In a recent unanimous decision in Special Appeal No. 2209077/RS, Brazil's Superior Court of Justice ("STJ" or the "Court") reaffirmed the broad application of joint and several liability under Law No. 12,846/2013 (the "Anti-Corruption Law") to parent companies, subsidiaries, affiliates1, and consortium members. Importantly, the Court confirmed that this liability applies regardless of whether any corporate changes have occurred.
The case arose from a civil lawsuit filed by Brazil's Federal Public Prosecutor's Office ("MPF") against a public service concessionaire and its parent and affiliate companies. The MPF alleges acts of corruption uncovered in Operation Integration, tied to a concession agreement with the federal government, Ministry of Transportation, Paraná state, and related agencies.
This decision is particularly significant for companies operating as part of larger corporate groups in Brazil, as it underscores how Brazil's strict liability regime under the Anti-Corruption Law can expose entire business groups to substantial legal and financial risks, even if only one company is directly implicated in the misconduct.
1. Background of the Case and Key Issues
In the civil lawsuit, the MPF challenged amendments to the concession agreement that allegedly created an undue economic advantage for the concessionaire in return for improper benefits paid to public officials. Among other remedies, the MPF sought to annul these amendments, declare the concession void, and hold the concessionaire—along with its parent and affiliate companies—jointly liable for damages.
An affiliate company filed the Special Appeal before the STJ, arguing that (i) there was no evidence it participated in or benefited from the alleged misconduct, and (ii) the joint and several liability under Article 4, §2 of the Anti-Corruption Law2 should apply only in cases involving mergers, acquisitions, or other corporate reorganizations expressly mentioned in the main provision of that article.3
2. The STJ's Ruling
Justice Paulo Sérgio Domingues, serving as the case rapporteur, rejected these arguments and dismissed the appeal. He emphasized that:
- The joint liability provision in §2 of Article 4 is intentionally broad, designed to encompass as many scenarios as possible involving the formation, transformation, grouping, or dissolution of companies, thereby preventing accountability gaps under the Anti-Corruption Law.
- The main provision of Article 4 does not limit joint liability to corporate changes. Rather, it clarifies that liability persists even if there are such changes—meaning that liability exists regardless of corporate restructurings, so long as the wrongful acts occurred while the law was in force.
3. Practical Consideration
This ruling sends a clear message: companies that are part of corporate groups—especially those with complex structures—can face strict liability for acts of corruption committed by any entity within the group, even if they had no direct involvement in the misconduct.
Given this heightened exposure, it is essential for companies to adopt prevention and control mechanisms that safeguard the integrity of operations across their entire corporate structure. Building a robust compliance program—with strong risk management in corporate relationships—can be critical in avoiding multimillion-dollar liabilities and protecting a company's market reputation. Among the recommended strategies are:
- Conducting integrity due diligence in corporate restructurings and when forming partnerships, particularly in contracts with public entities, to identify legal, financial, and reputational risks.
- Implementing or enhancing compliance programs aimed at preventing and promptly addressing unlawful conduct, whether in dealings with third parties or among companies within the group.
- Continuously monitoring risks and adopting mitigation measures in contracts involving the public sector, especially where controlled companies, parent companies, affiliates, or consortium members are involved.
These measures are critical to minimizing liability and safeguarding a company's reputation in an environment of increasing regulatory scrutiny.
Footnotes
1. The reference to "affiliated company" follows the definition under Article 1,099 of the Brazilian Civil Code, which characterizes an affiliate as a company holding 10% or more of another company's capital, without exercising control over it.
2. Pursuant to Article 4, §2 of the Anti-Corruption Law, parent companies, subsidiaries, affiliates, and consortium members —within the scope of their contract — shall be jointly and severally liable for the unlawful acts provided under the law, limited to the obligation to pay fines and to fully repair the harm caused.
3. Article 4 of the Anti-Corruption Law establishes successor liability by providing that a legal entity remains liable even in the event of contractual amendments, corporate transformations, mergers, acquisitions, or spin-offs.
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