Category: Institutional

Caroline Valois, Maria Cecilia Santos, Natalia Fava de Almeida, Fernanda Quiroga and Patricia Brasil Massmann.

Who has never heard it said that women have no place in politics? That they do not understand or are not interested in the subject and cannot participate in the political environment? These ideas are rooted in the Brazilian common understanding and exercise a clear limiting function, as they contribute to maintaining the status quo of Brazilian politics, which is predominantly male, with laws made by men for men and based on male conceptions.[1]

The direct consequence of this scenario is that essential guidelines for women are little discussed from the experience of women themselves, since men are their official interpreters. As a result, the number of draft laws and/or public policies to give effect to women's rights and guarantees assured in the 1988 Federal Constitution is reduced and almost always ineffective, feeding the growth of numbers related to gender inequality and violence against women, which place Brazil today in 92nd position in the ranking of gender equality by the World Economic Forum.[2]

The scenario becomes even more critical in other comparisons with the rest of the world. According to the ranking of the Interparliamentary Union[3] on gender equality in parliament, Brazil ranks 143 out of 190 countries listed, with only 14.6% of women in the legislature. It is the second worst country in Latin America on the list, losing only to Haiti. According to the same ranking, Brazil is behind even countries with much more conservative religious traditions in relation to women, such as Rwanda, the Arab Emirates, Namibia, Mozambique, among so many others, information that compromises the very quality of the democracy.[4]

However, in the Federal Constitution, Brazil is expressly described as a Democratic State of Law,[5] in which "all power emanates from the people, who exercise it through elected representatives or directly"[6] and "men and women are equal in rights and obligations."[7] In view of this, it was to be expected that women would occupy political and power spaces in a manner equal with men or at least proportional to their presence in society.

Taking the 2018 elections as an example, women were elected to 16.11% of the political posts, although they represented 52.5% of the Brazilian electorate.[8] In the 2020 municipal elections, there was a sinle point of growth in women's representation in politics: the number of female candidates rose from 32% to 33.6% of the total of 557,389 registered, while the percentage of mayors elected rose from 11.57% to 12.2%.[9] This is still a far cry from a more equal representation in politics, which presupposes hard work ahead.

Historical context of achievements in women's rights in the world and in Brazil

Although the under-representation of women in politics and in areas of power still remains evident, there is no doubt that many achievements have been made over the last two centuries, particularly in recognizing women as subjects of rights for their inclusion in society and the exercise of citizenship. Another important milestone was the 1948 Universal Declaration of Human Rights, which recognized equal rights for men and women.

In this process, the conquest of the right to suffrage[11] and the effective exercise thereof was and continues to be fundamental. The first country to recognize the political rights of women was New Zealand in 1893. In the United Kingdom, this achievement was reached in 1918 with the passage of the Representation of the People Act, and in the United States in 1919 through the 19th Amendment to the U.S. Constitution. In these two countries, the right to vote was preceded by the first wave of the feminist movement, driven by the mass entry of women into the labor market, but under absolutely precarious conditions.[12]

In Brazil, this right was only recognized in 1932,[13] with the promulgation of the Electoral Code (Decree No. 21,076),[14] but in a partial manner, since the right to vote was not expressed and illiterate and poor women were prevented from voting.[15] The right to suffrage for all women was only widely instituted in Brazil with the promulgation of the Federal Constitution of 1946, which also finally provided for women's right to vote.[16] The fact that the achievement of full electoral capacity for women in Brazil is relatively recent (less than 80 years) also contributes to the current scenario of under-representation of women in Brazilian politics.

In the last decades of the 20th century, Brazil ratified the Convention for the Eradication of All Forms of Discrimination Against Women (CEDAW), which recognizes as discrimination the exclusion, distinction, or restriction of rights based on sex and imposes on the signatory countries the obligation to guarantee women's participation in politics. Brazil is also a signatory to the Beijing Conference, which addresses in greater detail the need to include women in politics. Both treaties have been integrated into the Brazilian legal system and are united in recognizing that women's participation in politics is a fundamental element in reducing inequality and, consequently, gender-based violence.

In addition to the constitutional provision and the international treaties mentioned above, it is also important to highlight the following women's rights milestones in Brazilian law.[17]

1962: The Married Woman's Statute allowed women to no longer need their husband's permission to work outside the home, receive an inheritance, buy or sell real estate, sign documents, and even travel.

1977: Marriage is no longer indissoluble with the Divorce Law.

1995: Prohibition of any discriminatory and restrictive practice for the purpose of access to or maintenance of the employment relationship on the grounds of sex, race, color etc. and criminalization of a requirement imposed by employers to undergo a pregnancy test.

2002: Lack of virginity is no longer a reason to annul a marriage with the Civil Code; men and women have been equated in relation to family power according to the New Civil Code.

2006: The Maria da Penha Law (Law No. 11,340) brought mechanisms to curb domestic and family violence against women.

2015: Law No. 13,112 is passed and amends the Law of Public Records to allow mothers to have the right to register their children at the registry office without the presence of the father.

2016: Law No. 13,104 amended the Penal Code to establish the qualifying circumstance of feminicide.

2019: Divorce priority for victims of domestic violence (Law No. 13,894/19).

As can be seen from this brief legislative chronology, it is true that there is a scenario of progressive improvement in the legal status of women in Brazilian society, with a view to, if not elimination, at least reduction in inequality between men and women. However, these initiatives are still insufficient to promote constitutionally declared equivalence, as laws that underestimate the needs of this part of the population still persist.

As an example, we highlight the criminal law, in which the minimum penalty for the crime of rape[18] is equivalent to the minimum penalty for the crime of extortion committed by restricting the liberty of the victim.[19]

Analysis of Brazilian law to include women in politics

 Based on international commitments and the 1988 Constitution, Brazil adopted some measures aimed at equal political participation. In September of 1995, Law No. 9,100 was approved, which established a minimum quota of 20% of applications for women for proportional positions. The provision did not speak of a reserve of spots, but of actual application. The Superior Electoral Court (TSE) ensured the effectiveness of the rule by ordering that it was impossible to replace female candidates with men during the course of the election.[20]

In 2009, Law No. 12,034 amended the third paragraph of article 10 of the General Election Law, which came into force with the following wording: "of the number of vacancies resulting from the rules provided for in this article, each party or coalition shall fill a minimum of thirty percent (30%) and a maximum of seventy percent (70%) for candidacies of each sex.” With regard to candidacies, that law made two important changes:

• By bringing the minimum quota of 30% for one of the sexes, not specifying which, it allowed a political party to run 70% male candidates and 30% female candidates, which is customary, or 70% female candidates and 30% male candidates, which, however, has never occurred.

• The second important change was to make it compulsory to fill the minimum vacancies, it not sufficing to reserve vacancies, otherwise the slate of candidates of the party will be rejected, or the number of candidates of the opposite sex will be reduced.

In practice, the quota policy for women's candidacy alone is not sufficient to promote the substantive equality expected in the political field. On the other hand, the quotas for women's candidacies have given rise to "women's wings" in the party associations, which in most parties, however, do not participate in deliberations and decision-making.

In addition to quotas for candidacies, Law No. 12,034/09 enacted changes to Law No. 9,096/97 (Law on Political Parties) to create institutional incentives for women's participation in politics. It mandated that the party should apply a minimum of 5% of the party's quotas for the creation and dissemination of programs that encourage women's political participation, or else, in the year following non-compliance, it will have to add a further 2.5% of the party's funds for this purpose. However, the law does not establish the possibility of losing percentages of such financing in the event of noncompliance, or mechanisms to ensure effective compliance.

The same law also provided that parties must use a minimum of 10% of their free party advertising hours to spread and promote women's political participation, allocating this time to women. Contrary to what happened with the quota for candidacies, we note significant concern on the part of the Electoral Courts in enforcing this specific time quota. Not a few judgments have been entered for loss of time for party advertising for non-compliance with this rule.

In order to reduce campaign costs, simplify party management, and encourage women's participation, Law No. 13,165/15 provides for the mandatory allocation of at least 5% of party fund resources to creating and maintaining programs to promote and disseminate political participation by women. This task falls to the women's bureau of the political party or, in the absence of such a bureau, to the institute or foundation for research and teaching and political education. In addition, according to the new wording of paragraph 7 of the same provision, resources may be pooled together in different fiscal years. It should be noted that the amendment to the paragraph creates an escape valve and justification for the parties not to deploy the funds year by year.

Law No. 13,165/15 also created the so-called Special Fund for Public Financing of Campaigns (FEFC), the public campaign financing instituted to compensate for the suppression of the possibility for there to be private financing by legal entities for electoral campaigns. This fund is based on a provision in article 9 of the law, which allocates between 5% and 15% of the amount of the fund to the financing of women's campaigns.

Even with all the difficulty in giving effect to the application of quotas and with them promoting women's full participation in political life in Brazil, the implementation of this provision in the 1990s and its improvement with the electoral mini-reforms in the 2000s at least gave rise to the necessary debate on political inclusion and its mechanisms. But even with the mandate to apply funds, the number of women in the Federal Senate remained unchanged since the 2010 elections. In the Chamber of Deputies there has been an increase in participation by women.

The increase in the number of female deputies, however, contrasts with recent complaints about the use of “sham candidates" to divert funds from the minimum FEFC percentage. The more the legislation is improved to promote women's political participation, the more some associations find subterfuges to circumvent it and maintain the male status quo in the exercise of political power. In addition, the legislation and debates on the subject have been silent regarding the establishment of quotas or any other action that favors greater participation by women in majority elections, as well as on the reservation of posts for women in parliament and political parties.

The small number of female parliamentarians also impacts on the performance of their mandate, since women's projects have little or no entry into the legal system and the majority of congresswomen are left out of the organization of steering committees and boards that hold power over the agenda of the Brazilian Congress.[21]

How to break the cycle of under-representation of women?

To answer this question, it is necessary to reflect on the causes of women's under-representation and, consequently, of gender inequality in politics and thus build a more collaborative, balanced, fair, and proportional political system for men and women. From this analysis, the break in the cycle of under-representation should begin with small family initiatives within Brazilian homes, go through the school curriculum, and include the implementation of public policies and incentives for private initiatives that also aim to promote the inclusion of women in the political debate.

In this sense, it is important to maintain and develop non-governmental or non-partisan institutions, such as the Women of Brazil Group,[22] currently chaired by the businesswoman Luíza Helena Trajano. It is a good example of a national organization that aims to engage civil society in achieving collective improvements and stimulate female protagonism.

Initiatives such as this are increasingly common, and it is up to women to take the lead in their own stories, so that it is possible to include the whole of humanity in politics.

Below are some suggestions on how to contribute to this change:

• Educate men and women in exactly the same way, and encourage and support girls who dream of having a professional and/or political career.

• Recognize that men and women complement each other in their different experiences.

• Listen to the women around you, give them room to speak and position themselves.

• Encourage discussion rounds in communities, associations, schools, and all environments, giving women a place for them to speak.

• Seek opportunities to contribute with the implementation of affirmative actions to achieve gender equality in their spheres of action, always keeping in mind that there are many women with the desire and potential for change and leadership.

• Study gender equality in order to have sensitive personal and professional performance and to be able to perceive, point out, and modify situations of inequality around you, seeking solutions for them.

• Encourage and support candidacies of women who advocate equality between men and women, seeking to familiarize yourself with the proposals presented and vote for these candidates.

Paraphrasing Bertha Lutz,[23] if it is in Parliament that laws that impact on everyday life are discussed, it should be recognized as the true home of every woman, and this will only be possible with the commitment of the whole society.

References Consulted

AMNESTY INTERNACIONAL Universal Declaration of Human Rights. Available at: https://www.ohchr.org/en/udhr/documents/udhr_translations/por.pdf. Accessed on: Oct. 5, 2020.

BERTOLIN, Patricia Tuma Martins; CARVALHO, Suzete. The Occupational Segregation of Women: is legal equality enough to overcome it? In: BERTOLIN, Patricia Tuma Martins; ANDREUCCI, Ana Claudia Pompeu Torezan (Org.). Women, Society, and Human Rights. São Paulo: Rideel, 2010.

BOBBIO, Norberto. The Future of Democracy: a defense of the rules of the game. São Paulo/Rio de Janeiro: Paz e Terra, 2015.

BRASIL. FEDERAL SENATE. More Women in Politics. Available at: https://www12.senado.leg.br/institucional/procuradoria/proc-publicacoes/2a-edicao-do-livreto-mais-mulheres-na-politica. Accessed on: Oct. 4, 2020.

____. PLANALTO. Constitution of the United States of Brazil. Available at: http://www.planalto.gov.br/ccivil_03/constituicao/constituicaocompilado.htm. Accessed on: Oct. 5, 2020.

____. CHAMBER OF DEPUTIES. DEC. No. 21,076, OF February 24, 1932. Available at: https://www2.camara.leg.br/legin/fed/decret/1930-1939/decreto-21076-24-fevereiro-1932-507583-publicacaooriginal-1-pe.html. Accessed on: Oct. 3, 2020.

____. FEDERAL SENATE. Advances in Brazilian Legislation. Available at: https://www.facebook.com/SenadoFederal/posts/3442028539146310/ Accessed on: Oct. 5, 2020.

____. SUPREME FEDERAL COURT. ADIN 5617. Available at: http://www.stf.jus.br/portal/peticaoInicial/verPeticaoInicial.asp?base=ADIN&s1=5617&processo=5617. Accessed on: Oct. 5, 2020.

____. SUPERIOR ELECTORAL COURT. Participation of Women: statistics. Available at: https://www.justicaeleitoral.jus.br/participa-mulher/#estatisticas. Accessed on: Oct. 4, 2020.

____.____. Election Fund and Radio and TV Time Must Reserve a Minimum of 30 Per Cent for Women Candidacies. Available at: http://www.tse.jus.br/imprensa/noticias-tse/2018/Maio/fundo-eleitoral-e-tempo-de-radio-e-tv-devem-reservar-o-minimo-de-30-para-candidaturas-femininas-afirma-tse. Accessed on: Oct. 5, 2020.

____. SÃO PAULO STATE ELECTORAL COURT OF APPEALS. Appellate Decision No. 3663-76.2010.6.26.0000, Class No. 38. 2010.

_____. FEDERAL PROSECUTOR’S OFFICE. TSE ADI Consultation 5617 Campaign of Candidates. Available at: http://www.mpf.mp.br/pgr/documentos/ConsultaTSEADI5617CAMPANHADECANDIDATASVersofinal1.pdf. Accessed on: Oct. 5, 2020.

BRASIL, Patricia C. The Gender of Brazilian Politics: a question of equality in the Federal Senate. Masters Thesis. Mackenzie Presbyterian University, 2016. Available at: http://tede.mackenzie.br/jspui/handle/tede/1181. Accessed on: Oct. 5, 2020.

CONSOLIM, Veronica Homsi. The History of the First Feminist Wave. Sept. 14, 2017. Justifying. Available at: https://www.justificando.com/2017/09/14/historia-da-primeira-onda-feminista/. Accessed on: Oct. 5, 2020.

FRASER, Nancy. Scales of Justice: remaining political space in a globalizing world. Cambridge: Polity Press, 2008.

INTER PARLIAMENTARY UNION. Ranking of Women in National Parliaments. Available at: https://data.ipu.org/women-ranking?month=10&year=2020. Accessed on: Oct. 4, 2020.

MASSMANN, Patricia C. Brasil; MACHADO, Monica Sapucaia. Grasping for the Wind: the situation of women in Brazilian party leaderships, 30 years after the Women's Letter to the Framers of the Constitution. In: BERTOLIN, Patricia Tuma Martins Bertolin; ANDRADE, Denise Almeida de; MACHADO, Monica Sapucaia. Women's Letter to the Framers of the Constitution 30 years later: balance and memory. São Paulo: Autonomia Literária, 2018.

MIGUEL, Luis Felipe; BIROLI, Flávia. Feminism and Politics. São Paulo: Boitempo, 2014.

WOMEN OF BRAZIL. Who Are We? Available at: https://noticias.grupomulheresdobrasil.org.br/grupo-mulheres-do-brasil/quem-somos/#:~:text=Hoje%20somos%20uma%20rede%20pol%C3%ADtica,profiss%C3%B5es%2C%20com%20os%20mesmos%20objetivos. Accessed on: Oct. 3, 2020.

PAIVA, Raquel. Politics: female in the grammatical gender. Rio de Janeiro: Mauad X, 2008.

POLITICIZE. Representativeness: what does it mean? Available at: https://www.politize.com.br/representatividade/. Accessed on: Oct. 4, 2020.

RANCIÉRE, Jacques. The Hate of Democracy. São Paulo: Boitempo, 2014.

____. Can One Still Talk About Democracy? Lisbon: KKYM, 2014.

SINEAU, Mariette. Law and Democracy. In:  DUBY, Georges; PERROT, Michelle (Dir.). History of Women in the West: the 20th Century. Porto: Edições Afrontamento, 1991.

UNION OF THE COUNCILMEMBERS OF THE STATE OF SÃO PAULO. Map of Women's Right to Vote in the World. Available at: https://uvesp.com.br/portal/noticias/este-mapa-mostra-o-ano-em-que-as-mulheres-tiveram-o-direito-de-votar-em-cada-pais-do-mundo/. Accessed on: Oct. 5, 2020.

WORLD ECONOMIC FORUM. Global Gender Gap Report 2020. Available at: https://www.weforum.org/reports. Accessed on: Oct. 5, 2020.

[1]For more details: “Mais Mulheres na Política” ["More Women in Politics”]. Available at: https://www12.senado.leg.br/institucional/procuradoria/proc-publicacoes/2a-edicao-do-livreto-mais-mulheres-na-politica. Accessed on: Oct. 4, 2020. For further details of these effects, see: Bertolin and Carvalho, "Mulher Sociedade e Direitos Humanos” [“Women, Society, and Human Rights”]. Redeel, 2010, p. 179).

[2] For more information, please see: WEF, Global Gender Gap Report 2020. Available at: http://www3.weforum.org/docs/WEF_GGGR_2020.pdf. Accessed on: Oct. 5, 2020.

[3] The Interparliamentary Union is an organization formed by national parliaments with the aim of empowering parliaments and parliamentarians to promote peace, democracy, and sustainable development, which among its various observatories maintains specific monitoring of the presence of women in parliament. To find out more, go to: https://data.ipu.org/women-ranking?month=10&year=2020wg. Accessed on: Oct. 5, 2020.

[4]In this regard, see Nancy Fraser, Scales of Justice: remaining political space in a globalizing world.

[5] “Article 1. The Federative Republic of Brazil is formed by an indissolvable union of States, Municipalities, and the Federal District, is a governed by a Democratic State governed by the Rule of Law and has as its founding principles:

[6] “Sole paragraph. All power emanates from the people, who exercise it through elected representatives or directly, in accordance with this Constitution."

[7] “Article 5. All are equal before the law, without distinction of any kind, and Brazilians and foreigners residing in the Country are guaranteed the inviolability of the right to life, liberty, equality, security, and property under the following terms:

I - men and women are equal in rights and obligations under this Constitution;"

[8] Electoral Justice. “Participa Mulher – Estatísticas” ["Women participate - Statistics”]. Available at: https://www.justicaeleitoral.jus.br/participa-mulher/#estatisticas. Accessed on: Oct. 5, 2020.

[9]For more details, go to: Senate Agency, “Cresce número de mulheres candidatas e eleitas no pleito de 2020” ["Growing number of female for candidacy and elected in the 2020 election”]. Available at: https://www12.senado.leg.br/noticias/materias/2020/11/16/cresce-numero-de-mulheres-candidatas-e-eleitas-no-pleito-de-2020

[10] “Article 2: Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty."

[11] The right to vote includes both active (to vote) and passive (to be voted for) electoral capacities.

[12] For more details, see Sineau in Duby; Perrot (2010, p. 551).

[13] Thereafter, the following year, the first federal deputy was elected, Carlota Pereira de Queiroz (BRASIL, 2016, p.99).

[14] “Article 2. A citizen over 21 years of age, without distinction of sex, is a voter enlisted in the form of this Code."

[15] See the map of women's right to vote in the world at: https://uvesp.com.br/portal/noticias/este-mapa-mostra-o-ano-em-que-as-mulheres-tiveram-o-direito-de-votar-em-cada-pais-do-mundo/ Accessed on: Oct. 5, 2020.

[16] “Article 133 - Enlistment and voting are mandatory for Brazilians of both sexes, except for the exceptions provided for by law."

[17] Federal Senate. "Women's rights in Brazilian legislation". Available at: https://www.facebook.com/SenadoFederal/posts/3442028539146310/. Accessed on: Oct. 5, 2020.

[18] Article 213 of the Penal Code.

[19] Paragraph 3 of article 158 of the Penal Code.

[20] Appellate Decision No. 16,632, of September 5, 2000

[21] More details in BRASIL (2016). Available at: http://tede.mackenzie.br/jspui/handle/tede/1181. Accessed on: Oct. 5, 2020.

[22] https://noticias.grupomulheresdobrasil.org.br/grupo-mulheres-do-brasil/quem-somos/#:~:text=Hoje%20somos%20uma%20rede%20pol%C3%ADtica,profiss%C3%B5es%2C%20com%20os%20mesmos%20objetivos.

[23] Bertha Lutz was one of the leading figures in the fight for women's right to political participation and, in 1937, assumed the position of deputy (BRASIL, 2016, p. 97).

Category: Corporate

The Brazilian Anti-Corruption Law (Law No. 12,846/13) provides for the administrative and civil liability of legal entities for acts against the public administration, sanctioning not only the entities that commit corruption acts, but also third parties that have some degree of connection with the corrupt conduct or the corrupting entity. In this sense, in certain circumstances, administrative and judicial sanctions may be extended to financial institutions providing financing to the corrupting entity in the context of corruption acts.

Article 5 of the Brazilian Anti-Corruption Law contains a list of acts that are harmful to the public administration and may lead to administrative and civil liability of legal entities. One of these items is subsection II, which deals with the liability of financing agents or sponsors for illicit acts under the Brazilian Anti-Corruption Law. To wit:

"Article 5 - For the purposes of this Law, acts harmful to the public administration, Brazilian or foreign, shall be all acts performed by the legal entities mentioned in the sole paragraph of article 1 that go against foreign or Brazilian public property, against principles of the public administration, or against international commitments assumed by Brazil, defined as follows:

[...]

II - to finance, fund, sponsor, or otherwise subsidize the commission of the illegal acts provided for in this Law.”

In view of this legal provision, some doubts arise for which, save better judgment, there is still no guidance in legal scholarship or case law: is lenders’ liability strict or fault-based? Which acts of financing, funding, or sponsorship are capable of generating the liability provided for in article 5, subsection II? Does the lender liability for corruption acts require its direct participation or knowledge (actual or presumed) of the illicit activity? In environmental matters, there are court decisions that extend the liability for environmental damages to financial institutions, creating the concept of the "indirect polluter". Similarly, in the context of the Brazilian Anti-Corruption Law, could lenders be classified as "indirect corrupters"? We intend to address these questions in this article.

Lender liability for environmental damages

Law No. 6,938/81 created the framework for the National Environmental Policy and created strict civil liability for environmental damages. Since its promulgation in 1981, there has been a remarkable development of scholarly theories and case law on the subject of environmental liability, especially with regard to the indirect causative agent of environmental damages.

The concept of “polluter” encompasses “individuals or legal entities, public or private, directly or indirectly responsible for activity causing environmental degradation” (article 3, subsection III and IV). Hence the concept of an indirect polluter. The concept of an indirect polluter has allowed for extension of civil liability to other agents whose conduct may represent some kind of contribution or incentive to environmental damage, including lenders. According to Herman Benjamin, Justice of the Superior Court of Appeals (STJ):

"Law No. 6,938/1981 defines a polluter as an individual or legal entity, governed by public or private law, responsible, directly or indirectly, for an activity causing environmental degradation. The concept is broad and includes those who directly cause the environmental damage (farmers, industrialists, loggers, miners, speculators), as well as those who indirectly contribute to it, facilitating or making viable the occurrence of the damage (banks, public licensing bodies, engineers, architects, developers, brokers, transporters, to name a few roles."[1]

The 2nd Panel of the STJ, dealing with the State's liability for environmental damages, settled an understanding that civil liability for environmental damages is strict, joint and several, and unlimited in nature. However, it made it clear that joint and several liability for indirect causation only applies when there is an omission in a legal duty to act. Note the opinion of the reporting judge Justice Herman Benjamin:

"In this context, it is necessary to recognize the joint and several liability of the State when, obliged to act in order to prevent environmental damages, it is inactive or acts deficiently or belatedly. Hence it is a case of nonperformance of an obligation to act by a party who had the duty to act. [...] For the purpose of ascertaining a causal link in urban-environmental damage and possible joint and several liability, those who act, those who fail to act when they should act, those who do not care that they do, those who remain silent when it is their duty to speak, those who fund those who act, and those who benefit when others act are all equated.”[2]

Thus, an indirect causal link in environmental law only occurs if there is an omission in a legal duty to act. The law professor Ana Maria Nusdeo summarizes the issue:

"I believe that the establishment of an indirect cause of an environmental damage that is not linked to the damage due to exercise of a risk activity must be linked to the damage by a causal link established: 1) by actual contribution to the damage and 2) by violation of a specific legal duty the fulfillment of which would have prevented the occurrence of the damage or promoted its mitigation."^[3]

So, if there was an indirect link of causation for the environmental damage, would the liability of the lender be applicable or not? Would it be strict or fault-based? A majority of the legal scholarship believes that the liability would be fault-based, or strict with the possibility of breaking the causal link by acts of diligence on the part of the lender. Thus, by demonstrating that the institution has fulfilled its legal duties and acted diligently and appropriately to confirm compliance with environmental legislation, as well as to identify and mitigate the environmental risks of its clients, lenders can eliminate their liability.[4]

The strict liability of financial institutions for indirect environmental damage, without the possibility of exclusion of liability for acts of diligence and good social and environmental practices, would create economic inefficiency for the entire financial and credit system and, ultimately, for society as a whole.

Lender liability in the Brazilian Anti-Corruption Law

With regard to the lenders’ liability for acts harmful to the public administration, the Brazilian Anti-Corruption Law represents a legal innovation, since article 5, subsection II, finds no parallel in the Penal Code or the Administrative Misconduct Law as an autonomous infraction.

Subsection II of article 5 deals with the liability of lenders who, in some way, contribute to the commission of illicit acts under the Brazilian Anti-Corruption Law. At first reading, the nuclear verbs "finance", "fund", "sponsor” or "subsidize" suggest that these infractions would depend exclusively on the conduct, without the need to evaluate the result of the infraction. However, in order to establish an unlawful act, it does not suffice simply to grant financing; it would also be necessary to verify the active participation or direct involvement in enabling the act of corruption. Thus, it would be necessary to prove not only the acts of commission attributable to the lender (financing, funding, sponsoring or subsidizing) but also the special intent to commit the illicit acts of article 5, acts committed by a third party (individual or legal entity) financed, sponsored or subsidized by the accomplice in the act of corruption.

Therefore, in order to establish the illicit act of subsection II of article 5 of the Brazilian Anti-Corruption Law, it is necessary to prove two requirements: (i) that the legal entity finances, funds, sponsors or subsidizes the commission of any act of corruption under article 5; and (ii) that these actions have the purpose (specific intent) of contributing to or instigating the commission by another party (individual or legal entity) of the harmful acts provided for in sections I, III, IV, and V of article 5.

In the analysis of the liability of indirect corruptors, a distinction must be made between the granting of loans (credit for general purposes, unrestricted use of proceeds without a specific allocation, such as working capital, line of credit, special check, etc.) and the granting of financing for a specific purpose, which is known, analyzed and approved by the bank in the context of project evaluation (such as infrastructure financing and project finance). In the first case, it would not be possible to assign liability under the Brazilian Anti-Corruption Law, since it would not be possible for the financial institution to know the use of the proceeds.

A case of an indirect corruptor, for example, would be a project financier (for example, a project finance for a large infrastructure construction) who, reviewing the project's cost spreadsheet and learning that one of the items to be financed is a bribe to be paid to environmental authorities for the project's licensing, nevertheless proceeds with the financing in order to make the project viable and, consequently, makes the payment of the bribe possible. Another example would be a bank offering credit to a bidder to finance the payment of a bribe to a public agent so that it can organize a fraudulent bid, knowing the fraudulent nature of the bid.

Having clarified that the liability of the financier arising from article 5, subsection II, depends on the specific intent to finance its client's act of corruption after actual knowledge of the act of corruption, or at least the possibility of knowing it after reasonable diligence, one wonders what the parameters would be for reasonable diligence by the financial institution. It can be argued that the parameters of reasonable diligence to be followed by a financial institution are those arising from banking laws and regulations, including the rules and regulations issued by the Central Bank of Brazil. Since this is a sanctions rule, where the principle of strict legality must be observed at all times, we cannot work with amorphous liability parameters, with broad and vague concepts. In other words, if the financier does not have actual knowledge of the use of the funds for the commission of illicit acts and has fulfilled its legal duties arising from money laundering regulations, identification of suspicious transactions, know your client procedures, risk management policies, implementation of internal control systems, among others, it would not be correct to hold such a financier administratively liable for acts of corruption by its clients as a result of article 5, subsection II, of the Brazilian Anti-Corruption Law.

In conclusion, lenders’ liability for acts of corruption of third parties seems to have a subjective nature, requiring proof of the purpose (specific intent) of contributing to or instigating the commission of the harmful acts provided for in the Brazilian Anti-Corruption Law, or at least disrespect for the duty of diligence imposed by law. The strict liability of financial institutions for acts of corruption would create economic inefficiency for the entire financial and credit system and, ultimately, for society as a whole. Excessive exposure to the legal risk of indirect liability in the Brazilian Anti-Corruption Law would have the potential to drive away institutions willing to finance activities and investments, resulting in increased costs with credit and an economic slowdown.

^[1] BENJAMIN, Antonio Herman Vasconcelos. Liability for environmental damages. Revista de Direito Ambiental [“Review of Environmental Law”], No. 9, p. 37, Jan./Mar. 1998.

^[2] REsp No. 1.071.741 -SP (2008/0146043-5), opinion drafted by Opinion drafted by Justice Herman Benjamim, decided on December 16, 2010.

^[3] MACHADO, Paulo Affonso Leme. Direito ambiental brasileiro [“Brazilian rnvironmental law”]. 19th ed. São Paulo, Malheiros, 2011; NUSDEO, Ana Maria de Oliveira. Financial institutions and environmental damages caused by financed activities. In: YOSHIDA, Consuelo Moromizato et al. (org.). Sustainable finance and the socio-environmental liability of financial institutions. Belo Horizonte: Forum, 2017, p. 36.

[4] FERREIRA, Eduardo de Campos; MADASI, Ana Cecília. The transdisciplinarity of the socio-environmental liability of financial institutions. In: YOSHIDA, Consuelo Moromizato et al. (org.). Sustainable finance and the socio-environmental liability of financial institutions. Belo Horizonte: Forum, 2017, p. 36; YOSHIDA, Consuelo Moromizato. Liability of financial institutions: from reactive to preventive action. In: OLIVEIRA, Carina Costa de (org.). Legal instruments for the implementation of sustainable development. Rio de Janeiro, FGV, 2012.

Category: White-Collar Crime

Recent years have brought significant changes in tax crime decisions issued  by higher courts. One of the recent innovations in the field of criminal tax offenses is the thesis set by the Federal Supreme Court (STF) withholding amounts related to state taxes (ICMS) and not transferring them to the government  constitutes the crime of tax misappropriation:[1]

The taxpayer who, in a contumacious manner and with the intention of misappropriation, fails to pay the ICMS levied from the purchaser of the goods or service incurs commits the crime established in article 2, subsection II, of Law No. 8,137, of 1990.

The STF issued the decision at the end of 2019 and has generated various criticisms and debates among legal scholars due to the court's failure to set a definition for “contumacious" or “intention of misappropriation.”

The jurisprudential answer to these questions became more concrete as of June 2020, when the STJ acquitted a defendant convicted at the trial level for the crime of "tax misappropriation" (article 2, II, of Law No. 8,137/1990). At the time, the 6th Panel of the STJ found that there was no contumacious delinquency or misappropriation in the conduct because it was "an isolated event in the company’s management, because it lasted a short period of time (four months).”[2]

More recently, in a session held on August 4, 2020, the Sixth Panel of the STJ decided to dismiss a tax misappropriation case  on the grounds that there was no contumacious delinquency, since the non-payment occurred only once. The court recognized the absence of intent on the basis of two main factors: (i) the non-payment was restricted to a single month; (ii) the debtor requested an installment payment for the tax, which, although not fulfilled, contributed to ruling out the intention for misappropriation.

The decision drew attention because the reporting judge in the case, Justice Rogério Schietti, had dismissed the appeal in an suit for habeas corpus filed by the defense in June of 2019. In a sole judge decision, the Justice argued that the "awareness of not paying" would suffice to ensure the continuance of the criminal proceeding.

In the latest decision published on August 14, Justice Schietti explains that he changed his mind because, when reviewing a case of non-payment of ICMS declared, it is necessary to analyze whether the omission was intended to obtain personal benefit, such as "possibility of reinvestment with higher return, obtaining higher profits, etc." There is an undeniable difference between not paying taxes due to circumstances beyond the will to pay and not paying to protect personal interests.

Further, on September 14, 2020, the 6th Panel of STJ, also with Justice Schietti writing for the court when ruling on Special Appeal No. 854.893, once again emphasized the need for intent in the agents’ conduct and the intent consists of violating tax regulations to obtain amounts for their own benefit or for the benefit of third parties by evading tax payments.

In the specific case, in which accounting operations were delegated without the supervision necessary, the action could, at most, constitute negligent or reckless conduct, which is not criminalized by the legal system.

The STJ has been judicious in analyzing the presence of contumacious violation and intent in the conducts, in an attempt to avoid criminalizing the debt. This careful and precautions approach moves in the opposite way to what had been previously built by the case law of that same court.

In the same direction of avoiding trivializing the criminalization of tax offenses, the STJ has also set the parameter for the application of the principle of insignificance in the event of state tax evasion. In a decision published on August 25 (HC No. 535.063-SP), the STJ ordered the suspension of a criminal action for evasion of the ICMS tax payable to the State of São Paulo in the total amount of BRL 4,813.11.

The 3rd Panel of the STJ argued that State Law No. 14,227/10 provides for unenforceability of tax enforcement for debts not exceeding 600 Tax Units in the State of São Paulo (Ufesps), that is, debts below BRL 10,470 are unenforceable by the tax authorities and, therefore, cannot be penalized. The judgment concerns a case of evasion of ICMS (article 1 of Law No. 8,137/90) and not of tax misappropriation. However, it is logical to argue that if debts below this limit are unenforceable, neither does it make sense to criminally prosecute the misappropriation of  ICMS in an amount below BRL 10,470.

In 2018, the STJ had already established the principle of insignificance in cases of evasion of federal taxes and set the limit of BRL 20,000, under this threshold the debts are unenforceable. Now, there is also a limit provided for the state of São Paulo, such that there can be no criminal prosecutions for evasion of amounts lower than BRL 10,470.

It is possible to note a guaranteed trend permeating the recent decisions of the STJ regarding tax crimes. Despite the fact that it stems mainly from a change in the understanding of the Supreme Court, the direction adopted seems to move towards an appropriate application of penal concepts, punishing only conducts that actually  fit the concept of a crime against the tax order.

However, although the STJ’s judgments already present more concrete contours for defining the criminally relevant cases, the state courts still focus only on tax defaults, leading to intense legal uncertainty.

In June of 2020, the São Paulo Court of Appeals (TJ-SP) dismissed an appeal filed by a defendant convicted in a criminal proceeding for failure to pay ICMS ("tax misappropriation") for eight consecutive months.[3] In the judgment, the 4th Criminal Chamber of the TJ-SP rejected the theory of lack of a prima facie case and held that the defendant, as officer of the tax-paying company during the period mentioned in the complaint, "took advantage of such tax evasion or reduction” and also "it was his duty to safeguard the orderliness of his business, including in the tax sphere."

The decisions by the TJ-SP are still pending appeal and  may be modified if the STJ maintains consistency in the definition of misappropriation and contumacious delinquency. It is clear from recent case law of the STJ that a management position at a company is not sufficient to establish tax misappropriation, since it does not in itself demonstrate the specific intent and delinquency essential for establishing the crime.

This clash between the state courts and the STJ should be monitored in order to achieve a minimum amount of legal certain in the discussion regarding the "crime of tax misappropriation," considering the most recent theories of the STF on the subject.

[1] RHC No. 163.334

[2] RE No. 1.852.129/SC

[3]TJSP, AP No. 0003615-44.2011.8.26.0347, 4th Criminal Law Chamber, Opinion drafted by Ivana David, decided on June 30, 2020.

Category: Capital markets

Many may be surprised at the strength of the Brazilian IPO market in 2020, even in the scenario of the covid-19 pandemic. So far, there have been 23 initial public offerings registered with the CVM in 2020, and another 39 applications under review, of which, it is quite true, a portion represents transactions that were interrupted and are awaiting better market conditions. However, in parallel with the significant increase in the number of transactions, there is also an increase in the volume of cancelations and cases in which securities show losses after their stock market debut.

The expectation regarding the Brazilian IPO market has been nourished since the end of 2019. Structural reforms and the prospect of a resumption of growth, coupled with falling interest rates, have created an environment conducive to accessing capital through equity offerings. Investors previously accustomed to lumpy returns linked to public securities now have to seek the desired return on equity, generating great potential demand for offerors. There was, therefore, a significant increase in domestic participation in share offerings, previously marked by the predominance of foreign capital.

On the other hand, the market has shown that it is not willing to pay any price for the shares, and this is reflected in the pricing of the offerings at the floor of the indicative ranges stated in the prospectuses (or below them) and even cancelations of transactions. Added to this scenario is the market volatility caused by the uncertainties regarding the course of the pandemic (for example, expectations about vaccines and the occurrence of new waves in various countries), the concern about fiscal policy, the interruption of structural reforms in Brazil and external tensions, such as that experienced during the heated election process for the presidency of the United States.

Although the capital markets continue to be an interesting option for the capitalization of companies, the scenario requires extra care regarding pricing and timing of transactions. Structured, high-growth companies that are solid in their fundamentals continue to be sought after and in demand. The importance of preparing and selecting advisors in the process becomes even more critical to the success of transactions. Machado Meyer has a highly specialized team prepared to assist businesses in this process, from the preparation phase to the post-IPO phase, with experience and relevant history with companies of all types, industries, and sizes.

Category: Environmental

The growing concern with good business practices and social and environmental responsibility, especially of the younger generations, has guided decision-making for sustainable investment. The esteem of "responsible" businesses drives the adoption of good environmental, social, and corporate governance practices.

The principles of ESG constitute a set of criteria adopted by investors to evaluate a company's interaction with the environment and society, and the observance of high standards of corporate governance. These factors allow investors to have a holistic view of the main risks and opportunities of the company in which they intend to invest, as well as its contribution to sustainable development.

Among the practices that may be adopted by companies, the following stand out:

• Measures to preserve the environment, such as adequate waste management, the search for energy efficiency, reduction of emissions of pollutant gases, and encouragement of sustainable use of genetic resources from biodiversity;

• Social responsibility measures, such as the enforcement of labor rights and safety at work, the promotion of well-being in the workplace, attracting and retaining talent, encouraging diversity, responsible marketing, and concern for human rights and community impacts; and

• Improvement in corporate governance practices, such as the creation of more diverse boards, delimitation of the responsibility of directors and shareholders, respect for the law, adoption of ethical values in conducting business, promotion of anti-corruption practices, and transparency in the rendering of accounts.

The concept of ESG was outlined over time, while social and environmental issues gained importance in conducting business. The efforts culminated in the creation of the Principles for Responsible Investment - PRI ) in 2006 - an initiative of the United Nations (UN) and investors to integrate environmental, social, and corporate governance issues in the conduct of sustainable investments.

In the environmental sphere, especially after climatic and ecological events and with the pressure of the various stakeholders involved, legislation and regulations were promoted to make environmental responsibility an essential issue within companies. In this manner, companies started to create mechanisms to anticipate new regulations, decreasing the cost and increasing the efficiency of their business chain.

Companies that comply with ESG principles are more resilient and demonstrate greater ability to manage business in times of crisis and in the long term, becoming more attractive to investors. For this very reason, the topic gained even more importance during the crisis caused by the covid-19 (coronavirus) pandemic.

There is a growing movement towards adopting good environmental, social, and corporate governance practices in business management, as companies see in the initiative the possibility of reducing costs, mitigating risks, and creating new opportunities. In addition to the various benefits already mentioned, the adoption of ESG principles is associated also with reduction in regulatory and legal interventions, giving a competitive edge to companies that implement such practices and drive other companies to join the "new normal".

The trend towards the adoption of ESG criteria in business chains and the significant movement of business leaders and policies in relation to the issue demonstrate that the "new normal" is to invest in resilient companies capable of adapting to change and supporting sustainable development. More than results in efficiency for companies, the dissemination of ESG practices represents an achievement in terms of protecting the environment and society.

Category: Infrastructure and energy

The Federal Court of Appeals for the 1st Circuit (TRF1) unanimously decided to maintain the ban on the use of flavoring and additives in tobacco products. The decision was reached on October 20, in a case for which the opinion was drafted by Federal Appellate Judge Daniele Maranhão.

This ban is provided for in article 6 of Board of Directors Resolution (RDC) No. 14/2012 and is based on the public policy of promotion of health exercised by the National Health Surveillance Agency (Anvisa), since the use of flavor and aroma additives in tobacco products sometimes attracts the consumption of tobacco products.

Due to the Incidental Proceeding of Assumption of Jurisdiction (IAC), the decision by the TRF1 has obtained binding force, such that the judges and the bodies of the TRF1 will have to decide in the same manner on the subject, that is, in compliance with RDC No. 14/2012.

Since the publication of RDC No. 14/2012, the subject has generated heated debate between the tobacco industry and Anvisa. As an example, in 2018, the National Confederation of Industry (CNI) proposed Direct Action of Unconstitutionality (ADI) No. 4,874 to question the legality of the prohibition established by RDC No. 14/2012. The decision by the Federal Supreme Court (STF) was contrary to the CNI and in favor of the legality of the RDC.

The decision by the TRF1 strengthens the independence of Anvisa in its technical decisions made in the context of RDCs.

Category: Real estate

According to article 51 of Federal Law No. 8,245/91 (the Tenancy Law), tenants of non-residential real estate will have the right to renew the contract, for an equal term, provided that, cumulatively, the contract is in writing and for a fixed term, the minimum term of the contract to be renewed or the sum of the uninterrupted terms of the contracts is five years, and the tenant is conducting its business, in the same branch, for a minimum term of three years.

If, on the one hand, the requirements for filing an action for renewal are clear, the wording "for an equal term" included in the article gives rise to different interpretations regarding what exactly the expression refers to: (i) the five-year term required for the tenant to have the right to renewal; (ii) the sum of the terms of all contracts entered into by the parties or, further, (iii) the term of the last contract formalized in the course of the legal relationship.

The issue also provokes discussions regarding the existence of maximum and minimum periods for which a lease contract may be renewed. After all, renewal actions, although intended to guarantee the rights of lessees, such as the maintenance of the goodwill, cannot become a way to perpetuate lease agreements, restricting the property rights of the lessor.

In addressing the matter, the case law - with precedents from the Superior Court of Appeals (STJ) - established that lease agreements must be renewed for five years, which is both a maximum and a minimum term. The five-year period is reasonable for renewal of contracts, which may be requested again by tenants at the end of this time period, since the law does not limit this possibility.

According to the STJ, allowing renewal for longer periods could go against the purpose of this system, considering the sensitive changes in the economic environment and the other factors that influence the parties' decision regarding the renewal of the contract. Shorter deadlines, in turn, could overwhelm the Judiciary disproportionately. In other words, if the lease was renewed for only one year, for example, the tenant would have to file semi-yearly suits for renewal, which would create procedural turmoil, since the suits would fully overlap.

Moreover, it is an argument within the majority position that the Tenancy Law, by providing that the tenant will have the right to renew the contract 'for an equal period', is referring to the minimum period required by law for renewal of the lease, five years, and not the period of the last contract entered into by the parties.

It is therefore concluded that renewal of non-residential leases will be for a period of five years. This understanding is reardless of the term of the last contract formalized in the course of the legal relationship, which may have completed the five-year period necessary to file the lawsuit, and is maintained even if the lease exceeds five years, with no renewal for longer periods.

Category: Tecnology

The entry into force of the General Data Protection Law (Law No. 13,709/18 - LGPD), on September 18 of this year, had impacts on various sectors of society. By regulating practices related to the processing of personal data in Brazil, the LGPD has established new process management requirements for the public and private sectors.

Much of the private sector has expressed difficulties in meeting obligations imposed by law, and the reality of the public sector does not seem very different: the adequacy initiatives are still timid and there are concerns about the understanding of the new legal framework brought about by the LGPD.

This issue becomes even more troubling in the courts and administrative bodies, which should be prepared not only to fulfil their obligations, but also to decide on and demand proper enforcement of the rights under the LGPD.

Privacy policies and the 7 errors game

Among the obligations related to the processing of personal data that the public sector needs to comply with is the adoption of measures guaranteeing data subjects "clear and updated information on the legal provision, purpose, procedures, and practices used to carry out these activities, in easily accessible vehicles, preferably on their websites", in compliance with the principles of transparency and free access to information on the LGPD.

This information should be provided in a manner that is easy, clear, and accessible by the public sector, especially as privacy policies on their websites. The LGPD itself lists what information and requirements must be stated in these documents.

The appointment of the “responsible person" and the provision of the respective contact information are also requirements of the LGPD for those who process personal data. The responsible person's role is to act as a data protection focal point, with competence to report to the National Data Protection Authority (ANPD), guide other employees on the subject, and receive complaints from users.

However, the mere availability of such information is not sufficient to comply with the law: its content must necessarily reflect the concepts of the LGPD and, consequently, highlight the measures adopted throughout the adaptation project. In practice, the privacy policies ultimately demonstrate how each organization has done its "homework" to comply with the LGPD.

When the legislation became mandatory, it was expected, among other measures, that such information would start to be made available on websites. In practice, however, few public bodies have fulfilled this obligation. Fewer still are those who have done so in a correct and satisfactory manner.

The National Telecommunications Agency (Anatel), for example, has published a specific page on personal data processing on its website with misconceptions regarding the cases of processing. The agency stated that all processing of personal data carried out by Anatel would be based on consent, which was said to be "the only legal basis for the LGPD".[1] The law, however, provides for ten cases for processing of non-sensitive data, including consent, and eight cases for processing of sensitive data. The website was subsequently updated and the text adjusted, however, there is a lack of clearer information on how the data processing is performed by Anatel. And it is a fact of concern, above all, that Anatel has still made the mistake of publishing a guideline so far from the model of the law.

The privacy policy disclosed by the Court of Appeals of the Federal District and Territories (TJ-DF) is another example of misapplication of concepts of the LGPD. The document, published on September 8 through Resolution No 9/20, mistakenly defines the terms "controller" and "operator"[2] and does not present the information it should, such as the rights of the data subject and the channel of contact with the person in charge.

A similar mistake occurs in Ordinance No. 68/20, which governs the application of the LGPD within Rio Grande do Sul Public Prosecutor's Office and defines its members, public servants, and interns as personal data operators of the institution.

Fortunately, there are exceptions. This is the case of the São Paulo Court of Appeals (TJ-SP), which has developed a specific webpage for LGPD related subjects and on it it released the organizational structure of its adaptation project. The TJ-SP went further still and implemented new procedural categories in its computerized system with the aim of improving statistical studies on the judicialization of matters involving the LGPD, according to CG Notice No. 663/20.

Along the same line, the National Council of Justice (CNJ) sought to guide the bodies of the Judiciary with the publication of a recommendation on initial measures for compliance with the LGPD.

LGPD arrives at the courts. Now what?

Although organizations are not yet fully compliant with provisions of the LGPD, the issue of data protection is on the rise in society. The application of the law has already become the subject of lawsuits questioning the purpose and security of personal data processing.

In the last month, some of these lawsuits have been highlighted in the media, such as the first public lawsuit based on the LGPD, filed by the Federal Prosecutor's Office for the Federal District to question possible improper marketing and sale of personal data by a website. The suit, though, has been extinguished, as the judge found that the plaintiff had no procedural interest, since the website in question was under maintenance.

Along the same line, a student from Pernambuco went to court to question why he was forced to provide his biometric data to recharge an electronic bus ticket. The suit is in progress before the Court of Appeals of Pernambuco (TJ-PE).

The principles of the LGPD were also cited in a court judgment ordering a construction company to pay R$ 10,000 for sharing personal data of its client with third parties outside the contractual relationship, which caused unwanted contacts with this client by financial institutions, consortiums, and other companies.

These cases illustrate that the rights and obligations of the LGPD are now enforceable in court, despite the postponement of sanctions under the LGPD to August 1, 2021.[3] The Judiciary is now exercising more active control and examination of cases related to data protection, which until then had been carried out by consumer protection agencies, which examined cyber-security issues on the basis of the sparse and industry-specific laws and regulations on data protection still in force, such as the Consumer Protection Code and the Brazilian Civil Rights Framework for the Internet.

In this scenario, two concerns arise. The first related to the late structuring of the ANPD, a unified and organized regulatory authority for the purpose of personal data protection, whose executive board members the Federal Senate recently approved.[4] In addition to the challenge with quickly structuring the ANPD, it is also expected that the authority will quickly fulfill its pedagogical role of guiding and coordinating application of the law, including in relation to the government sector, in order to avoid conceptual errors such as those pointed out earlier in this article.

Without the ANPD and its guidelines, government agencies and entities from other sectors would assume the role of enforcers of application of the LGPD and begin to impose sanctions measures which may have a high degree of arbitrariness and legal uncertainty.

The second concern relates to the misconceptions committed by the public sector already addressed. They show how little preparation some agencies have doing their "homework" and question how they will deal with these issues. This applies especially to courts and administrative bodies, whose obligations also include instructing magistrates in order to properly decide how to apply the LGPD. After all, if the public sector is not prepared to fulfil its obligations, would it be ready to demand application of the rights provided for in the LGPD?

Conclusion

In general, the public sector has been slow to adapt to the terms of the LGPD, even in the face of the various impacts that its entrance into force has brought about for society. The situation is even more delicate for the courts and administrative agencies. While they needed to demonstrate the implementation of the obligations under the LGPD, they began to exercise, in part, the role of monitoring and guaranteeing the rights of the holders of personal data.

These obscure points should guide discussions during and even after implementation of compliance rules in the public sector, especially until the ANPD begins its work, since it is tasked with providing guidance and determining many requirements on the application of the LGPD.

Nevertheless, it must be recognized that there are good initiatives taking place in the public sector, such as the TJ-SP, which has shown ability in fulfilling its obligations, and the CNJ, which took the initiative in guiding the bodies of the Judiciary.

At this moment, it is expected that the public sector will adopt a mediation posture and stimulate the settlement between the parties in the event of disputes related to the protection of personal data, exactly because of the novelty of the law and in line with the guidelines to be issued by the ANPD.

[1] "Consent. The basis of the LGPD is consent, i.e. authorization from the data subject must be sought before processing takes place. And this consent must be received explicitly and unequivocally." Excerpt of text published in September 23, 2020, on Anatel's website. <https://www.anatel.gov.br/institucional/component/content/article/104-home-institucional/2666-portal-da-anatel-tem-pagina-sobre-tratamento-de-dados-pessoais>

[2] Resolution No. 9/2020. “Article 5. At the Court, the Controller and the Operators are respectively the Chief Judge of the Court, assisted by the Information Security and Personal Data Protection Management Committee - CGSI, and the public servants and employees who carry out personal data processing activities at the institution or third parties, in similar contracts and instruments signed with the Court.

Paragraph 1. The Deputy Chief Judges and the Ombudsman of the Judiciary shall be the Deputy Controllers.

Paragraph 2. The Committee shall be formed by a technical and multidisciplinary team, which shall perform legal, information, and technology security, internal and external communications, human resources, document and strategic management functions."

[3] Articles 52, 53, and 54 of the LGPD, which deal with administrative sanctions under the law, will enter into on August 1, 2021, in the manner set forth in Law No. 14,010/2020.

[4] On October 20, 2020, the Senate approved via a floor vote the five names nominated to sit on the ANPD’s Executive Board. The candidates were indicated in the publication of the extra edition of the Official Gazette of the Federal Government on October 15, 2020.

Category: Tax

ME Ordinance No. 340, published on October 9, regulated the functioning of the Judicial Delegations of the Special Bureau of the Federal Revenue Service of Brazil. The DRJs, as they are known, are the bodies responsible for judging federal administrative tax proceedings at the first instance. Until then, the composition and functioning of the DRJs were regulated by MF Ordinance No. 341/11, established by the former Ministry of Finance.

The greatest innovation brought about by the new ME Ordinance No. 340/20 was the creation of appellate chambers, adjudicatory bodies competent to examine, at the appellate level, disputes regarding small amounts (cases of up to 60 minimum wages), guaranteeing a two levels of review (even if done by a body composed exclusively of tax auditors). These chambers fulfill, to this end, the mandate of article 23 of Law No. 13,988/20, which began to direct judgments of small value cases to handed by a DRJ joint committee, without further access to the Administrative Tax Appeals Board (Carf). It can therefore be said that the ordinance created a "second instance within the first instance."

ME Ordinance No. 340/20 also brought about the possibility of remote judgments by DRJs. At the discretion of the chairman of the panel, judgements may take place remotely, by means of videoconference or, even, in a virtual manner, via the scheduling of an agenda and a defined deadline for the judges to post their votes. The obligation of exclusively in-person judgments refers only to cases with amounts at issue above R$ 2 million, to those that assign tax liability to a third party, or to those that have given rise to a criminal referral.

The expansion of non-presential judgments reflects the general trend in the post-covid-19 environment and, in fact, allows greater speed in the review of the facts. However, the virtualization of judgments by the DRJ could also have led to greater participation by the parties in the proceedings. Unlike judgments by the Carf, the DRJs’ sessions continue to take place "behind closed doors", with participation limited to the judges themselves.

In this scenario, the characteristics of the virtual environment would meet, without greater costs, a long-standing demand from taxpayers for oral argument and/or remote monitoring of the DRJ's judgment sessions.

Another point of attention in MF Ordinance No. 340/20 is maintenance of the tie-breaking criterion by the vote of the judge presiding over the adjudicatory panel. This criterion, which was already present in the previous Ordinance, goes against article 28 of Law No. 1388/20, which established that ties in the judgment of administrative proceedings for calculating and demanding tax debts would be resolved in favor of the taxpayer.

Although article  28 of Law No. 13,988/20 makes direct reference only to the tie-breaking of judgments within the Carf (article 25, paragraph 9, of Decree 70,235/72), the rule reflects a choice by the legislator to give preference to the essence of article 112, II, of the CTN, which imposes the principle that doubts are resolved in favor of taxpayers.

Doubt as to the establishment and levying of tax debts, at any stage of the judgment (which certainly includes the DRJ), should culminate in dismissal of the tax debt, at risk of continuing with a levy that does not respect the constitutional principles of legality and sanctionable conduct and the very concept of tax provided for in article 3 of the CTN.

The provisions introduced by ME Ordinance No. 340/20 will take effect on November 3 of this year, the date on which the standard will enter into force, and will expressly revoke the text of MF Ordinance No. 341/11.

Category: Litigation

Article 97, subsection IV, of Law No. 11,101/05 (the Business Bankruptcy and Judicial Reorganization Law - LRF) provides that any creditor may file for bankruptcy for businessmen and business companies, in compliance with the requirements set out in article 94.

However, in cases involving tax debts, the Superior Court of Appeals (STJ) has settled case law to the effect that the Tax Authority does not have standing to file for bankruptcy for companies and/or businessmen. According to the STJ, the Tax Authority has no interest in bringing such a claim, given that (i) article 187 of the National Tax Code (CTN) states that the judicial collection of a tax debt is not subject to bankruptcy, judicial reorganization, creditors’ arrangement, inventory, or small-estate probate; and (ii) articles 5, 29, and 31 of Law 6,830/80 (LEF) provide that tax debts must not necessarily be submitted to bankruptcy proceedings, with the tax authorities having their own means for collection of the amount recorded as outstanding debt, i.e., tax enforcement.[1]

In addition, the STJ also believes that granting standing to bring suit to the Tax Authority to petition for bankruptcy of companies and/or businessmen would make it impossible to overcome the company's economic and financial crisis situation, at odds with the principle of preservation of the company.[2]

Nevertheless, in an extended judgment held in August of this year, the 1^st Chamber of Business Law of the São Paulo State Court of Appeals (TJ-SP), by majority vote, granted the appeal so as to annul the trial judgment and order the regular continuation of the petition for bankruptcy filed by the Federal Government, represented by the Attorney’s Office for the Federal Tax Authority, against a company engaged in the trade and distribution of food products.[3]

The judgment in question, handed down by the 1^st Court of the Judicial District of Rancharia/SP, had denied the complaint and extinguished the case without a resolution of the merits because it found that the Tax Authority had no procedural interest, according to the settled case law of the STJ.

The 1^st Chamber of Business Law of the TJ-SP, for its part, held that with the entry into force of the LRF, a new interpretation should be given to the possibility of filing for bankruptcy by the Tax Authority in certain situations. In this context, it emphasized that, in the case at hand, the petition for bankruptcy is not based on article 94, subsection I of the LRF[4] - whose more restrictive understanding should prevail - but on article 94, subsection II, since the Tax Authority, although it filed for a tax foreclosure, has not located sufficient assets of the debtor to satisfy the debt. Having exhausted the means to obtain its credit, it would not be possible to withdraw from the public body the possibility of filing for bankruptcy of the debtor.

Additionally, the 1^st Chamber of Business Law of the TJ-SP found that the Tax Authority is not subject to the formal competition of creditors, as it can continue to use tax enforcement to seek satisfaction of its debt. On the other hand, it is subject to the substantive competition of creditors, since it submits itself to the queue for payments.

With respect to the principle of preservation of the company, the understanding expressed was that "in the circumstances described above, i.e., in the cases of frustrated tax execution and inertia of the debtor in satisfying the tax debt, there is no way to invoke the principle of preservation of the company, in a generic manner, so as to justify any lack of interest of the Tax Authority in the petition for bankruptcy. Not least because, if there is the purpose of protecting the interest of the national economy, one must also consider the need to exclude from the market those companies that are not able to participate in a healthy way in free competition (one of the principles of the economic order, article 170, IV, CF).”

Despite the evident intention expressed by the 1^st Chamber of Business Law of the TJ-SP to seek to ensure fairer competition among business companies, some argue that the understanding that the Tax Authority can petition for bankruptcy of companies that frustrate tax executions may further harm the interest of the national economy for the following reasons:

• Contrary to the prevailing understanding of the STJ, the understanding of the 1^st Chamber of Business Law of the TJ-SP may generate some legal uncertainty. Various creditors of companies that have debts with the tax authorities will run the risk of having their claims included in bankruptcy proceedings granted exclusively on the initiative of the Tax Authority, although the latter may use various legal means to obtain satisfaction of their claims, through applications for compulsory adjudication, attachment of the debtor's income, and redirection of tax enforcement to the company's partners, among others. Due to the well-founded fear of its creditors, the company may suffer a reduction in its line of credit or even lose strategic business partnerships, running the risk of insolvency;

• The precedent in question may create, for attorneys acting on behalf of the Tax Authority, an obligation to file for bankruptcy for all companies with large tax debts, considering that, unlike lawyers representing private individuals, the objective is to satisfy the tax debt, regardless of the strategy and the path to be followed to do so. Thus, the understanding of the 1^st Chamber of Business Law of TJ-SP may, in the last case, prevent companies that have effective conditions from being able to recover economically and socially, since the tax authorities will certainly not conduct a more detailed analysis of which companies should or should not continue to operate in the market;

• Even in the event that there are no assets of the debtor that can be seized in the tax foreclosure, the petition for bankruptcy will not necessarily allow the tax authorities to receive the amounts due to them more effectively. In such a scenario, the maximum that the Tax Authority can obtain is the opening of an invitation to competition of creditors, who will compete among themselves to satisfy their claim, under the terms of article 83 of the LRF;

• The joint interpretation of articles 94 and 95 of the LRF makes it possible to conclude that the legislator did not intend to extend to the Tax Authority the possibility of filing for bankruptcy of the debtor. This is because article 95 is clear in providing that debtors may file for, within the time limit for contesting the petition for bankruptcy, a petition for judicial reorganization to demonstrate their interest in making payment on their debts compatible with continuity of their activities. When the tax authorities are the creditor applying for bankruptcy, such a defense would have no practical effect, since the tax authorities are not subject to judicial reorganization. In other words, in the scenario discussed herein, debtors would be deprived of the prerogative expressly provided for in the LRF, which should not be allowed in the legal system.

The position detailed above is not intended to encourage the non-payment of tax debts by companies, but to demonstrate that the tax authorities do not need to resort to such a drastic measure, which greatly affects the national economy, in order to obtain satisfaction of debts, since they enjoy various legal privileges in that regard.

The conclusion is that, although unique to date, the understanding adopted by the TJ-SP may generate a number of legal and economic consequences. It remains now to be seen whether this understanding will remain isolated or whether there will be a real change in the rules of the game.

[1] STJ, REsp 363.206/MG, Opinion drafted by Justice Humberto Martins, Second Panel, decided on May 4, 2020; STJ, REsp 164.389/MG, opinion drafted by Justice Sálvio de Figueiredo Teixeira, Third Panel, decided on August 16, 2004; and STJ, REsp 287.824/MG, opinion drafted by Justice Francisco Falcão, First Panel, decided on February 20, 2006.

[2]STJ, REsp 363.206/MG, opinion drafted by Justice Humberto Martins, Second Panel, decided on May 4, 2010.

[3]TJ-SP, Civil Appeal No. 1001975-61.2019.8.26.0491, opinion drafted by Appellate Judge Alexandre Lazzarini, 1st Chamber of Business Law, decided on July 16, 2020.

[4] Article 94. The bankruptcy of the debtor shall be decreed:

1. - without any relevant reason of law, when, at maturity, a liquidated obligation materialized in an enforceable instrument or instruments is unpaid, the sum of which exceeds the equivalent of forty (40) minimum wages on the date of the petition for bankruptcy; (...)

Category: Tax

With the publication of Decree No. 47,332/20, Rio de Janeiro taxpayers can already apply for amnesty for tax debts under the terms set out in Law No. 9,041/20.

The program in question applies exclusively to overdue tax debts arising from levies or disallowances of tax debts for taxpayers active in the economic activities of oil and natural gas extraction and natural gas processing, classified under codes 0600-0/01 and 3520-4/01 of the National Classification of Economic Activities (CNAE), and manufacture of petroleum refining products (CNAE 1921-7/2000). The program includes both assessed and non assessed tax debts, whether or not enrolled as outstanding debt, including those assessed for taxable events that occurred up to September 30, 2020.

The percentage of reduction of interest and fines is 90%, not cumulative with any other reductions. The decree makes clear the possibility of including only part of the debts subject to a given infraction notice, notice of assessment, or outstanding debt certificate.

In addition to ICMS debts, debts for contribution to the State Fund for Combating Poverty (FECP), the State Tax Balance Fund (FEEF), and the Temporary Budget Fund (FOT) may be included in the amnesty program. It is possible to opt for payment in lumpsum or in installments, except for FECP, FEEF, and FOT debts that only allow for payment in lumpsum.

To formalize enrollment into the program, the taxpayer will have to submit by November 13th of this year a proposal for a Consent Order for the Specialized Oil and Fuel Tax Audit (AFE04). One must also submit forms, the models for which are included in the exhibits to the decree, in addition to the company’s corporate documents and documents relating to its procedural representation.

Once the application is submitted (accompanied by the required documents and forms), administrative proceedings will be initiated and AFE04 will be responsible for certifying compliance with the legal requirements. In the event of non-compliance with any of the conditions required, the taxpayer will be summoned to remedy the non-compliance within a non-extendable period of five days, under penalty of dismissal.

Once the taxpayer's application for membership has been certified as being in good standing, AFE04 will forward the case to the Sub-Bureau of Revenue and the Sub-Bureau of Legal Affairs of the State Treasury, which will confirm the existence of interpretative differences. The purpose is to delimit, in an opinion to be ratified by the secretary of finance and the attorney general of the state, the conduct to be indicated in the Consent Order to be submitted to the governor.

Once the Consent Order has been signed, AFE04 will certify if the taxpayer has renounced and irrevocably waived the cases whose debts it intends to include in the amnesty program. After that, the Consent Order will be published in the Official Gazette and, within two days, the corresponding payment forms will be issued.

The decree clarifies that the attorneys' fees, in the event of payment in cash or in installments, will be 3% for debts not brought in court and 4% for debts brought in court. If the installment method is chosen, the fees must be paid in full when the first installment is paid. The reduction in fees refers only to the work of analysis and collection of the debt as a result of registration as outstanding debt. Any other fees fixed in other claims will be due in full, as established in the respective proceedings.

With the regulations of this amnesty expected by the oil and gas companies segment, it is recommended that interested parties as soon as possible begin the procedures to gather the documentation necessary in order to avoid setbacks in formalizing adhesion to the program.

Category: Infrastructure and energy

Pedro Henrique Jardim, André Camargo Galvão and Leandro Lopes Zuffo

The Ministry of Infrastructure recently announced the possible creation of the BR dos Rios program, a new public sector policy focused on inland navigation. The director of the Department of Navigation and Waterways of the National Bureau of Ports and Waterway Transport (DNH-SNPTA), linked to the Ministry, released a note on internal debates and with participants from the inland navigation sector regarding the need for this new program, which is inspired by the BR do Mar project which is in legislative process, focused on cabotage navigation (Bill No. 4,199/2020).

According to the information disclosed, the BR dos Rios program is still under discussion with Brazilian shipping companies (EBNs), trade unions, and others interested in the matter. After this phase, if the way forward is similar to the BR do Mar project, priority guidelines will possibly be formulated to be presented in the form of a resolution by the Investment Partnership Program (PPI).

The specific measures, however, are not yet clear. It is not possible to know, for example, whether the movement towards relaxation in the charter system, which was dealt with by the BR do Mar program, will be mirrored in the BR dos Rios project. From the information available, it is possible to envisage specific measures to review the regulation of locks, which are necessary to make the operation of the hydroelectric power sector compatible with river navigation activities. Currently, locks are regulated by Law No. 13,081/15, but there is a noted need for more specific regulations and better delimitation of the possibly conflicting roles assigned to the National Water Agency (ANA), the National Water Transport Agency (Antaq), and the National Electric Energy Agency (Aneel). In this scenario, the director of the DNH-SNPTA believes one must still delimit a supervisory authority for river transport.

Although its potential has not yet been fully exploited nationwide, inland waterway shipping currently plays an important role in the Northern Region of Brazil. The Tapajós River alone is responsible for about 27% of transport in this modality, according to data presented by Antaq.

Inland waterway shipping is seen as strategic from the point of view of sustainability by the Ministry of Infrastructure, which has partnered with the World Bank to study alternatives for the management of the Madeira and Tapajós rivers. Due to positive environmental characteristics compared to other modes, river navigation projects may also benefit in the future from the ESG (environmental, social and governance) agenda that has been developed by the government in conjunction with the Climate Bonds Initiative (CBI).

For now, the joint agenda of the Ministry of Infrastructure and the CBI only presents more concrete results for the brazilian railway sector, in which the agenda is to structure projects that are already certified as sustainable at the time of auction.

Certification as a sustainable project may offer tax benefits to the issuer of securities that fall under the provisions of Bill No. 2,646/20 (the Green Bonds Bill), which, among other provisions, provides for the creation of a new type of incentivized debentures for financing sustainable projects, popularized with the term “green bonds”. According to the Green Bonds Bill, projects that receive national or international certification will be eligible for being considered as green bonds. Currently, the certifications available are provided by the CBI and the International Capital Market Association (ICMA). Also, according to the Plan, these issues will have access to a simplified procedure and greater tax benefits than those currently provided for infrastructure debentures.

In the navigation sector, there have already been issuances abroad based on the principles stipulated by the ICMA. In addition, the CBI plans to develop specific criteria by the end of this year for the shipping category, in the same way as was done for other sectors, observing the particular characteristics of each economic activity (e.g. railroad, electric or solar energy, basic sanitation, and construction).

Category: Tax

Since Constitutional Amendment no. 45/2004 (EC 45/2004) introduced the institute of general repercussion as another formal requirement to allow the trial of extraordinary appeals, the Federal Supreme Court (STF) only reviews a certain constitutional discussion when it has the ability to reach a large number of interested parties, not limited to the parties involved in that case.

The introduction of this new requirement helped to highlight the role of the STF as a constitutional court, not just one more and last level of review that may be appeal to resolve a given dispute.

This does not mean that, before EC 45/2004, the STF had the function of being just one more step in the structure of the Brazilian Judiciary to be traversed before complete exhaustion of all possibilities for appeal established in Brazilian law. The features of the STF as a constitutional court became more evident mainly after the enactment of the Federal Constitution of 1988 and with the creation of the Superior Court of Justice (STJ), through the prescription of strict requirements for certiorari of extraordinary appeals and review of the matter raised.

However, the lack of a requirement such as general repercussion, which reflects the adoption of a new conception of the country's legal system (abstraction of the trial of an extraordinary appeal), allowed many appeals to be brought before the STF on the same subject and, in most cases, of interest to a reduced number of individuals or companies (subjective transcendence).

With the introduction of the new requirement, the intention was to change the way the Court should be understood, from "one more level of appeal" in the structure of the Judiciary to the body competent to settle important constitutional controversies of interest to Brazilian society, not just a small number of interested parties.

The way to assess whether or not the matter raised in a given extraordinary appeal has general repercussion and the effects resulting from that assessment show a change in the Court's actions. Paragraph 3 of article 102 of the Federal Constitution itself provides that admission of extraordinary appeals is conditioned to prior assessment of the existence of general repercussion of the matter, and refusal requires a ruling by two thirds of the members of the Court. The procedure to be observed in the analysis of the existence of general repercussion is governed by the STF’s internal rules. In general terms, after the extraordinary appeal is assigned, the Justice writing for the Court will conduct a review and present his opinion, which will be submitted to the other Justices (currently in virtual environment) for a decision.

Once the STF has recognized that there is a general repercussion, the specific matter that will be reviewed by the Court is identified. As a result, the other courts will have to stay the progress of new extraordinary appeals filed on the same subject. Although paragraph 5 of article 1,035 of the CPC/2015 provides that all cases that raise an issue considered of general repercussion in progress in Brazilian territory must have their processing suspended, we believe that the most consistent position with the principles of procedural celerity and effectiveness of judicial relief is a stay of the proceeding after, and if any, the filing of an extraordinary appeal with the lower court.

With the adoption of this measure, it is ensured that, after the completion of the trial before the STF, the prevailing position can be applied to the other cases that deal with the issue quickly and without the possibility of filing new appeals that would only have the effect of unduly delaying the final and unappealable trial.

It follows, therefore, that with the recognition of the general repercussion of a matter, there is a detachment from the review of the subject of the trial of the specific case that made possible the arrival of the matter before the Court. In other words, recognizing the general repercussion, the STF submits the matter for consideration and to a great extent, as occurs in the trial of an lawsuit in concentrated and abstract control of constitutionality.

As a result, the STF will first decide on the constitutional issue that had general repercussion recognized, not limiting itself to the grounds set forth in the appeal submitted. The Court may also receive contributions from representative entities (amici curiae) with notorious knowledge on the subject. After the conclusion of the trial, the understanding reached to resolve the individual case will be applied. This is confirmed by the provisions of article 988, sole paragraph, of the CPC, which provides that, even if the party withdraws its appeal, matters with recognized general repercussion will be assessed by the STF.

This new model for trial of appeals is called abstraction of the trial of one-off extraordinary appeals. It deals with topics of great interest, separating the review of the theory itself and the consequent application of the understanding to the specific case that made its arrival at the STF possible, thus holding great similarity with the review inherent to the abstract and concentrated control of constitutionality.

The effects underlying the decisions rendered under this system are binding on the bodies of the Judiciary, either because, i) once applied by the 2^nd level of appeal, they will not admit the filing of a new extraordinary appeal, or because ii) there is a provision for the lodging of a claim against the decision by the 2^nd level of appeal that violates the STF's ruling, provided that the right to appeal has been exhausted.

In this order, it is possible to note an important change in the control of constitutionality exercised by the STF in recent years, since decisions handed down in the trial of subjective cases, but according to the system of general repercussion, they now have an effect similar to that arising from abstract and concentrated control.

This new way of viewing the constitutional court's actions stems from the assignment of the so-called transcendent effect to the STF’s decisions controlling diffuse constitutionality, especially when marked by abstraction. In the opinion handed down in the trial on Complaint 4,335, Justice Gilmar Mendes provides relevant support for the understanding of the subject in this new phase of control of constitutionality in Brazil:

The Federal Supreme Court realized that it could not fail to assign legal meaning to declarations of unconstitutionality done in the context of incidental control of constitutionality, and the adjudicatory panels of other Courts were exempted from the duty to submit declarations of unconstitutionality to the Court en banc or special bodies, in the manner set forth in article 97 of the Constitution. There is no doubt that the Court, in this case, ended up recognizing transcendent legal effect its decision. Although the grounds for this understanding refer to a breach of the presumption of constitutionality, it is true that the Supreme Court's guidance ended up giving its decision something like binding effect, regardless of the Senate's intervention. This understanding is now enshrined in the civil procedural law itself (Code of Civil Procedure, article 481, sole paragraph, final part, as amended by Law No. 9756, of December 17, 1998).

This is the guideline that seems to prevail over the understanding that deems as dispensable the application of article 97 of the Constitution by the lower Courts, if the Supreme Court has already declared the law unconstitutional, even incidentally.

(…)

In any case, the identical nature of control of constitutionality, as to its purposes and the dominant common procedures for the diffuse and concentrated models, no longer seems to legitimize the distinction as to the effects of the decisions entered in direct control and incidental control.

Only this new understanding seems able to explain the fact that the Court has come to recognize general effects for decisions handed down in the context of incidental control, regardless of the intervention of the Senate. The same should be said of the various legislative decisions that recognize transcendent effect for the decisions by the STF issued in the context of diffuse control.

Therefore, we conclude that the requirement of general repercussion as an additional element to be verified for extraordinary appeals to be granted certiorari by the STF, in addition to making the Court's review of the constitutional matter more challenging, by requiring that the decision to be rendered reach a large number of interested parties, contributes to the abstraction of the control of diffuse and concrete constitutionality.

At a time that requires the adoption of mechanisms to give more effectiveness to the STF’s decisions and provide legal certainty and equal protection to litigants who have identical matters in debate, concepts such as general repercussion and the mark of the abstraction of trials according to this proceeding deserve praise.

Category: Infrastructure and energy

Published on September 2 of this year, Executive Order (MP) No. 998/20 seeks to strengthen the opening of the free market for the sale of electricity and, among other measures, introduces improvements in the efforts to modernize the electricity sector led by the federal government.

The text provides that up to 70% of the funds for investment in research and development and energy efficiency not yet committed to projects will be allocated, between September 1, 2020, and December 31, 2025, to the Energy Development Account (Conta de Desenvolvimento Energético - CDE). The transfer is still subject to the regulations of the National Electrical Energy Agency (ANEEL). The objective is to promote fee moderation and reduce part of the impact on electricity fees for costs related to the Covid-Account, a mechanism to alleviate the effects of the pandemic for electricity distributors that was recently contracted by the Electric Energy Trading Chamber (Câmara de Comercialização de Energia Elétrica - CCEE) with domestic financial institutions.

Seeking to rationalize the policy of industry subsidies and also in the context of efforts to avoid future rate increases due to covid-19, MP 998 provides for the gradual abolition of discounts on Distribution System Use Fees (Tarifas de Uso do Sistema de Distribuição - TUSD) and Transmission System Use Fees (Tarifas de Uso do Sistema de Transmissão - TUST), commonly referred to as “wire-fee discounts", which currently benefit renewable energy projects.

With this measure, new renewable generation projects will only be entitled to this benefit if they have requested a grant or change in installed capacity by September 1, 2021, and are expected to enter into commercial operation within four years after the date of issuance of the grant.

As a counterpart to the phasing out of the wire fee subsidy, the MP provides that the Federal Executive Branch will define guidelines, by September 1, 2021, for the implementation of mechanisms that take into account the environmental benefits related to low emission of greenhouse gases brought about by renewable source generation projects.

The MP also brings in preparatory measures for possible privatization processes of public service energy concessionaires, such as extension to June 30, 2021, of the deadline for state-owned companies controlled by states, the Federal District, and municipalities to hold bids for the transfer of control and granting of new energy concessions. Another example is the provision for a simplified competitive process, in the event of unsuccessful bidding, to ensure the provision of emergency and temporary electricity distribution services until the provision is taken over by a concessionaire under the official public service arrangement. Other provisions seek to bring about greater efficiency in the allocation of industry costs borne by state-owned companies that hold energy utilities concessions, such as the use of resources from the Global Reversion Reserve (Reserva Global de Reversão – RGR) to indemnify part of the assets of the distributors that were already in operation at the time of privatization and had not been accounted for.

Also relevant is the change that involves the retailer's performance in the free contracting environment, in line with the federal government's energy policy objectives to open up the free market. For example, some guidelines were defined for retailer's actions in representing consumers, still subject to ANEEL regulations. In addition, MP 998 provides for the possibility of suspending the supply of electricity to consumer units modeled under a generator or retailer in the event of closure of their representation by a generator or retailer distributor in CCEE, if the consumer does not diligently ensure the continuity of its service.

MP 998 also establishes measures to promote the development of the Brazilian nuclear industry, such as the planned auction of reserve generation capacity for the Angra 3 Thermonuclear Plant, held by Eletrobras Termonuclear S.A. (Eletronuclear), which may receive a 50-year generation grant, with the possibility of renewal for another 20 years and benefit from a 40-year contract for the sale of electricity.

To this end, the Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social – BNDES) is expected to develop an economic and financial feasibility study of Angra 3 and its financing, which will serve as the basis for defining the price of the Angra 3 energy sales contract.

Still in relation to the nuclear sector, the MP provides for the transfer of all shares held by the National Nuclear Energy Commission (CNEN) in the capital stock of Indústrias Nucleares do Brasil S.A. (INB) and Nuclebrás Equipamentos Pesados S.A. (Nuclep) to the Federal Government. INB and Nuclep will be transformed into public companies linked to the Ministry of Mines and Energy (Ministério de Minas e Energia - MME) through the redemption of all shares held by private shareholders.

Between September 2 and 5, 2020, the text received 205 proposed amendments from congressmen. Many of them are propositions that the power sector tries to insert in the main text, while others intend to modify or delete passages from the MP.

The section dealing with nuclear energy meets with strong resistance from members of different parties, especially the opposition. There are proposals to delete the article that gives the National Energy Policy Council (Conselho Nacional de Política Energética - CNPE) the prerogative to authorize the operation of Angra 3 for 50 years, extendable for another 20 years. There is also strong resistance regarding the transformation of INB and Nuclep into government-owned companies linked to the MME.

Various other amendments attempt to alter the percentage of use of resources of the Research and Development and Energy Efficiency programs. Some proposals attempt to maintain the discounts on the transmission and distribution system use fees granted to renewable source ventures, and there is even an amendment that extends the granting of subsidies to coal plants for longer.

In addition, proposals were submitted to extend the exemption from the social fee throughout the term of the state of public calamity, scheduled to end in December of 2020, in order to prohibit the cutting off of electricity supplies due to defaults by homes, essential services, consumers who depend on life support electrical equipment, and those who have had difficulty paying their bills.

There are also amendments specifically related to the contracting of the Covid-Account credit operation. One of them prohibits distributors from paying interest on equity and distributing dividends to shareholders until the loan is fully paid off. Another establishes that the distributors may not request Extraordinary Fee Review alleging economic and financial imbalance due to the coronavirus pandemic until December 31, 2025, the deadline for amortization of financing.

In view of the multiplicity of issues covered by Executive Order 998 and the large number of amendments presented, especially when other relevant bills involving the electricity sector, such as PLS 232, are already under discussion, it is expected that the processing of the text in Congress will face challenges. The risk of any lapse of the executive order due to the impossibility of deliberation in accordance with the constitutional procedures and time limits for conversion into law are not ruled out. It is certain, however, that some of the topics contemplated in MP 998 are on the agenda and are in harmony with the efforts to modernize the electricity sector and strengthen the free market for energy marketing and trading.

Category: Labor and employment

The new coronavirus pandemic has forced many companies to review their forms of organization, with impacts on labor relations and the day-to-day lives of employees.

According to data from the PNAD-Covid survey, conducted by the Brazilian Institute of Geography and Statistics (IBGE), in the week between May 3 and 9, approximately 16 million people were on leave from work due to social distancing.

There was also a significant expansion in teleworking, which, according to research data, has been constantly practiced since May of 2020 by approximately 8 million people in Brazil.

In this scenario, what about employers' responsibilities to their employees? Should the employer bear the costs of teleworking?

The Consolidated Labor Laws (CLT), by regulating the subject, expressly establish that employee and employer must agree on bearing costs related to telework (electricity, internet, telephone, among other items).

Unless the collective bargaining agreement applicable to the parties provides otherwise, the laws and regulations provide that they may agree upon who will bear the costs related to teleworking.

The laws and regulations in force (unless otherwise provided for in the applicable legal instrument) do not oblige the employer to bear such costs. However, this is a good practice that not only mitigates the risks of legal claims on the subject but also, to a certain extent, ensures that employees have adequate infrastructure to work.

If the company therefore opts to reimburse employees for costs related to teleworking, one option would be to make payments as reimbursement of expenses. In this case, employees must submit an expense report, with the respective receipts, to enable reimbursement of amounts by the employer.

Although apparently simple, reimbursement requires internal structures and control of receipts, which can generate overhead costs for employers. In addition, there are situations in which it is difficult to identify what proportion of a certain cost actually relate to professional activities and what is pertinent to employees' personal expenses, which will require greater scrutiny by employers and additional structure for review and approval of reimbursable expenses.

As a simpler alternative to reimbursement, employers can choose to pay a lump sum monthly cost allowance to employees to offset expenses incurred working, without the need for supporting documents.

There are relevant advantages to this alternative. Initially, and subject to the recommendations that will be addressed below, discussions on the nature of the expense being borne by the employer (if intended for strictly professional use or if it includes a percentage for personal purposes only) are avoided. The reimbursement of expenses of a strictly personal nature, not related to work, may generate labor, social security, and tax repercussions for employers even if, potentially, in non-material amounts.

Another advantage is that cost allowances, as a result of the changes introduced by Law No. 13,467/17 (the Labor Reform), as well as reimbursement of expenses, is not, as a rule, included in the employee's remuneration and, therefore, is not subject to labor and social security charges, although it is paid in a usual manner.

In addition, article 75-D of the CLT establishes, in its sole paragraph, that the infrastructure and technological equipment necessary and appropriate for the provision of remote work provided by employers are not part of employees' remuneration.

In any case, it is not only the title given to the payment that guarantees its compensatory nature. In order for the cost allowance not to have the nature of salary, the amounts should (i) be paid only to employees who incur expenses (for example, the internet allowance is only justified while the employee is working remotely); and (ii) keep a direct relationship with the employees' expenses, considering market averages.

In view of this, it is advisable to establish parameters for payment of the cost allowance if the company chooses to bear the costs arising from the remote work when drawing up internal policies to regulate remote work.

An alternative to regulating the payment of the daily allowance is negotiation of collective bargaining agreements with professional unions. Banco Bradesco, for example, entered into a collective bargaining agreement with the Bank Workers' Union which, in addition to regulating remote work, provides for the payment of a cost allowance to employees in this arrangement.[1]

Formalizing payment rules and criteria for defining the amounts to be paid as cost allowance reduces the risk of legal questioning as to the nature of the payment and is important to mitigate the risks involved.

Before reaching any decision regarding the implementation of one model or another, companies must analyze what is best for their business taking into consideration not only the labor and social security issues, but also the tax issues involved.

[1] https://spbancarios.com.br/09/2020/bancarios-do-bradesco-aprovam-acordo-de-teletrabalho-com-9335-dos-votos

Category: Environmental

Federal Law No. 14,066/20, published on September 30, establishes important changes in dam legislation in general, especially with changes to the National Dam Safety Policy (PNSB), instituted by Federal Law No. 12,334/10. Although the PNSB does not deal only with mining tailings dams, the legislative changes were proposed and received more attention after the dam breach events in Mariana (2015) and Brumadinho (2019).

In the state of Minas Gerais, some of the changes made to the PNSB had already been implemented through State Law No. 23.291/19, such as the prohibition of construction or raising of mining dams by the upstream method. Dams already built or raised by this method must be de-characterized by February 25, 2022, a deadline that may be extended by the supervisory authority and the licensing authority, subject to technical feasibility.

In addition, the construction method and the age of the dam will now be considered for classification of the structure by risk category. The risk classification may also take into account criteria established by the supervisory body, which may represent less safety for the developer, who will have the classification of its dams changed per criteria not provided for by law. The legal insecurity is accentuated with the provision that the supervisory body will require the developer to adopt measures leading to reduction of the dam's risk category, without making it explicit or having provided for how this will occur and what it may mean in practice.

The changes in the PNSB tried to better define some terms and expressions that have been used recurrently in recent years, technically or otherwise. In this sense, a de-characterized dam was defined as "one that does not operate as a sediment or tailings containment structure, not having characteristics of a dam, and that is intended for another purpose." In order to appease controversies and typical debates in crisis management cases, definitions of "accident", "incident”, and "disaster" have been added. As long as the accident is the result of total or partial collapse of the dam, the incident is an earlier step, where the integrity of the structure is compromised. Disaster, on the other hand, is the result of an adverse event, whether of natural origin or induced by human action, which causes significant human, material, or environmental damage, in addition to economic and social damage.

Various provisions have been added to the PNSB to ensure greater participation by and information to the general population, especially the population potentially impacted by the structures, and greater transparency of developers. An example is the prohibition of mining dams for which studies of breach scenarios identify the existence of a community in the Self-Rescue Zone (ZAS), a measure previously adopted in the state of Minas Gerais. In the case of dams that are already in this situation, installed or in operation, the developer should be heard, in order to choose, together with the public power, to de-characterize the structure, resettle the population, and safeguard cultural heritage, or perform reinforcement works that ensure the effective stability of the dam, factoring in the dam's prior existence in relation to the ZAS community and the technical and economic feasibility.

Also in an attempt to ensure greater transparency to ventures, Law No. 14,066/20 provides that, in the event of a change in the dam's safety conditions that may entail an accident or disaster, the developer must immediately notify the supervisory body, the environmental licensing authority, and the civil protection and defense agency. The developer must also provide the resources necessary to guarantee the safety of the dam and, in the event of an accident or disaster, to repair the damage to human life, the environment, and to public and private property until the structure is completely de-characterized. The time criterion imposed should be understood as a minimum period and it should not be interpreted that the repairs will only be due until the moment of de-characterization of the structure, since damage and repair activities may take much longer.

By placing greater emphasis on damage prevention, Law No. 14,066/20 also instituted the Emergency Action Plan (PAE) as a mandatory part of the Dam Safety Plan (PSB) for any mining dam, or dams in general of medium or high potential for damage, or high risk dams. In addition, the individual developer or the person with the largest position in the legal entity’s structure should sign and give notice to the PSB. The PAE should be available at the developer's website, contain the map of the flood area, with the leak points, and be updated until the structure is completely de-characterized.

Similarly, for some types of dam, especially those with medium and high risk, or medium and high potential for damage, the supervisory body may require, under the terms of the regulations, the submission of security, insurance, bond, or other financial or real guarantees to repair damage to human life, the environment, and public property. Once ordered by the supervisory body, existing dams will have two years to be adapted.

Some changes have also been made to the administrative procedure (and its sanctions) for violations. After some discussions in Congress, Law No. 14,066/20 provided for fines ranging from R$ 2,000 to R$ 1 billion, in addition to seizure of ore, assets, or equipment and suspension of mining activities, among other sanctions.