Under the Consumer Protection Law, the piercing of the corporate veil is an issue that still raises controversies - in view of its significant practical effects, especially to suppliers - and involves the following questions: is it necessary to exist fraud or abuse of right by the partners to pierce the corporate veil or, is it enough that the legal entity be an obstacle to the compensation for losses caused by legal entities to consumers?

Based on the premise that Law is not an exact science, the answer to this question also requires thoughts and debates on the subject. Such disputes are inherent to the process of setting of opinions and court precedents.

The fact is that article 28 of the Consumer Protection Code established the theory of the piercing of the corporate veil for relations regulated by that Code in a more comprehensive manner than the Brazilian Civil Code.

Indeed, while the Civil Code establishes the need of either a deviation from the corporate purpose or a blur between the legal entity's and the partners' assets for the corporate veil to be pierced, paragraph five of the Consumer Protection Code (CDC) entails a broader construction; under said paragraph, the corporate veil may be pierced where the latter represents an obstacle to the compensation for damages suffered by consumers.

The main issue concerns exactly the interpretation of said article: some say it should be interpreted in a teleological, systematic manner, consistent with the lead paragraph thereof and, therefore, that the piercing of the corporate veil always requires a situation of fraud or abuse of right.

Other part of the doctrine holds that the application of paragraph five cannot be ruled out, on pain of violation of the law maker's will, by creating a new material event to which the piercing of the corporate veil will be applied.

Within the context of the constitutional consumer protection and in view of the CDC system of rules, it does make sense that the piercing of the corporate veil be more comprehensive and favorable to consumers under this Code. This is also the opinion of the Federal Superior Court.

One of the reasons for this interpretation more favorable to consumers lays on the fact that in case of relations regulated by the Civil Code, potential creditors had the opportunity to check the economic situation of future debtors (legal entities) and were able to examine and negotiate any possible risks, presumably with a more technical knowledge of the entire situation, which does not normally happen with disadvantaged creditors (employees and consumers).

It should be stressed that the full and separate application of the piercing of the corporate veil contemplated in paragraph five does not violate the systematic and teleological use of the CDC, but rather strengthens the entire consumer protection system, in view of the consumers' intrinsic vulnerable and disadvantageous condition.

The Brazilian Higher Courts have already established an opinion, hence any restrictive interpretation of paragraph five would then represent a violation of the principles in the consumer protection code system and the CDC itself.

Nevertheless, the indiscriminate application of the piercing of the corporate veil rule is questionable even in case of consumer relations. The reason for that is because the doctrine was developed based on principles and premises which precisely include fraud or abuse of right and, moreover, it is an exception to the rules in our legal system.

Lastly, in our opinion, the principle must always be applied to concrete cases in a manner that involves logic, common sense, ethics and above all, in the best interest of the clients.

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.