaranteeing the extension of the deadline for payment of the debt up to 120 months.

In the judgment of a constitutional complaint filed against a decision by the STJ that had ruled out the observance of article 57 of Law 11,101/05, Justice Luiz Fux,^[27] of the Federal Supreme Court (STF), granted an in limine relief to suspend the effects of the decision, based on the understanding that the judicial reorganization system imposes on the debtor, in addition to negotiating with private creditors, regularization of its tax situation, which, at present, can be done even through a tax settlement (Law 13,988/20). Although this decision was reversed,^[28] the decision expressly considered the new regulatory scenario that has led to a change in case law on the effects of tax liabilities in judicial reorganizations. Justice Luiz Fux's decision has even guided the understanding expressed by the Special Body of the Paraná Court of Appeals, which dismissed the argument of unconstitutionality to establish the constitutionality of article 57 of Law 11,101/05, on September 21, 2020.^[29]

Based on these examples, it is possible to confirm that the evolution of instruments to equalize tax liabilities is leading to a change in the processing of judicial reorganizations, with closer relations between the companies under reorganization and the tax authorities and greater emphasis on good tax standing. It is up to the company in economic and financial crisis to explore the new alternatives for negotiating its tax debts, in the terms that best meet the particularities of its situation, in order to avoid clashes in the judicial reorganization.

^[1] Article 191-A. Granting of judicial reorganization depends on presentation of proof of clearance of all taxes, with due regard for the provisions of articles 151, 205, and 206 of this Law. (Included by Lcp No. 118, of 2005)

^[2] Article 57. After the plan approved by the general meeting of creditors has been attached to the case record or after the time limit provided for in article 55 of this Law without objection from creditors, the debtor shall submit clearance certificates for tax debts pursuant to articles 151, 205, 206 of Law No. 5.172, of October 25, 1966 - National Tax Code.

^[3] Article 155-A (...) Paragraph 3. A specific law shall provide for the conditions for installment payment of tax debts of the debtor under judicial reorganization. (Included by Lcp No. 118, of 2005)

Paragraph 4. The non-existence of the specific law referred to in paragraph 3 of this article means that the general installment payment laws of the State shall apply to the debtor under judicial reorganization; in this case, the installment payment term cannot be shorter than that granted by the specific federal law. (Included by Lcp No. 118, of 2005)

^[4] Article 68. The Public Treasuries and the National Institute of Social Security (INSS) may grant, pursuant to specific legislation, installment payment of their debt claims, in the context of judicial reorganizations, in accordance with the parameters established in Law No. 5,172, of October 25, 1966 (National Tax Code).

^[5] BUSINESS AND TAX LAW. SPECIAL APPEAL. JUDICIAL REORGANIZATION. REQUIREMENT THAT THE COMPANY IN REORGANIZATION MUST PROVE ITS GOOD TAX STANDING. ARTICLE 57 OF LAW N. 11,101/2005 (LRF) AND ARTICLE 191-A OF THE NATIONAL TAX CODE (CTN). INOPERABILITY OF THE AFOREMENTIONED PROVISIONS. ABSENCE OF A SPECIFIC LAW REGULATING THE INSTALLMENT PAYMENT OF TAX AND SOCIAL SECURITY DEBTS OF COMPANIES UNDER JUDICIAL REORGANIZATION. 1. Article 47 serves as a guideline to guide the operation of judicial reorganization, always aiming at the institute's purpose, which is "to make it possible to overcome a situation of economic and financial crisis on the part of the debtor, in order to allow maintenance of the source of production, employment of workers, and the interests of creditors, thus promoting the preservation of the company, its social function, and stimulus of economic activity.” 2. Article 57 of Law No. 11,101/2005 and article the provisions of article 191-A of the CTN must be interpreted in light of the new guidelines established by the legislator for tax debts, particularly in view of the legal provision for the installment payment of the tax debts on behalf of companies under reorganization, which is a cause for suspending the enforceability of the tax, pursuant to article 151, subsection VI, of the CTN. 3. The tax installment plan is a right of the company under judicial reorganization that leads to a situation of good tax standing, such that any non-compliance with the provisions of article 57 of the LRF can only be attributed, at least immediately and for the time being, to the absence of specific legislation regulating the installment plan in the context of a judicial reorganization, not constituting a burden for the taxpayer, when the legislator is silent, to presentation of certificates of good tax standing in order to be granted reorganization. 4. Special appeal not granted relief. (Special Appeal 1187404/MT, opinion drafted by Justice Luis Felipe Salomão, Special Court, decided on June 19, 2013, published in the electronic gazette of the judiciary on August 21, 2013).

^[6] Article 47 of Law 11,101/05.

^[7] Article 10 of Law 10,522/02 establishes the "general" installment payment of debts of any nature with the National Treasury, under the following conditions (less beneficial than the "special installment payment for the judicial reorganization context": within up to 60 monthly installments, according to the wording of Law 10,637/02.

^[8]Special Appeal 1864625/SP, opinion drafted by Justice Nancy Andrighi, Third Panel, decided on June 23, 2020, published in the official gazette of the judiciary on June 26, 2020.

^[9] Law 11,101/05. Article 6, paragraph 7. Tax foreclosures are not suspended by the granting of judicial reorganization, except in the case of payment in installments, pursuant to the National Tax Code and specific ordinary legislation. (Repealed by Law 14,112/20)

National Tax Code. Article 186. The tax debt takes precedence over any other, regardless of its nature or the time of its formation, with the exception of debt claims resulting from labor legislation or occupational accidents. (As amended by Lcp No. 118, of 2005); Article 187. Judicial collection of the tax debt is not subject to a creditors' list or registration in bankruptcy, judicial reorganization, scheme of arrangement, inventory, or probate. (As amended by Lcp No. 118, of 2005)

Tax Foreclosure Law. Article 5. The competence to try and decide the execution of the Public Treasury's Outstanding Debt excludes that of any other court, including bankruptcy, scheme of arrangement, liquidation, insolvency, or inventory; Article 29. Judicial collection of the Public Treasury's Outstanding Debt is not subject to a creditors' list or registration in bankruptcy, scheme of arrangement, liquidation, inventory, or probate.

^[10]Special Appeal 1673421/RS, opinion drafted by Justice Herman Benjamin, Second Panel, decided on October 17, 2017, published in the electronic gazette of the judiciary on October 23, 2017.

^[11] Theory No. 08, of the 37th edition of Jurisprudence in Theories of the STJ.AgRg in CC 136.130/SP, reporting judge Justice Raul Araújo, opinion drafted by Justice Antonio Carlos Ferreira, Second Section, decided on May 13, 2015, published in the electronic gazette of the judiciary on June 22, 2015, and others.

^[12] Special Appeal 1694261/SP, Special Appeal 1694316/SP, Special Appeal 1712484/SP, Special Appeal 1757145/RJ, Special Appeal 1760907/RJ, Special Appeal 1765854/RJ, Special Appeal 1768324/RJ.

^[13]CC 153.998/DF, Reporting Justice Laurita Vaz, opinion drafted by Justice Nancy Andrighi, Special Court, decided on December 18, 2019, published in the electronic gazette of the judiciary on September 22, 2020.

^[14] Special Appeal 1694261/SP, opinion drafted by Justice Mauro Campbell Marques, First Section, decided on June 23, 2021, published in the Electronic Gazette of the Judiciary on June 28, 2021.

^[15]RFB/PGFN Joint Ordinance No. 895, of May 15, 2019, and PGFN Ordinance No. 2382, of February 26, 2021.

^[16] Code of Civil Procedure, article 190. When the lawsuit deals with rights that admit settlement, it is lawful for fully capable parties to stipulate changes in the procedure to adjust it to the specifics of the case and to agree on their procedural burdens, powers, faculties, and duties, before or during the lawsuit.

^[17] Article 19, paragraph 13. Without prejudice to the provisions of paragraph 12 of this article, the Attorney General's Office for the National Treasury will regulate the execution of procedural legal settlements within its scope of action, including in the administrative or judicial collection of outstanding federal debt. (Included by Law No. 13,874, of 2019)

^[18] Case No. 2215483-23.2021.8.26.0000, decision dated September 24, 2021: judicial reorganization of Ponto Final Participações e Empreendimentos Ltda.

^[19] Case No. 248841-13.2020.8.26.0000, decided on August 10, 2021.

^[20] Case No. 5046520-86.2021.8.13.0024, in progress before the 2nd Business Court of the Judicial District of Belo Horizonte/MG. The petition referred to is ID 4055338020.

^[21] As per ID 4139833018 – Decision.

^[22] As per ID 4555558026 – Petition and 4573277993 – Petition.

^[23] As per ID 4795738014 – Decision.

^[24] Judgment handed down on July 27, 2020 - pp. 35,809-35,847.

^[25] On January 22, 2021, March 1, 2021, and July 19, 2021.

^[26] Case No. 0046087-14.2020.8.19.0000, decided on April 6, 2021.

^[27] Complaint No. 43.169 MC/SP, decided on September 4, 2020.

^[28] On December 3, 2020, under the understanding that the dispute has infra-constitutional nature, the constitutional complaint was denied.

^[29] Argument of Unconstitutionality No. 0048778-19.2019.8.16.0000.

Category: Real estate

The Superior Court of Justice (STJ), in a recent decision and unanimously, recognized the suitability of claims of ownership (usucapio) related to private properties  without real estate registration. This was the understanding of the ministers, when they judged a claim of ownership related to a property located in a land subdivision established for years in the Planaltina-DF, but not authorized or regularized by the local Public Administration.^[1]

The issue  brought for consideration by the Supreme Court originated in hundreds of cases of usucapio in progress before the Court of Justice of the Federal District involving private properties devoid of their own enrollment certificates, inserted in land subdivisions legally classified as clandestine, which were not authorized or regularized by the administration of the Federal District, although they have existed for decades. The decision also consolidates previous decisions of lower courts with the same understanding.

The usucapio is a constitutionally guaranteed institute. It allows the acquisition of real estate property by proving the possession exercised without opposition and for a certain time, in addition to other requirements required by law. Because it is an original form of acquisition of property, there is no transfer of liens or encumbrances on the real estate property for the plaintiff (the usucapiente). The registration of the usucapio on the enrollment certificate, therefore, is not done to constitute the acquisition, but rather to give publicity to it and allow the exercise of the right to dispose of the property, in addition to regularizing the registry itself.^[2]

In the case, for the judge of origin, the usucapio is a form of acquisition of the property that may be declared regardless of the prior existence of registration or enrollment certificate.

On the other hand, the Public Prosecutor's Office of the Federal District and the government of the Federal District itself defend the thesis of impossibility of declaring property through usucapio of properties in this condition, under penalty of usurping the administration's urban planning and regularization function.

It seems reasonable to argue that, in the case of the subdivision located in the Federal District, the absence of real estate registration should not really derail the favorable decision in usucapio. This is because the objective of the legal standard – provided that the presence of all legal requirements is demonstrated – is exactly to regularize, in legal and register terms, a consolidated fact. The lawsuit promotes, finally, legal certainty in real estate transactions, for the benefit of the less favored population.

In the case analyzed, there is the perfect individualization of the property, served by infrastructure and equipment that enable the development of civil and social life, characterizing the property as belonging to an absolutely established nucleus, with difficult (or impossible) reversal.

It should be emphasized that the integration of consolidated informal nuclei and non-regular areas to the urban territorial planning, with the delivery of titles to their effective occupants seems to be the general objective of the country's land policies. This can be proven by the current legislation, which does not require prior registration as a presupposition of usucapio.

In this sense, the Decision of the Supreme Court represents, in addition to a legal solution for a recurrent claim, a huge advance. It confirms the feasibility of regularizing irregular and vulnerable areas (both socially and economically), which suffer from significant land problems, demonstrating that it is possible to apply fast solutions and guarantee the fundamental right to housing.

^[1] Special Feature 1,818,564 - DF

^[2] Resp. 118360/11