Brazil: Update From Brazil - New Civil Procedural Code

On 16 March 2015, after four and a half years of discussions in the National Congress, the final text of the New Brazilian Civil Procedural Code was sanctioned by President Dilma Rousseff. Law no. 13,105/2015, which establishes the New Code, will come into force on 17 March 2016.

The New Code is the government's attempt to provide faster and more effective administration of justice. In Brazil, a suit may often last over five years, or, if it is against the Government or a State-owned entity such as INFRAERO (the operator of many of Brazil's airports), more than a decade, mainly by virtue of the high number of appeals available to the parties.

The largest country in the southern hemisphere with a population of over 200 million, Brazil suffers from an excess of suits that clog the judicial system. According to the latest official data released in 2014, Brazil has 99.7 million active lawsuits, with a growth rate of approx. 3.4% new claims per year. The sheer volume of proceedings prevents decisions from being rendered within a reasonable time.

Following the end of military rule in 1985, rights of broad and unrestricted access to justice for citizens were implemented through the Federal Constitution and the Consumer Defence Code (CDC), which came into force in 1988 and 1990 respectively. However, the current Civil Procedural Code, which has been in force since 1973, has been unable to keep pace with the increase in litigation. Extremely formalistic and complex, the current Code underwent many amendments during the last 20 years. Despite introducing some important advances, these amendments also weakened the Code's structure and compromised its efficiency due to excessive formality and the variety of available appeals which they created.

The New Code attempts to simplify and expedite procedure as well as ensuring greater uniformity. It adopts well-established solutions applied in other countries with both common and civil law traditions. Particularly, the increased recognition of precedents from higher courts as a mechanism to ensure greater uniformity is a key new measure.

Accordingly, first instance judges and appeal courts will be bound by judgments rendered by higher courts. Although this may seem natural in the eyes of a non-Brazilian observer (especially of Anglo-Saxon origin), such provisions represent a true innovation in the system currently in force in Brazil. Currently, the judge has the right to freely decide according to his or her own conviction, as long as the decision is reasoned, that is, takes into account the laws in force and the facts of the case. This wide discretion often results in conflicting decisions on the same subject matter, undermining trust in the judiciary and multiplying appeals. It is hoped that the New Code will result in more consistent decisions and greater legal certainty, thus reducing the number of suits and appeals.

In summary, the major general advancements of the New Code are: (i) fine-tuning to better accord with the Federal Constitution 1988; (ii) establishing the supremacy of case law from higher courts; and (iii) introducing the possibility for a judge to strike-out proceedings at an early stage to avoid repeated and vexatious claims.

Effectiveness of the international aviation treaties

In addition to reducing the number of pending suits, it is hoped that the New Code will also provide the necessary framework for international treaties to which Brazil is a party to be more uniformly applied by Brazilian courts, thus also bringing greater legal certainty to international relations.

Article 178 of the Brazilian Constitution provides that treaties regarding international transportation signed by Brazil must be observed, subject to reciprocity. Thus, in principle, the Constitution already requires Brazilian courts to apply the Warsaw Convention (as amended) and the Montreal Convention 1999. Those familiar with Brazilian passenger claims will know that, in practice, the courts with very few exceptions apply the CDC, which provides for unlimited liability, in preference to the Conventions. This may be because judges are not familiar with the Conventions, or prefer to take a political position that favours the consumer.

Reinforcing Article 178 of the Brazilian Constitution, the New Code recognises, as regards Brazilian courts' jurisdiction, the provisions of international treaties in force in Brazil. Articles 13 and 24 expressly provide as follows: "Civil jurisdiction shall be governed by Brazilian procedural rules, subject, however, to the specific provisions in treaties, conventions or international agreements to which Brazil is a party"; and "A suit brought before a foreign court does not entail lis pendens and does not prevent the Brazilian courts from hearing the same cause and those connected thereto, subject, however, to any provisions to the contrary in international treaties and bilateral agreements in force in Brazil."

As a result, the New Code has, in theory, introduced a requirement that a treaty ratified by the Brazilian legal system – such as the Montreal Convention in force in Brazil from 2006) – should prevail, as it occupies the same hierarchical position as local statutory laws. Further, as the Convention contains specific provisions formulated for the aviation industry, it should not conflict with more general local legislation such as the CDC. Although it remains to be seen how the Brazilian courts will approach application of the Convention going forward, the inclusion of specific language in the New Code affirming its applicability is positive.

Convention claims awaiting judgment by the Supreme Courts in 2016

As the guardian of the Federal Constitution, the Supreme Federal Tribunal (STF) in Brasilia began to consider two combined leading aviation cases in May 2014 involving conflict between the CDC and the Warsaw and Montreal Conventions - Sylvia Regina Rosolem vs Société Air France and Ciontia Cristina Giandulli v Air Canada. The two cases relate, respectively, to indemnification of pecuniary damages resulting from baggage loss and the applicable limitation period for the purposes of bringing a civil liability suit due to international flight delay.

The first three STF Judges (who are called Ministers) noted that the Montreal Convention establishes special rules for a special type of contract between certain economic entities (airlines) and their clients. They accordingly voted in favour of application of the Convention, finding no incompatibility with the CDC since the lex specialis prevails over the lex generalis. Voting was suspended when Minister Rosa Weber requested the entire court file for review. With a total of eleven Ministers and three votes cast to date, the votes of seven Ministers are still to be rendered. The Presiding Minister only votes in the event of a tie to render a casting vote. The Court file was returned in December 2015 by Minister Rosa Weber, meaning that voting may be resumed at any time following the end of the summer recess on 1 February 2016.

Brazil's Superior Court of Justice (STJ) is also expected to address the applicability of the Warsaw Convention (as amended) to cargo claims later this year when it considers divergent jurisprudence in Unibanco AIG Seguros vs LATAM Airlines Group and Indiana Seguros S.A. vs. Federal Express Corporation. The STJ is responsible for standardising the interpretation of federal law throughout Brazil, and hears appeals where violation of constitutional provisions is not alleged (such claims falling under the STF's limit).

The STJ's Second Section of ten Ministers is divided into two "Terms" of five Ministers each (the 3rd and 4th Terms). The 3rd and 4th Terms "unify" divergent interpretations amongst Brazil's courts in respect of private, commercial and consumer law and – in exceptional cases – unify divergent interpretations within the Second Section itself.

In November 2015, the STJ's 3rd Term ruled 5:0 in Unibanco vs LATAM that a subrogated insurer's claim for cargo damage during international transportation in 2006 should not be limited by the Warsaw Convention (as amended) but should instead follow the "full compensation" principle enshrined in Article 944 of Brazil's Civil Code and Article 5 of the Brazilian Constitution (the date of loss was before the Montreal Convention 1999 came into force on 27 September 2006, so that the Warsaw Convention applied). The Minister leading the judgment concluded that it was not reasonable to concede favourable terms to the carrier and to limit compensation for damage which had not resulted from a risk inherent to the aviation industry (eg, a crash). The 3rd Term held that the limitation of liability for cargo contained in the Warsaw Convention (as amended) had originally been drafted in 1929 with a view to protecting a nascent aviation industry at a time when its economic outlook was uncertain and the risk of a catastrophic loss high. Given the significant advances in aviation safety, the five Ministers comprising the 3rd Term concluded that the aviation industry no longer warrants the "favourable treatment" afforded by Article 22(2)(b) of the Warsaw Convention (as amended) and reverted to the "full compensation" principle.

The fact that the provisions limiting a carrier's liability regarding cargo contained in Article 22 (2)(b) of the Warsaw Convention (as amended) had been revised by the Hague Protocol and Montreal Protocol 4 and are effectively replicated in Article 22 (3) of the Montreal Convention 1999 was not considered by the 3rd Term. This point rather undermines the argument that the cargo limit should be disregarded today on account of safety developments since 1929.

The 3rd Term's decision did contain one favourable aspect, however. In contrast to earlier instances which had applied the CDC, the 3rd Term concluded (correctly) that there was no consumer relationship between the carrier and the insured (an importer and distributor of electrical components) who was not the end-user of the cargo and sought profit. Accordingly, the 3rd Term held that the CDC did not apply.

LATAM filed a special appeal against the 3rd Term's decision on the basis that the five Ministers of the 4th Term had rendered a divergent decision (by 3:2) in Indiana Seguros vs. Federal Express. On similar facts, the 4th Term had ruled in May 2014 that a subrogated insurer's claim for cargo damaged by the carrier in 2001 was not governed by the CDC but indeed by the Warsaw Convention (as amended). The 4th Term noted that, having elected not to declare the cargo value, there was no question that the importer had agreed to limit the value of an eventual claim in accordance with the Convention.

The fact that the 3rd and 4th Terms of the STJ (Brazil's court of last resort for non-Constitutional matters) could reach such different decisions on two factually similar cases and, indeed, take such different approaches, certainly highlights one of the challenges of the New Civil Procedural Code – to deliver uniform jurisprudence and reduce the high number of appeals. The ten Ministers of both Terms will now vote to "unify" their conflicting decisions. The fact that they have effectively voted 7:3 against application of the Convention to date leaves little room for optimism. It will be interesting to see whether the New Code (specifically Articles 13 and 24 which affirm the applicability of the Conventions) will be taken into account.

Update From Brazil - New Civil Procedural Code

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Alexandre Lima
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.