Category: Litigation

The Brazilian Arbitration Act was enacted more than two decades ago and had its constitutionality declared incidentally by the Brazilian Supreme Court (STF) in the context of an appeal arising from a proceeding of ratification of a foreign court decision (Case No 5,206, judged in 2001). The analysis of the constitutionality of the Arbitration Act went through the analysis of the constitutional guarantee of non-obviation of judicial jurisdiction. The conclusion was that the Federal Constitution ensure the access to the justice system but at the same time also ensures the right to settle disputes by other mechanisms.

Even though the discussion concerning the constitutionality of the Arbitration Act is already fully overcome, the Court of Appeals of the State of Rio de Janeiro, at the end of 2020, decided to review the issue of non-obviation of judicial jurisdiction to deny the enforceability of an arbitration clause due to the supervenience of a decree of bankruptcy of one of the contracting parties (case records n. 0018212-97.2015.8.19.0209).

The mentioned lawsuit is a contractual review lawsuit with a request for damages filed jointly by Stiebler Arquitetura e Incorporações Ltda. and two specific purpose societies. Whereas the agreement contained an arbitration agreement, the defendants raised that as a preliminary challenge to the lawsuit. The judge granted the request to dismiss the lawsuit since the dispute should be settle by an arbitral tribunal.

However, after Stiebler's bankruptcy decree, the judicial trustee requested that the court of the bankruptcy should be consider the only court to rule on issues involving the bankrupt company. Stiebler, for its part, also argued in its appeal that a company under a bankruptcy regime, which means subject to Law No. 11,101/05, Brazilian Reorganization and Bankruptcy Act, cannot be a party in arbitration proceedings claiming that this would be a breach of the guarantee of non-obviation of judicial jurisdiction.

In addition to analyzing other issues that fall beyond the scope of this article, the Court of Appeals of the State of Rio de Janeiro, more specifically the 3rd Civil Chamber of Rio de Janeiro Court of Appeals, considered that the arbitration clause cannot have unrestricted application and its analysis should consider the high costs that will be borne by the insolvency estate and by the creditors.

Thus, considering that the insolvency estate could not bear to pay for the costs of an arbitration proceeding, the court held that right to access the judicial jurisdiction should be protected and the dispute should remain within the judicial court. This decision was subject to a motion for clarification that was dismissed by the Rio de Janeiro Court of Appeals. Following this, an appeal to the Superior Court of Justice (STJ) was filed by one of the parties to discuss if the arbitration clause remains valid (REsp nº 1959435 / RJ). The appeal was received by the Superior Court in September 2021 and is pending trial.

The decision rendered by the Rio de Janeiro Court of Appeals represents a step backwards to the whole case-law already well- established on the issue. In fact, the STJ itself had already rendered strategic decisions regarding the use of arbitration in the country, also regarding the arbitrability of disputes involving companies going through insolvency proceedings. An example is a decision rendered by Minister Nancy Andrighi in 2008, under Precautionary Measure No. 14,295/SP, which decided on a matter of arbitrability involving a company in out-of- court liquidation. This matter involved ABC Health Services Hospital and Interclinical Health Plan S.A., the Minister rapporteur considered that the arbitration clause remains valid, as it was concluded before the decree of liquidation.

Another example, in Targa vs. Cremer, also judged by the Court of Appeals of the State of Rio de Janeiro in July 2014, lawsuit registered under no. 0016509-16.2014.8.19.0000, Targa turned to the judicial court to request the suspension of an arbitration proceeding claiming that the issues under discussion involved a matter that could not be subject to arbitration because the company was under a reorganization proceeding. The court ruled that since the discussion was substantially contractual, there were no grounds to discuss the lack of arbitral jurisdiction.

Such cases are not isolated and are in line with legislative developments on the subject. First, the II Commercial Law Seminar of the Council of Federal Justice (CJF), held in 2015, approved the 75^th statement as it follows: "if there is arbitration agreement, if one of the parties has been declared bankrupt: (...) the judicial trustee cannot refuse the effectiveness of the arbitration clause, given its autonomy in relation to the contract.". Despite this statement had no binding force, it reassured the interpretation given by scholars regarding the matter.

With the enactment of Law No. 14,112/20, the Brazilian Judicial Reorganization and Bankruptcy Act was amended to expressly provide that "the commencement of judicial reorganization proceeding, or the decree of bankruptcy does not authorize the judicial trustee to refuse the enforcement of the arbitration agreement, not preventing or suspending the beginning of the arbitration proceedings" (art. 6, § 9).

This means that the judgment of the 3^rd Civil Chamber of the Court of Appeals of Rio de Janeiro, that rejected the enforceability of the arbitration clause, disregarded all recent case-law developments and even legislative changes about the matter.

If the precedent of the 3rd Civil Chamber of the Court of Appeals of Rio de Janeiro is not reviewed – which is apparently a remote hypothesis –, such interpretation will bring legal uncertainty to the arbitration agreements and will imply a real setback in relation to the institute.

There are still problems regarding the compatibility between arbitration and insolvency, however, provided that the matter under discussion is considered arbitrable under Brazilian Arbitration Act, the state and the arbitral jurisdictions can and must live harmoniously. It is expected that when the appeal is judged by the Superior Court, they will maintain its position regarding the binding effect of the arbitration clause, which will be aligned with the legislative developments on the matter.

Category: Infrastructure and energy

Alberto Faro, Renata Oliveira and Felipe Baracat

The recently published Law No. 14,112/20, which amends the Judicial Recovery Law, brought innovations on the institute of substantial consolidation, generating some concern for sponsors and funders of infrastructure projects in the modality Project finance.

The consolidation of assets arises in American jurisprudence as a measure of unification of assets and liabilities of companies of the same economic group that are going through an economic and financial crisis, so that all recoverers are responsible for all creditors of the economic group, and that all creditors take the risks of the entire group, and not only their direct debtors.

The U.S. courts then define two determining tests for substantial consolidation, applied in this order, (i) the fact that creditors have negotiated with different companies believing that it is a single economic one; and (ii) the fact that the businesses developed by debtors are characterized by such equity confusion that substantial consolidation would be a beneficial measure for all creditors. The requirements of American jurisprudence are also:

• the presence of consolidated financial statements;

• identity in market performance and corporate composition;

• the existence of cross-guarantees; And

• the existence of a single integrated capital control system.

In any case, substantial consolidation in the form currently configured in the United States represents an exceptional measure and is based on clear legal certainty.

The concern for Project finance in Brazil arises characteristics inherent in this financing model. There are traces such as centralized ownership structure and segregation of projects in several SPEs (specific purpose companies), in addition to the identity of market action between the various companies of the same business group. There are also real guarantees of the projects, and it is common to grant personal guarantees by the parent companies. Cross-guarantees are often also observed.

The concept of substantial consolidation arose with the edition of Law No. 14,112/20, but was already applied by jurisprudence. A not-so-recent decision of the 1st Bankruptcy and Judicial Recovery Court of São Paulo,^[1] regarding the judicial recovery process of the Urbplan group, it was the first to establish objective criteria applicable to companies of the same economic group, highlighting: interconnection of companies of the economic group; existence of cross-guarantees; wealth confusion; joint market action; coincidence of directors and corporate composition; relationship of control and/or dependence; and asset diversion.^[2] In any case, before the new law, substantial consolidation had already been applied with some degree of legal certainty.

Law No. 14,112/20 innovates by pointing out the institute as an exceptional measure, defining objective requirements for its application. First, and necessarily, when there is "interconnection and confusion between debtors' assets or liabilities" and then cumulatively with at least two other of the following four requirements:

• existence of cross-guarantees;

• relationship of control or dependence;

• full or partial identity of the corporate framework; And

• joint market action among the postulants.

The market concern is related to these requirements, as the structures of the Project finance may have some similarities with such elements.

In any case, the first filter would be impaired: there should not, as a rule, be equity confusion in structured financing operations. This is because each SPE is, in general, the embodiment of an independent enterprise. Creditors are also not expected to negotiate with the same economic group. On the contrary, creditors understand that the contracting of debts with the SPs represents, above all, a protection of their credit, since they assume a risk, previously quantified, specific to the project financed, even if they often have reliable guarantees from shareholders or with the conclusion of an ESA (Equity Support Agreement).

The main difference from more traditional business financing is that the Project finance adopts this structure exactly to allocate risks efficiently and protect creditors within a resource leverage scenario – the creditors of these projects do their risk and credit analysis based on this structure and, consciously, adopt the risks of a given project without the intention of assuming the risk of the business group. The new law also seems to bring greater predictability to the application of the institute in this context, by positively the conditions and requirements for its application and also considering that the jurisprudence has well understood the contractual, corporate and capital structure inherent in this type of financing.

Another important and sensitive innovation for the Project finance substantial consolidation will result in the immediate termination of trust sums and claims held by one debtor in the face of another. This will not, however, impact any lender's real guarantee. That is, if, on the one hand, there are impacts on the credit risk of projects with the potential extinction of the fidejussory guarantees, on the other hand, the law would rule out the possibility of ineffectiveness of real guarantees.

^[1] TJ/SP. Case No. 1041383-05.2018.8.26.0100. Processing in the 1st Bankruptcy and Judicial Recoveries Court of the Capital.

^[2] Such requirements are not adopted in a unique manner by case law. This is the decision of Judge Daniel Carnio Costa, holder of the 1st Court of Bankruptcies and Judicial Recoveries of São Paulo, a court specialized in the matter of the TJ / SP - today the court of greater relevance in matters of commercial law and whose theses are usually replicated by other courts.

Category: Tax

The year 2020 will be marked not only by the pandemic, but by the speed with which the organs of public administration have adapted to the new reality of social distancing. The Administrative Council of Tax Appeals (Carf), the body responsible for the trial of federal tax administrative proceedings, also had to adapt to the new non-face-to-face format.

For the council, the year 2020 began with the prospect of a new internal rules, including the possibility of society giving an opinion in the draft following the transparency passed on by Carf, through a public consultation.

However, the placement of a new regiment was in the background, since the pandemic forced the body to concentrate its efforts on maintaining the trial activity in the period of social distancing.

In March, with the stoppage of face-to-face sessions, the Ministry of Economy published Ordinance Carf No. 10,786/20, instituting non-face-to-face trial sessions for administrative processes involving: (i) historical values of up to R$ 1 million; or (ii) matter subject to the summary or resolution of Carf or, furthermore, decisions finalized by the Supreme Court or the Supreme Court given in the system of the general repercussion or repetitive appeals. Until then, the possibility of virtual sessions existed only for the trial of cases below 60 minimum wages, and, in such cases, without the possibility of oral support or participation of interested parties.

For this new trial model, Carf implemented new systems for virtual sessions, enabling oral support or real-time monitoring of judgment. And in order to check the publicity of the trials, the sessions are later made available to the public on YouTube.

Some say that virtual sessions surround the taxpayer's right of defense, claiming that prerogatives concerning trials in face-to-face sessions have been mitigated. However, it seems to us that Carf is trying, to the fullest, to minimize any harm that virtual judgment can bring to taxpayers.

With the implementation of non-face-to-face sessions, the departing of requests for removal of the agenda was made flexible, for later reinclusion when the session resumes in person, being another attempt by the agency to reduce any damage that virtual sessions can bring to the parties. Carf also made it possible to hold virtual hearings, for the order of interested parties with the rapporteur of the administrative procedure, which confirms the commitment of the body to maintain satisfactory judicial provision.

On August 14, 2020, with the reduction of the number of lower-value cases, Carf published Ordinance No. 19,366/20, increasing the amount of jurisdiction to R$ 8 million and allowing several other cases to be brought to trial.

A few months after the establishment of non-face-to-face sessions, the results have already begun to appear. The president of the body, Counselor Adriana Gomes Rêgo, mentioned at the VI Carf Seminar on Tax and Customs Law that, surprisingly, compared to 2019, the year was marked by a significant increase in the number of trials – 55% more in the months of June to October.

The period was also distinguished by the extinction of the quality vote, with the publication of Law No. 13,988/20, which in its art. 28 determines, in case of a tie in the judgment of the tax credit requirement, the solution of the issue in a favorable way to the taxpayer.

After controversial discussions about its applicability and extension, the Ministry of Economy issued Ordinance No. 260/20 to regulate the new provision, clarifying that the extinction of the quality vote would only apply to processes that discuss the requirement of tax credit through infraction notice or notification of release. Under the ordinance, the new provision will not apply to procedural discussions, judgment of declaration embargoes or other kinds of processes within Carf's jurisdiction.

Despite the regulation by the Ministry of Economy, the discussion on the extinction of the quality vote extended to the Supreme Court. Direct actions of unconstitutionality are being filed in the high court questioning the legislative process that resulted in the publication of Law No. 13,988/20. Until the closing of this article, the Supreme Court had not yet ruled on the merits of the issue.

While 2020 was the year of adaptations in the agency, the expectation is that 2021 will be consolidation, maintaining pace and judgment models, at least until a safer phase of the pandemic is reached. Virtual trial sessions, at least until the completion of the national vaccination plan, must follow.

And given the performance figures mentioned here, the agency's promise to continue implementing measures to optimize virtual judgment is already being fulfilled this early in the year.

In January, Ordinance Carf/ME no. 690/21 was published, which raised the amount of jurisdiction for virtual judgment of administrative proceedings to R$ 12 million, in addition to providing for the possibility of judging representations of nullity also virtually.

This increasing increase in jurisdiction values – from R$ 1 million to R$ 8 million and, in 2021, to R$ 12 million – indicates the reduction in the number of lower-value cases and the body's interest in increasing the percentages of trial of cases.

It is not yet known what Carf's next steps will be throughout the year. The resumption of the renewal of the bylaws, after public consultation, is of great interest to taxpayers, who also yearn for a modernisation of the platforms for the transmission of the sessions and the system for monitoring administrative processes itself.

Given the significant increase in the number of judgments in virtual sessions, Carf is expected to establish, definitively, a mixed regime of judgment of administrative processes, granting taxpayers the opportunity to choose the modality of judging their cases.

Category: Corporate

There is a mutually beneficial and synergetic relationship between non-governmental nonprofit organizations (NGOs) and for-profit companies in Environmental, Social and Governance (ESG) topics. Not only can nonprofit NGOs adopt good environmental, social and governance practices in the course of their activities, similar to for-profit companies, but for-profit companies can also count on nonprofit NGOs to help them in projects that create positive environmental or social impacts, a true feedback relationship that generates benefits for all parties. It couldn't be any other way. After all, they share similar and compatible purposes and principles. There should therefore be a cross-collaboration between the for-profit and nonprofit entities in advancing the ESG agenda in order to boost value generation.

What is ESG?

The theme of sustainability has always existed in the corporate world, but in a mandatory and less participatory way. Historically, the government borne the main role of promoting sustainability, pressuring companies through the enactment of laws and regulations. Sustainability discussions now take new contours. The corporate world is under pressure from investors (through the allocation of capital in sustainable projects), consumers (through boycotts of unsustainable products), employees (who demand a now look to human capital management and talent acquisition) and society in general. The "stakeholder capitalism" is no longer an investment niche of few organizations concerned with social and environmental issues and now reaches virtually the entire traditional economy. Companies are expected to be actively engaged in solving social and environmental problems.

In this context, the ESG theme has served as an important factor to boost sustainable development – "one that meets the needs of the current generation without compromising the ability of future generations to meet their own needs".^[1]

The ESG approach requires the evaluation of businesses, companies, institutions and even countries not only from an economic point of view, but also according to environmental, social and governance indicators. The corporate environment is evolving; those who resist will be not only on the wrong side of history, but also at a competitive disadvantage.^[2] In these new times, consumers and society at large expect much more from businesses. They are not satisfied with companies that seek only profit. Organizations that accept these responsibilities and are able to meet their stakeholders’ expectations will ultimately bring greater benefits to its shareholders.

In addition to contributing to a healthier and fairer ethical society, good ESG practices are related to several benefits, such as risk mitigation, better capacity for innovation and adaptation, cost reduction, good reputation, attracting new generation talent, resilience to adverse scenarios, among others. For these reasons, what was once an issue reserved for activists is now increasingly present in the daily lives of investors and the financial market.

A study by the Morgan Stanley Institute for Sustainable Investing showed that sustainable funds outnumbered traditional ones and reduced investment risks during the covid-19 pandemic. Although the crisis caused a global recession and huge market volatility in 2020, sustainable funds have achieved better performances than traditional ones. An analysis of 3,000 mutual funds and Exchange Traded Funds - ETF (indexed exchange traded funds) in the United States showed that sustainable funds performed 4.3% above the median of traditional funds in the last year.^[3] Also, according to Morgan Stanley, in early 2020, 1 in 3 dollars under professional management in the U.S. was employed in a sustainable investment strategy, totaling approximately $17.1 trillion, up 42 percent since 2018.

Among the metrics most commonly used in the ESG theme, the following stand out:

Environmental

• Proper waste management

• Efficient management of water, clean energy and other resources

• Emission of polluting gases

• Deforestation

• Biodiversity

Social

• Enforcement of labor rights and labor safety

• Talent attraction and retention

• Employee welfare

• Encouraging diversity and gender protection

• Human rights and positive impacts on society

• Data protection and privacy

Governance

• Transparent corporate governance practices

• Compliance and promoting ethical values in the conduct of business

• Composition of the Board of Directors

• Relationship with government entities and politicians

What is the third sector?

The first sector includes the State and its public institutions, the entities of direct and indirect Public Administration, traditionally the main responsible for coping with social and environmental problems. The second sector is the private sector, composed of the private non-governmental initiative, usually companies with the aim of obtaining profit – that is, the market. The third sector is formed by private non-governmental organizations without the objective of profit that perform voluntary activities developed in favor of society and the public at large, independently of the other sectors (government and market), although with them can establish cooperation agreements and partnerships and can receive funding from them.

The third sector is a direct result of the inability of the public authorities to solve certain social and environmental problems, thus making great room for the prominence of civil society. The performance of the third sector promotes an active and participatory civil society, which seeks the public interest and provides better services to the community. In addition, it makes civil society more engaged and interested in participating in state decisions.

Among the best-known non-governmental organizations in the third sector are charities, social organizations, non-profit entities, community funds, foundations, and various types of associations.

How ESG can help the third sector and vice versa

In view of the previous definitions, it is clear that there are common objectives between companies and the third sector in the search for environmentally, socially and governance-sustainable practices.

Several ESG practices developed by private companies can also be used by nonprofit organizations, such as governance, return and impact measurement and efficient capital allocation, to promote greater efficiency in the administration and use of resources. The use of corporate governance mechanisms of for profit companies by the third sector allows to achieve the objectives of:

• Transparency: making clear, true and complete information available to all stakeholders, including sponsors, donors, partners and supported communities;

• Equity: fair treatment of all stakeholders, avoiding discriminatory attitudes or policies, under any pretext;

• Accountability: accounting and measurement of social impacts and project efficiency) by managers (members, directors, executives, tax advisors, auditors); and

• Sustainability: adoption of social and environmental considerations in the definition of programs, projects and operations, with a view to the longevity of the organization.

Similarly, we can imagine several forms of collaboration between nonprofit entities and companies in relation to ESG practices. In this sense, nonprofit organizations can, for example, work together with companies in projects and terms of partnership or consulting, lending the experience and knowledge acquired in the pursuit of their causes, to assist in the supervision and development of ESG performance indicators in the corporate world. This would be the case of an NGO focused on protecting the environment that helps private companies verify the achievement of pollution and deforestation metrics. Or the situation of an entity engaged in the fight against gender inequality that assists private companies in adopting measures to increase the representativeness of women and blacks in their payroll and senior management. Both sides benefit: the NGO, advancing its cause and creating a new source of fundraising and partnerships, and the company, with a more efficient way to monitor its metrics, achieve goals and achieve greater transparency in its commitment to such metrics.

With the increasingly common formation of partnerships and agreements between the State and the organizations of the third sector, the Public Administration ends up having the task of supervising the legal entities of the third sector. Then comes a great opportunity for the managers of these organizations to take advantage of ESG practices to create a robust corporate governance structure that allows the adoption of control mechanisms, and to promote diversity, respect legality and follow principles of social and economic responsibility. This process helps make administration more efficient in order to prevent fraud and corruption, promote transparency, and take better advantage of resources.

Transparency driven by corporate governance can also increase the value of the entity, helping it in its fundraising initiatives and contributing to its own development. The adoption of best practices of corporate governance and sustainable performance from a social and environmental point of view can also inspire more confidence in key donors, giving them more peace of mind that their resources will be employed honestly, efficiently and responsibly.

Companies that adopt the ESG in their business model and their strategic planning have an incentive to promote donations to third sector institutions in order to help them in this cause, in view of their common interest in the environment and sustainability. The positive social and environmental impacts generated by NGOs with the support of private corporate donations ultimately backfeed the system and help companies achieve the sustainability goals required by shareholders, investors and consumers.

[1] Brundtland Report, UN, 1987

^[2] Hunt, Vivian, Simpson, Bruce and Yamada, Yuito. The case for stakeholder capitalism, 12/11/2020. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-case-for-stakeholder-capitalism

^[3] Institute for Sustainable Investing. Sustainable funds outperform peers in 2020 during coronavirus, 24/2/2021. https://www.morganstanley.com/ideas/esg-funds-outperform-peers-coronavirus

Category: Labor and employment

Ordinance No. 1.809/21, of the Special Bureau of Social Security and Labor, which modifies the list of business activities authorized to operate permanently on Sundays and civil and religious holidays, enters into effect on March 1st. The new rule replaces Ordinance No. 19.809/2020, issued during the period of public calamity, and provides greater security for employers.

The previous rule had brought in as a novelty the inclusion, in the authorized list, of essential activities provided for in Law No. 13,979/20. With the end of the state of public calamity, considered the great motivator of the normative change, on December 31, 2020, the continuity of the authorization for such activities was discussed, causing uncertainty and legal insecurity in sectors of great relevance in the economy, such as civil construction, industry in general, and the capital markets and insurance.

Since the legislation imposes on the business activity authorization to work on Sundays and holidays, the uncertainty exposes employers to the penalties of the inspection agencies.

In addition to changing the wording of some activities and including others, Ordinance No. 1,809/21 deleted the section that included the essential activities provided for in Law No. 13,979/20, thus eliminating the aforementioned insecurity. On the other hand, part of those activities was incorporated into the authorized list on a definitive basis.

We present HERE a detailed table with these changes. Among them, the following included activities stand out:

• Transmission of electricity, excluding office services but including (a) the furnishing of supplies for the operation and maintenance of generating plants and power transmission and distribution systems and (b) the related engineering works;

• Construction activities;

• Call center services; and

• Capital markets and insurance.

With respect to industries, while the list of essential activities in Law No. 13,979/20 does not detail the sectors included, making it quite comprehensive, Ordinance No. 1,809/21 ended up detailing those authorized to operate on Sundays and civil and religious holidays.

Also noteworthy is the inclusion of the agro-industry and the retail trade in general, previously limited to only a few items and activities. However, despite this provision, insecurity persists with respect to commerce in general, since articles 6 and 6-A of Law 10,101/2000, which establish the need for compliance with municipal legislation and authorization for work on holidays in a collective bargaining agreement, have not been revoked.

The form of remuneration or compensation for work on Sundays and holidays, including any overtime, remains unchanged. Thus, the employer must grant a compensatory rest day, under penalty of double payment, without prejudice to remuneration for weekly rest. In the event that the compensatory rest is not granted, in addition to payment of the aforementioned remuneration, the company will be subject to the penalties of the competent inspection bodies.

Category: Real estate

When judging Special Appeal 1.861.062/SP, the Third Panel of the Superior Court of Appeals (STJ) established the understanding that absence of consent from all co-owners to give possession of property to third parties does not give rise to nullity of the lease agreement.

The decision pointed out that the defects that can lead to nullity of the contract are those provided for in articles 166 and 167 of the Civil Code, and that the legislation does not require the presence of all owners in the lease instrument.

In this case, there was a civil condominium on the property subject to the dispute initially formed by six owners, each a co-owner of a fraction of 1/6 of the property. The plaintiff, one of the co-owners, rented the property without the signature of the others and, subsequently, due to default of the tenant, sought termination of the lease, issuance of an eviction order, and collection of the amount referring to rents due and yet to mature. In an unusual manner, the appellants, in turn, although owners of 2/6 of the property and also creditors of the rent payments, defended the nullity of the contract, alleging that they had not agreed to the lease of the property and that the plaintiff had not demonstrated that he had the consent of the other co-owners to sign the contract in question.

The reporting judge Villas Bôas Cueva found that the theory of nullity could not be accepted, thus releasing the tenant from any obligation, especially due to the principle of prohibition of unjust enrichment, provided for in article 884 of the Civil Code, in view of the undisputed default in the record. In addition, he stressed that although the transfer to third parties of possession of a property held in a condominium requires consent of the absolute majority of the co-owners (and not unanimously), the absence of such consent does not give rise to nullity of the agreement or remove its legal effects.

Specifically in relation to the issue of the consent of the absolute majority of the condominium members as opposed to the unanimous consent, it is worth pointing out that, by express legal provision of article 1,324 of the Civil Code, in the absence of opposition from the others, the condominium member that manages the property is presumed to be the common representative and may formally enter into the lease agreement on behalf of the others. It is also worth pointing out that in order to appear as lessor of a property, the lessor needs to possess it and not necessarily be its owner.

Still on the protection of tenants' rights, article 169, subsection III, together with article 167, subsection I, No. 3, and subsection II, No. 16, of Law No. 6,015/1973 (the Public Records Law), makes it clear that, for purposes of registration of the term of duration provision and annotation of the tenant's preemptive right in the proper Real Estate Registry Office, it is sufficient that the name of one of the owners and the lessor coincide. This supports the understanding that it is not necessary for all co-owners to attend and sign the lease agreement as lessors.

However, it is common for real estate registry offices to impose requirements requesting the attendance of all owners in the lease agreement, despite the legal provision and case law on the subject. In order to avoid future questions, it is recommended that, when entering into a lease agreement of a property held in a civil condominium (co-ownership), at least a resolution of the absolute majority of the joint owners be presented, even if not all of them are parties to the lease agreement.

Even so, if the registrar opposes registration of the lease agreement entered into by only one of the co-owners, it is possible to challenge it by indicating the provision of express law and case law on the subject. Therefore, this lease agreement is existing, valid, effective among the parties, and subject to registration and recording in the real estate registry in order to protect the tenant's rights.

Category: Labor and employment

The Federal Supreme Court (STF) began on February 19 the virtual judgmnet of Extraordinary Appeal 999.435, which discusses topic of general repercussion 638 regarding the need for prior collective bargaining for mass layoffs of workers.

The judgment relates to the extraordinary appeal filed by Embraer, in a collective dispute, regarding the validity of the mass layoffs carried out by the company in 2009, as a consequence of the global economic crisis experienced at the time.

The Labor Courts held that collective layoffs are not possible without the participation of the labor union representing the workers. Case law imposed collective bargaining as a prerequisite for the validity of mass layoff processes.

The judgment was not adjourned, but the opinion of the reporting judge, Justice Marco Aurélio, was released. In a direction contrary to the understanding of the Labor Courts, the Justice proposes as a solution to the dispute no need for collective bargaining for the mass layoff of workers.

The Justice argues that the Federal Constitution is exhaustive in setting out the list of rights that must necessarily be addressed via collective bargaining. In his opinion, since there is no constitutional or legal prohibition on the matter and in accordance with the legal principles that govern labor relations and the dignity itself of the human person, it is not necessary to consider the inclusion of obstacles blocking the employer's unilateral power.

The issue has been discussed for more than 20 years with the STF, with a Direct Action for Unconstitutionality (ADI No. 1625) regaring Decree No. 2,100/96, which declared the end of the validity of Convention 158 of the International Labour Organization (ILO) in Brazilian territory.^[1] The judgment of this ADI, scheduled for the first half of the year, was excluded from the calendar by the Chief Judge of the STF, Justice Luiz Fux, on the same day the judgment of the Embraer case began.

This is a highly relevant topic, especially in the current scenario of economic crisis, with various companies announcing plant closures and even a total shutdown of activities.

There is still a long way to go before the judgment is completed, certainly with ample debates among the Justices of the Court, who should address the issues together to settle the position. In any case, the Justice's proposed opinion further exalts the idea of loosening of labor law rules as a solution for resumption of economic development, in addition to fostering the role of pacification of social conflicts by the Judiciary, issues that have also been the subject of concern on the part of the Legislative Branch, as were the changes proposed by the Labor Reform.

^[1] ILO Convention No. 158, among other measures, prohibits arbitrary or unjust dismissal.

Category: White-Collar Crime

The so-called Anticrime Package (Law No. 13,964/19) entered into force in 2020 brought  substantial changes in criminal law and criminal procedure, among them an alternative for negotiated criminal justice: the possibility of entering into a Non-Prosecution Agreement (ANPP) between the investigated party and the Public Prosecutor's Office.

Before the ANPP, at the end of the investigation (police inquiry or criminal investigative procedure conducted by the Public Prosecutor's Office), the prosecutor had two options: to request the closure of the investigation or to press charges. The innovation of the Anticrime Package gave the Public Prosecutor's Office a third option: to propose an ANPP. The agreement must be proposed only when there are sufficient elements of evidence to press charges.

According to the wording of the new article 28-A of the Code of Criminal Procedure (CPP), an ANPP may be proposed by the Public Prosecutor’s Office when:

• the accused confesses the crime;

• the crime was committed without violence or serious threat;

• the crime carries a minimum sentence of less than four years.

The ANPP cannot be offered in the following cases:

• if a plea bargain is available;

• if the investigated person is a repeat offender;

• if there is evidence that indicates habitual, repeated, or professional criminal conduct;

• the investigated person has signed an ANPP, plea bargain agreement, or conditional suspension of proceedings within five years prior to the crime;

• in crimes committed in the context of domestic or family violence or committed against a woman because of her condition as a female.

However, one year after the procedural innovation, there are still practical questions pending, especially regarding cases that were already in progress when the law entered into force. In an attempt to provide some guidance, the federal and state public prosecutor’s offices have published technical notes on the subject.

The Federal Public Prosecutor's Office (MPF) published practical instructions through the revision and expansion of Joint Guidance No. 03/18, among them:

• an ANPP is not a subjective right of the investigated person, and may be proposed according to the peculiarities of the actual case and when considered necessary and sufficient for the discouragement and prevention of the criminal offense;

• the investigated person may propose an ANPP and, if the proposal is refused, a request of review by a higher instance of the MPF may be filed;

• the MPF shall notify the investigated person to appear at the headquarters of the MPF if he is interested in an ANPP. The notice shall expressly include that the settlement presupposes a formal and detailed confession of the crime and that the person under investigation must appear accompanied by a lawyer;

• ANPPs may be entered into in ongoing criminal proceedings;

• an ANPP shall explicitly contain a time limit for compliance with the agreement.

If all the requirements are met and the legal impediments are absent, the settlement may be proposed and negotiated, culminating in the application of certain conditions for the accused (cumulatively or alternatively), such as

• reparation for the damage to the victim,

• voluntary relinquishment of assets and proceeds resulting from the crime,

• community service,

• payment of a fine and compliance with other conditions indicated by the Public Prosecutor's Office.

Regarding the conditions to be imposed by the MPF, Joint Guidance No. 03/18 established that the reparation of the damage may be partial, when applied in conjunction with other conditions, and provided concrete examples:

• prohibition for the investigated person to travel to the country from which the goods were unlawfully brought, in the case of smuggling (article 334-A of the Penal Code);

• removal of the investigated person from the board of directors or control of the company, in economic crimes (Law No. 8,137/90);

• prohibition for the investigated person to operate in the financial market for a certain period, in the case of crimes against the financial system (Law No. 7,492/86).

The Public Prosecutor's Office of the State of São Paulo (MPSP) published Technical Note No. 6 with a practical step-by-step guide for the execution of ANPPs virtually. Among the most relevant guidelines are:

• the accused may be reached via e-mail, WhatsApp, or voice call, for the offer of an ANPP and the negotiation meeting will be virtual, via videoconference;

• the ANPP will be face-to-face only if the accused cannot be contacted by virtual means;

• the MPSP may, at its discretion, also contact the victim to assess the damages suffered.

In Minas Gerais, the guidelines were published by the Court of Appeals of the State of Minas Gerais (TJMG) by Joint Ordinance 20/PR-TJMG/20. According to the TJMG, the judges will have sixty days to identify cases not yet sentenced and ongoing investigations that conform to the requirements of the new article 28-A of the CPP and whose evidentiary hearing has not yet been scheduled. After identification, the defense would be summon to response regarding its interest in reaching an ANPP.

In any case, once the negotiation is closed, the ANPP shall be signed by the representative of the Public Prosecutor's Office and by the investigated person and his defender. After signing, the agreement will go through judicial review for ratification in a hearing. The judge, then, must confirm the legality and voluntariness of the agreement after hearing the investigated person, and may refuse to approve the agreement if he believes that it does not meet the legal requirements, is the result of coercion, or that the conditions imposed are inadequate, insufficient, or abusive.

If the agreement is executed, it will not appear in the criminal record certificate of the accused and, after due compliance with the conditions, the judge will order the extinguishment of criminal liability^[1].

Corporate crimes, also known as white-collar crimes, are mostly eligible for ANPPs, since they have minimum sentences of less than four years (accounting for increases and decreases in sentence) and are committed without violence or serious threat.

Among the crimes related to day-to-day business activities, the environmental crimes set forth in Law No. 9,605/98 and tax crimes set forth in Law No. 8,137/90 stand out due to their volume.

For environmental crimes, in addition to the criminal settlement and the possibility of conditional suspension of the proceedings, an ANPP could be an excellent tool to speed up proceedings and make the criminal protection of the environment more efficient, reserving criminal sanctions for effectively serious cases, when there are no procedural alternatives available other than filing a complaint and initiating criminal proceedings.

With regard to tax crimes, ANPPs gain relevance because they provide the companies’ representatives with a negotiated alternative to avoid their involvement in a criminal proceeding. An ANPP may be an interesting alternative for so-called "formal crimes", i.e., those in which the criminal conduct is sufficient, regardless of the effective tax evasion.

However, for so-called "substantive crimes," in which it is essential to have  effectively evaded taxes prior to the start of a criminal proceeding, , the application of an ANPP should be carefully analyzed, since not only Laws Nos. 9,249/95 and 9,430/96, but also the higher courts have long since established payment of the tax debt at any stage of the criminal proceeding is a cause for extinguishment of liability.

If the repair of the damage is equated to payment of the tax debt, there would be no innovation in entering into an ANPP in tax crimes. On the contrary, the accused would be harmed because, in addition to paying the amount due to the tax authorities, he would have to comply with other conditions imposed by the Public Prosecutor's Office and would lose the possibility of, for a period of five years, entering into a new ANPP relating to any other crime.

^[1] The victim of the crime subject to the ANPP shall necessarily be notified when the agreement is ratified and in the event of non-compliance.

Category: Institutional

Gender-based distortions in treatment, especially in the labor market, are undoubtedly a highly topical issue, with repeated studies demonstrating the structural and social obstacles faced by women in achieving the equality of opportunities and treatment desired, not only in the professional but also in the social field.

There are also countless studies that demonstrate the benefits of diversity in corporate environments and in a company's productivity, but we are still far from equity in the evolution of professional careers between men and women. Women are outnumbered by men in leadership positions and roles, not only in business, but also in the civil service and politics.

Although eliminating the causes of this distortion does not depend solely on the legislator, an equity-oriented legal system plays a key role in this mission. The reverse is also true, i.e. a system that deepens distortions is immensely damaging and should be exposed.

In this context and exemplifying the benefits of a legal system oriented towards equity, the recent declaration of unconstitutionality, by the STF, of the levy on the employer's social security contribution in maternity leave pay deserves to be highlighted. The decision was rendered in the judgment of Extraordinary Appeal No. 576.967/PR under the general repercussion system for admitting appeals. What it judges and condemns, in essence, is the discrimination and prejudice that causes discriminatory charges arising from hiring a woman, that is, at the base of corporate careers: hiring women is arguably more expensive than hiring men. And the STF has taken a step in neutralizing the harms of an inequitable system.

From a purely technical standpoint, it was established that, as maternity leave pay is a social security benefit, it is not of the nature of consideration for work performed. This led to the understanding that maternity leave pay cannot be included in the calculation basis of the social security contribution borne by the employer.

The judgment brought in an important reflection by the Supreme Court regarding the application, ultimately, of the principles that guide the democratic rule of law. There is a specific direction in the majority opinion, by Justice Luis Roberto Barroso, towards:

• the need for unburdening the female workforce as a way to implement the principle of equal protection between men and women;

• the impossibility of burdening the individual in the Brazilian social security system due to a circumstance or fact of life that is peculiar to him/her for biological reasons, in this case, the exclusive capacity of women to become pregnant;

• the exclusion of taxation on maternity leave pay favors equal protection, the protection of motherhood and the family, in addition to reducing discrimination between men and women in the labor market.

Although the analysis is restricted to the context of labor relations, the opinion draws attention to another type of distinction in the treatment of men and women not yet widely discussed in Brazil: the more onerous taxation of women than men.

Recently, the Research Group on Taxation and Gender, linked to the Tax Law Center of the Getulio Vargas Foundation's São Paulo School of Law,^[1] conducted a deep analysis in a study called "Tax Reform and Gender Inequality",^[2] which presented suggestions for amendments to existing reform proposals in order to contemplate the promotion of gender equality through the instrument of taxation.

Usually called tax women or pink tax, studies on the subject expose the unequal treatment in the pricing of products intended for the female audience by clear marketing strategy,^[3] which attracts for them levying of a higher tax burden.

The high tax burden is due to the classification of these products as non-essential or superfluous, although they may be related to: (i) women's physiological needs; (ii) female empowerment; or (iii) demands socially imposed on women.

Added to this the fact that, in most situations, products that are essential for women have no equivalent in the male world. This is the case, for example, with sanitary pads. This item is of indispensable use due to the physiological condition of women. There is no substitute with a lower tax burden.

According to the “taxmeter", on February 14, 2021,^[4] the tax burden levied on sanitary pads was 34.48%, comparable to products such as chewing gum (34.24%) or higher than for others, such as stuffed animals (29.92%).

The direct reflection of high taxation is the inaccessibility of these products for low-income women, which is not alleviated by supply in the public health system. A survey of 9,062 women conducted by a sanitary pad brand^[5] shows that, in the 12-14 age group, 22% of girls say they don't have access to reliable menstrual products because they can't afford them or the products are not sold close to home. The percentage rises to 26% among women between 15 and 17 years old and drops to 19% in the 18 to 25 age group.

In addition to affecting women's health, the high taxes levied on this essential consumer product unquestionably entail clear restrictions on social, professional, and educational life. In fact, without access to the item and forced to resort to unsuitable substitutes, many women and adolescents stop leaving their homes out of fear, insecurity, and discomfort.

The high tax burden imposed on cosmetic products, especially on makeup, has equally relevant impacts on the social context and on the labor market itself. According to the taxmeter on February 14, 2021, the tax burden levied on makeup items varied from 51.41% (domestic) to 69.53% (imported). As a counterpoint, the tax burden applied on over products designed for the male public was much lighter, such as shaving cream (42,56%), suits (34,67%), or ties (35,48%).

The discrepancy becomes more evident when taxation on makeup is compared to that levied, for example, on a soccer team jersey (34.67%) or an electric razor (48.11%).

The origin lies in the erroneous classification of makeup items as "superfluous products" and cannot be explained if not by the distancing by tax authorities and legislators from the needs of the female social and professional universes. Women who deal directly with the public in their work, such as receptionists, secretaries, salespeople, stewardesses, or even those who assume high positions in companies, such as officers, executives, and managers are compelled, for cultural reasons and social or corporate codes, to present themselves with makeup.

There are cases recognized in precedents of the Labor Court in which the employer must bear the burden resulting from the use of makeup because it is imposed for the exercise of the function, as is the case of stewardesses. There are, however, dress and presentation codes that, although unwritten, are equally imposed and unquestionably obeyed by women in the most varied of social segments, jobs, and positions, inside and outside the work context.

In addition to meeting social and professional codes, the function of makeup is at the service of female empowerment, by raising the self-esteem of women and making them feel more secure in performing their professional and social activities. Mascara and a lipstick are often enough to make a woman feel more at ease at work or even at a social event.

In this sense, makeup can and is in fact used by many women as protection against the gender inequality rooted in our society. Therefore, its qualification as a superfluous item is rejected. On the contrary, in general it is essential for women, as it supports their self-esteem and, at the same time, allows them to comply with social and professional codes.

This topic has been frequently discussed on social networks and in the media in general, with great engagement on the part of cosmetic product brands.

Besides the benefit associated with women's self-esteem, the labor market related to the makeup sector itself employs mostly self-employed women, providing them with financial capacity. This fact points to another factor of social discrimination, which stems from the serious consequences of the high tax burden imposed on these products.

With these brief considerations, one can see how the tax law directly interferes, and to some extent encourages, differentiation between genders, albeit in a veiled and little discussed manner. This is because the principles of selectivity and essentiality are being applied in an erroneous manner, far removed from the current reality of society, and not guided by the imperative of gender equity.

Although significant and emblematic, the two examples addressed here do not exhaust the issue of distinction between genders in light of taxation. Other equally relevant examples have been debated and deepened by the studies Tax Women or Pink Tax and, also, by the Research Group on Taxation and Gender, linked to the Tax Law Center of the Law School of the Getulio Vargas Foundation in São Paulo.^[6]

It is therefore indispensable to approve bills directed at the accomplishment of a fair and neutral tax system, that preserves and promotes substantive equality of genders, exactly as assured by articles 3, 5, I, 145, paragraph 1, and 150, II, of the Federal Constitution.

^[1] Group coordinated by professors Tathiane Piscitelli, Núbia Nette Alves Oliveira de Castilhos, Andalessia Lana Borges Camara, and Simone Castro.

^[2] https://direitosp.fgv.br/sites/direitosp.fgv.br/files/arquivos/reforma_e_genero_-_sumario_executivo.pdf

^[3] This is the case, for example, of razor blades which, despite similar functionality, are priced higher when targeting the female audience. In the same sense, shampoos designed for women tend to be more expensive, although produced by the same brands as those designed for men.

^[4] https://impostometro.com.br/home/relacaoprodutos

^[5] https://revistamarieclaire.globo.com/Comportamento/noticia/2020/01/isencao-de-impostos-sobre-absorventes-menstruais-e-nova-luta-feminista.html

^[6] In this context, there are examples of the tax system on child support, the impacts of the regressive taxation system on women, with the concentration of the tax burden on consumption (and not on income), and the taxation on household essentials, often under women's responsibility.

Category: Tax

With the publication of Sefaz Resolution No. 202/21 and PGE Resolution No. 4671/21 in the Official Gazette of the State of Rio de Janeiro, enrollment into PEP-ICMS - the special program for payment in installments of tax debts of the State of Rio de Janeiro - has been definitively regulated. Interested taxpayers are already able to join the program. The deadline for including debts is April 29, 2021. This is an excellent opportunity for taxpayers interested in bringing their situation into good standing with the Rio de Janeiro State Tax Authority.

PEP-ICMS covers tax debts, whether formalized or not, related to the ICMS (Tax on Circulation of Goods and Services, except ICMS by tax substitution), the FECP (State Fund to Combat Poverty and Social Inequalities), the FEEF (State Fund for Fiscal Equilibrium), and the FOT (Temporary Budgetary Fund). The amounts may or may not be recorded as collectible debt and derive from taxable events occurring up to August 31, 2020. There is a reduction in legal penalties and default surcharges, depending on the payment method chosen by the taxpayer. For lump sum payments, the reduction is 90% of the surcharges. PEP-ICMS also allows installment payment of debts and establishes reductions of attorneys' fees for debts recorded as collectible debt.

The new resolutions establish that the request to join the PEP-ICMS for debts not recorded as collectible debt will be carried out through the Fisco Fácil Portal (“Easy Tax Portal”), on the website of Sefaz-RJ or in person, at the tax office of the taxpayer's jurisdiction that does not have access to the Fisco Fácil Portal.

As for the debts registered at outstanding debt, the application must be made directly on the website of the Attorney General of the State (PGE). Only in exceptional circumstances may the request for adherence be requested from the Attorney's Office of the Outstanding Debt of the Capital or the regional offices competent for each debt. Such cases will be reported on the PGE-RJ website.

As one of the conditions for the enrollment into PEP-ICMS, the taxpayer must become aware of all pending decisions and waive suits, challenges, and appeals filed related to the debts that will be included in PEP-ICMS, therein waiving them.

If the debt to be included in PEP-ICMS is not listed in the Access Portal, the taxpayer should contact Sefaz-RJ via e-mail This email address is being protected from spambots. You need JavaScript enabled to view it..

The taxpayer must obtain the DARJs for the payment of the installments in the Fisco Fácil Portal and/or at the PGE website. Failure to pay the first installment will cause the enrollment to be rejected and the debt to be forwarded for collection in court.

Among the causes for exclusion from PEP-ICMS, the following stand out:

• failure to pay more than two installments simultaneously, whether or not consecutive;

• the existence of an installment or installment balance unpaid for a period longer than 90 days;

• default of the tax due, for more than 60 days, by any establishment of the legal entity beneficiary of PEP-ICMS, regarding taxable events occurring after adherence to the program.

The last condition highlighted above is of utmost importance for taxpayers, since it means that, while there are installments falling due under PEP-ICMS, taxpayers must continue to discharge payments of taxes due for triggering events after the enrollment into the program, under penalty of exclusion from PEP-ICMS.

Category: Banking, insurance and finance

Individuals and legal entities resident, domiciled or with headquarters in Brazil, as provided for in tax law, must report to the Central Bank of Brazil the assets and amounts held by them outside the country. The reporting is mandatory to those holding assets abroad amounting to or exceeding the equivalent of 1 million USD on December 31, 2020. Those assets include properties and rights, such as corporate interests in companies, fixed-income securities, shares, real properties, deposits, loans investments, among others.

Those same individuals and legal entities must deliver a quarterly report to the Central Bank of Brazil listing assets held abroad on March 31, June 30 and September 30 of each year, if the total value of such assets amounts to or exceeds the equivalent to 100 million USD.

The report referring to December 31, 2020, must be delivered through the Brazilian Capital Abroad (CBE) reporting form available on the Central Bank of Brazil website at www.bcb.gov.br, from February 15, 2021, through April 5, 2021, at 6 PM.

The manual containing detailed information about the reporting content and requirements is also available on the Central Bank of Brazil website.

The late delivery of the declaration, as well as the lack of reporting or the submission of false, inaccurate or incomplete information, subjects the violator to a fine of up to 250,000 BRL imposed by the Central Bank of Brazil.

(CMN Resolution 4.841, of July 30, 2020; CMN Resolution 3,854, of May 27, 2010; BCB Circular 3,624, of February 6, 2013; and BCB Circular 3,857, of November 14, 2017, as amended).

Category: Labor and employment

The Public Ministry of Labor (MPT) issued the Technical Note (NT) nº 1/2021 recommending companies to implement alternative measures for pregnant employees during the covid-19 pandemic.

According to the MPT, when the pregnant woman's activity is compatible with remote work, the company must adopt this modality, avoiding exposure to the risk of contagion. In this context, it is essential to observe what is provided for in articles 75-A to 75-E of the CLT.^[i]

When the pregnant woman's work is only possible in person, the company must relocate her to other sectors of the company, in airy or isolated spaces, and with fewer employees. Besides, you must ensure flexible hours so that pregnant women do not have to travel to work during peak hours on public transport.

The technical note also mentions that, during the pandemic, a pregnant employee’s unfair dismissal may constitute discriminatory dismissal.

The text has no force oflaw. It is only a recommendation of the MPT and indicates the institution's possible understanding of administrative inspections.

High risk for pregnant women

For the issuance of NT, the MPT took into account current statistical data on covid-19 and studies that point to an increase in the mortality of pregnant women and women who have given birth (puerperal women) affected by the disease. Brazil currently accounts for about 77% of these cases worldwide, and the MPT's concern with this group of workers is legitimate.

. Companies increasingly adopt remote work as a safe option for employees who are part of risk groups, like pregnant women. In any modality, remote work can be an immediate and effective solution, considering that, since the beginning of the pandemic, many companies have used other alternatives, such as the granting of collective vacations (full or partial), suspension of employment contracts (lay off), suspension of the employment contract for qualification purposes (article 476-A of the CLT) or measures provided for in Law No. 14.020 / 20, which can no longer be applied.^[ii]

However, companies’ concern remains with the need to define the way the work will be provided since it is necessary to continue productive activities and maintain jobs. All of this in a scenario still with high rates of contagion.

^[i] Articles 75-A to 75-E of the CLT are part of chapter II-A, entitled “Do Teletrabalho” and were inserted by Law nº 13.467 / 2017.

^[ii] Legislative Decree No. 6/2020 was in effect until 12/31/2020, so that the measures provided for in Law No. 14,020 / 2020 were applicable as long as the state of public calamity was in effect.

Category: Institutional

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We invite you to take a tour of our office in this video and explore our new home!

WE HOPE WE CAN SEE YOU SOON!

EDIFÍCIO SECULUM II - FARIA LIMA

Rua José Gonçalves de Oliveira, nº 116

Itaim Bibi, São Paulo, SP, 01453-050

Category: Tax

After almost five years since the filing of the Repetitive Demand Resolution Incident (IRDR) No.0017610-97.2016.4.03.0000, the controversy over the The need to establish the legal personality disregard incident (IDPJ) in cases of tax liability was Special Body of the Federal Regional Court of the 3rd Region, in a session held on February 10th.

The vote that prevailed in the case was taken by the judgeWilson Zauhy, who concluded that the request was partially upheld to establish the thesis that “There is no place for the establishment of an incident of disregard for the legal personality in cases of redirection of tax enforcement provided that it is founded exclusively on tax liability in the cases of articles 132, 133, I and II, 134 of the CTN, the IDPJ being indispensable for proof of liability due to patrimonial confusion, irregular dissolution, formation of an economic group, abuse of rights, excess of powers or violation of the law, contract or bylaws (CTN, art. 135, items I, II and III), and for the inclusion of people who have a common interest in the situation that constitutes the triggering event of the main obligation, provided that they are not included in the CDA, all without prejudice to the regular progress of tax enforcement in view of the other co-obligors..

In his vote, the judge faced the controversy from three perspectives: the appropriateness of the IDPJ in terms of tax enforcement, the need for the prior establishment of the IDPJ in cases of tax liability and, also, the need to override the executive deed in relation to the others co-obliged, originally executed.

When dealing with the suitability of the IDPJ in terms of tax enforcement, Judge Wilson Zauhy considered that the establishment of such an incident would be possible under article 4, paragraph 2, of Law 6.830 / 80, which establishes the subjection of tax collections to liability rules provided for in the civil law, among which the disregard of the legal personality, highlighted in article 50 of the Civil Code, stands out.

In addition, the judge stressed that the changes introduced to the Civil Code by Law No. 13,874 / 19 would ratify the appropriateness of disregarding the legal personality in the context of tax collections. This is because the new wording given to article 50 of the Civil Code would have broadly defined the concepts of misuse of purpose and patrimonial confusion, which, in his understanding, would contemplate the hypotheses of excess and abuse of power, provided for in article 135 of the Code National Tax Authority (CTN).

Having established the premise that the establishment of the IDPJ in the context of tax enforcement would be appropriate, the vote faces the mandatory management of such procedure in cases of tax liability. For this, the judge considered it important to differentiate the legal responsibility provided for in articles 132, 133 and 134 of the CTN from that established in articles 124 and 135 of the same legal diploma.

According to the judge, the tax liability provided for in articles 132, 133 and 134 of the CTN depends on the occurrence of certain objective facts that do not require extensive probative delay. This is the case of the attribution of tax liability to the company that results from the merger, incorporation or transformation of another, to the one that acquired goodwill, commercial or industrial establishment and, still, to those who are subsidiary for third party debt, as is the case of partners who are responsible for the tax debts of the liquidated company.

A different situation would be that provided for in articles 124 and 135 of the CTN, which presuppose the presence of a certain volitional element on the part of the third party to whom the responsibility intends to be imputed. This is the case of the accountability of those who would have a common interest in the occurrence of the taxable event and, also, of the directors who practice acts with excessive powers.

Specifically for the cases provided for in articles 124 and 135 of the CTN, Judge Wilson Zauhy considered it necessary to establish the IDPJ, in order to prove, through a wide contradiction, the presence of the volitional element of the third party to whom the tax liability is to be attributed. . Such a presence cannot be presumed.

To corroborate this understanding, the judge mentioned the Major Theory of Disregard for Legal Personality, enshrined in the Civil Code and ratified by the Superior Court of Justice. According to this theory, the disregard of the legal personality presupposes full proof of the occurrence of misuse of purpose or patrimonial confusion, and it is not lawful for the interpreter to assume such facts.

In addition, as for the need to override the executive order while processing the IDPJ, the judge clarified that the best interpretation to be given to the stir is that the dispute will not be suspended, and should continue with respect to the other co-obligors.

Although the trial was finalized within the scope of the Federal Regional Court of the 3rd Region, the solution given to the controversy is not definitive. In view of the judgment given, it is appropriate to file a special appeal and an extraordinary appeal, which will be automatically indicated for processing under the same system of repetitive appeals. Thus, the thesis to be defined by the higher courts will be uniformly applicable throughout the national territory, under the terms of article 987 of the Civil Procedure Code.

Category: Infrastructure and energy

Fabio Falkenburger, Marina Estrella, Lucas Scaff, Pedro Amim and Vitor Guilherme da Silva Barbosa

Theme almost always present in all recent discussions involving executive aviation, aircraft shared ownership has just gained its own rules.

In a time of serious difficulties caused by the pandemic to the aeronautical sector, the National Civil Aviation Agency (Anac) is attentive to the demands of the market, acting quickly to mitigate the impacts of the economic crisis in aviation and to modernize legislation in an attempt to expand the population's access to services and facilitate the activities of companies and individuals operating in the sector.

After elaborating and changing several rules in 2020 to solve the problems created by the pandemic, Anac started this year at the same pace of intensity and continued the discussions on the creation of specific rules to regulate the sharing of aircraft ownership, a theme that was coming being studied by the agency since the end of 2018.

After two years of discussions, debates and technical analyzes, the Collegiate Board has just approved Subpart K of the Brazilian Civil Aviation Regulation No. 91 (RBAC 91), which establishes the general operating requirements for civil aircraft. The new subpart officially creates the figure of the shared ownership program, which should contain two or more airworthy aircraft, in addition to bringing important definitions for the terms "quota", "shareholder" and "administrator".

Under the new rules, quota will mean ownership, the right to property, the right to use or possession and / or the right to use or possession convertible into property right relating to an aircraft that is part of a shared ownership program. Shareholders are understood as individuals or entities that own an aircraft quota, directly or through cooperatives, and that have entered into specific contracts to adhere to the terms and conditions of the sharing program. The administrator is defined as the entity that offers the quotaholders the program administration services and that will be responsible for meeting the requirements of RBAC 91 and for exercising the operational control of the aircraft, even when the flight is performed for the benefit of a quotaholder. 

The regulation prohibits the paid transportation of people or goods on flights of the shared ownership program, but allows reimbursement of the expenses of a specific flight, which may include costs such as fuel, crew expenses, hangar, insurance made especially for the flight, airport charges, food, land passenger transportation and charges for the use of navigation facilities.

A relevant point that can be explored by the actors in the sector is the sharing of fixed costs. The regulation requires that a management contract be signed with a minimum duration of one year between the quota holders and the program administrator and stipulates that the contract must cover issues related to management services. The standard establishes that they will be able to understand, among others, services related to the employment, supply and hiring of pilots and crew and maintenance services for the program's aircraft.

The standard also determines the maximum number of shareholders, which may be 16, in the case of fixed-wing aircraft, or 32, in the case of helicopters. Anac informed through its official website that, as of August 2022, operations of shared aircraft must comply with the new provisions, but nothing prevents interested parties from requesting in 2021 the approval of administrative specifications to prove the regular existence programs. Those already operating shared aircraft must submit documentation for compliance with Subpart K by February 2022.

Aircraft sharing becomes a regulated activity and subject to prior approval by Anac. According to information released by the agency, the expectation is that a supplementary instruction will be issued by August 2021 to define the procedures for document analysis, requirements demonstration, inspection and authorization issuance.

The new rules, which were eagerly awaited by the sector, will contribute to the expansion of Brazilian executive aviation, allowing to reduce costs and strengthen a market niche with significant development potential.

Category: Infrastructure and energy

Liliam F. Yoshikawa and Camila de Carli Rosellini

Like other areas in the infrastructure segment, the mining sector, especially the Brazilian one, has undergone regulatory changes to attract more investments and to correct certain gaps related to mining practices and socio-environmental concerns.

Even in the midst of the covid-19 pandemic, the Mining and Development Program (PMD) was launched, which sought to define the federal government's agenda for the mining sector in the period from 2020 to 2023, aiming at the country's sustainable development in its socioeconomic bases and environmental.

In response to the government's intention to attract investments to Brazilian mining, the PMD continued a series of regulations already issued to revitalize the sector, such as the reform of the mining code. Occurred in 2018, through the publication of Decree No. 9.406 / 18, the reform brought stricter environmental rules on the obligation to close the mine and recover degraded areas, tightened the rule for counting the mineral research term and its hypotheses for extension , encouraged the economic use of tailings and mining waste and systematized the electronic auction to make areas available.

In the same vein, the Mining Plan presented by the Collegiate Directorate of the National Mining Agency (ANM), an organ linked to the Ministry of Mines and Energy (MME), in May 2020 proposed the revision of several resolutions and ordinances to the mining organ, with the objective of reducing the bureaucracy of mineral legislation and achieving an improvement in the business environment, including in response to the damage caused to the mineral sector by the pandemic.

After the official launch of the PMD, Bill No. 550/19 of the Federal Senate was approved, which was pending before the Chamber of Deputies and proposed amendment of the National Dam Safety Policy, aiming to increase control over dam safety. The project was converted into Federal Law No. 14,066 / 20.

In addition to adapting the legislation on dam safety to the growing socio-environmental concern, mainly with a focus on disaster prevention, Law No. 14.066 / 20 also sought to update the legislative framework in relation to the new technologies developed.

In this sense, Law No. 14.066 / 20 follows the guidelines of the PMD and is closely related to some of the program's goals aimed at socioeconomic and environmental commitment in mining, specifically with the goal of improving parameters for dam safety, its regulation, control, inspection, monitoring and responsibilities (plan 3.2, goal G).

Another recent legislative innovation refers to ANM Resolution No. 32, which changed the rules for the inspection and safety of dams in the country, with changes in the elaboration of the flood map and in the deadlines for presenting the map based on the DPA (Potential Associated Damage) of each dam, automatic elevation of the dam risk category to “high” in cases specified in the resolution, among other measures to increasingly improve the inspection and safety of mining dams.

In accordance with the objective of promoting the sector and also with the actions established by the Lavra Plan, after a long period of speculation and discussion, in September 2020, the ANM also started the process of making areas available, offering 502 units that were in the research application or authorization phase.

The second round, which took place in December last year, offered 7,027 areas, 69% of which were for mineral research purposes and the others for mining concessions. The period of the last public offering will end on March 1, 2021. If any area in availability receives more than one expression of interest, the electronic auction will take place from March 8 to 15.

In addition to the innovations already described in the sector, ANM collected, between November 27 and January 26, contributions to a new regulation proposal to discipline the procedures for the use of waste and tailings. The objective is to improve and update mineral legislation, due to the influence of new technologies and global trends in the sector, and to rationalize the use of deposits.

In another initiative that should have great repercussion in the sector, the President of the Republic forwarded 35 bills to the National Congress this month that he considers a priority for the country, among them the controversial proposal to regulate mining activities in indigenous lands, which must be the subject of many discussions.

All actions reveal a more dynamic mining sector, in search of technological innovations and initiatives that foster the attraction and renewal of investments and increase the legal security of mineral and other related activities. Both the Mining and Development Program and the recent legislative innovations of MME, ANM and other environmental agencies intend to boost advances in the sector, one of the most important to leverage the Brazilian economy.