On March 16, 2015, President Dilma Roussef signed a new Code of Civil Procedure that will enter into force after one year. The current Code of Civil Procedure was enacted in 1973 and has been criticized and received several amendments during the last decades. The new Code has been widely discussed since 2009 and has 1,072 Articles.
The underlying idea is to enhance the effectiveness of the dispute resolution method. Below are some of the relevant changes provided for in the new Code:
- Policy of mediation and encouragement of settlements: Judges, lawyers and public attorneys and prosecutors must encourage amicable solutions. Unless the parties agree that an attempt to settle the case is fruitless or the dispute cannot be settled, the judge must schedule a preliminary hearing to be led by a mediator. These hearings seek to enable the parties to reach a settlement at the initial phase of the case.
- Consumer disputes when the trader is not in Brazil: Brazilian courts now have jurisdiction over consumer disputes even in cases when the trader or the supplier does not have a place of business in Brazil.
- Forum selection clauses: clauses that select a foreign forum to adjudicate the dispute are valid and now expressly established by the new Code.
- International cooperation: the new Code comprehensively regulates hypothesis where Brazil will internationally cooperate. These include not only service of process and assistance on evidence matters, but also interim reliefs and any other measures not forbidden by the Brazilian law.
- Piercing the corporate veil: due to the increasing number of requests for piercing the corporate veil, the new Code comprehensively describes the procedural steps to be followed by the parties and judges. The purpose is to avoid abuses and to the enhance predictability.
- Amicus curiae: in special and relevant cases, the judge may allow the participation of friends of the court, which will participate in the case to assist the judge to reach the best decision. This participation may happen in any moment of the case.
- Procedural flexibility: in principle, the parties are allowed to decide on certain procedural rules on the content and structure of the proceedings, including dates.
- Cooperation between courts and arbitral tribunals: since it is well established that arbitrators do not have coercive powers, the new Code establishes that arbitrators and parties may use arbitral letters to request assistance from courts to enforce arbitral decisions.
- Partial judgments on the merits: in case of undisputed or ripe issues, judges are authorized to render partial judgments. Only issues that demand further evidence should be delayed.
- Provisional measures: decisions on interim reliefs may decide the dispute in case the opposing party does not challenge the decision granted. Likewise, there are certain cases where there is no need for urgency if either the plaintiff has strong grounds or the respondent does not present good grounds. These provisions aim to balance fairness and efficiency.
- Cases to be heard in chronological order: the new Code requires that cases be heard in chronological order to prevent recent cases from being heard first, with exceptions allowed.
- Repetitive cases: if the same procedural or substantive issue has been presented in several cases, Appellate Courts may be called on to decide the issue and promote legal certainty.
- Precedents: appellate Courts must enhance the number of precedents and such precedents are to guide similar cases adjudicated by the lower courts. The principal idea again is to promote legal certainty and decrease the number of appeals for the same issue.
- Interlocutory appeals: in order to also try to decrease the number of appeals, the new Code has created a list of circumstances when the parties are allowed to file interlocutory appeals.
- Additional fees for the appellate instance: not only the parties must be liable for the costs and attorney fees in connection with the first instance of the case, but also to the appellate instance. Filing an appeal, therefore, may increase the attorney fees up to twenty-five percent (25%) of the amount in dispute. The Brazilian system is known by the huge number of appeals and the new Code aims to decrease the number of appeals filed for the sole purpose of delaying the decision of the case.
- Attachment of properties: damages set forth by judges are fruitless in cases where no assets are found. Hence, the new Code comprehensively details how properties owned by a debtor to be transferred to the creditor, or sold for the benefit of the creditor, including attachment of companies and percentage of profits of companies.
Considering the magnitude of the new Code, it is not possible to say that the legal community agrees with all its aspects. Despite that, President Dilma Roussef vetoed only seven articles. The main veto relates to the possibility of conversion of individual actions into class actions. According to the President, potential conversions could happen in unpredictable circumstances.
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.