How common is commercial litigation as a method of resolving high value complex disputes in Brazil?
Litigation remains the predominant method for resolving commercial disputes in Brazil. This preference can be attributed to its cost-effectiveness, a well-established appellate system, and the creation of specialized courts dedicated to Business Law issues in regions experiencing high demand, such as São Paulo/SP, Curitiba/PR and Rio de Janeiro/RJ, which necessitates swift resolutions.
What is the legal framework governing commercial litigation? Is your jurisdiction subject to civil code or common law? What implications does this have?
Brazil operates under a civil law system, anchored by its Federal Constitution enacted in 1988, which sets forth essential principles including free competition and free enterprise. This legal structure is further supported by several key statutes: the Economic Freedom Act (Law 13874/2019), the 1976 Corporations Act, the 2002 Civil Code, and the 2015 Civil Procedural Code. Additionally, case law has become increasingly significant due to the establishment of a system of binding precedents by the Supreme Court, ensuring consistency and predictability in the interpretation of the Federal Constitution.
What key issues should a party consider before bringing a claim?
Before initiating legal proceedings, parties should verify the possibility of reaching an agreement with the opposing party, considering the lengthy duration required to obtain a final judicial decision. This is due to the protracted nature of Brazil’s appellate system, which, despite being well-established, is slow due to the vast number of ongoing legal cases. Additionally, parties should consider associated costs, such as the monetary correction of the debt and the accrual of default interest. It is worth mentioning that the party may request in advance to produce evidence, so as to analyze the convenience of an agreement or to evaluate the chances of success of a lawsuit. It may also request preliminary injunctions (precautionary or anticipatory on the merits), which may be utilized to achieve an advantage for reaching an agreement.
What is the judicial attitude towards mediation in Brazil?
In the current Brazilian legal system, the judiciary holds a favorable attitude towards mediation. This is reflected in the legal framework that encourages the use of alternative dispute resolution methods to alleviate the burden on the courts and expedite the resolution process.
The 2015 Brazilian Civil Procedure Code, for instance, underscores the importance of mediation and conciliation as primary tools in dispute resolution.
Courts often promote these methods early in the litigation process, recognizing their effectiveness in fostering amicable settlements and reducing judicial backlog. This judicial endorsement is aligned with broader national policies aiming to enhance legal efficiency and access to justice.
What is the process of mediation in Brazil?
In Brazil, the mediation process is structured to provide an efficient and effective alternative to traditional litigation. The process typically unfolds as follows:
- Initiation: Mediation can be initiated voluntarily by the parties or suggested by a judge during ongoing litigation. Parties agree to mediate and select a mediator, either from a list provided by the court or an independent professional meeting the qualifications set by the Brazilian National Council of Justice.
- First Meeting: The mediator organizes a first meeting with all parties involved to explain the rules and principles of mediation, such as confidentiality, neutrality, and voluntariness. This meeting sets the stage for open communication and collaboration.
- Exploration: During subsequent sessions, the mediator facilitates discussions to allow each party to express their interests, concerns, and positions. The mediator helps clarify the issues and encourages the parties to explore potential solutions. This phase is crucial for understanding the underlying needs and objectives of each party.
- Negotiation: As parties better understand each other’s positions, they move towards negotiating a settlement. The mediator assists in brainstorming and evaluating possible outcomes, guiding the parties towards a mutually acceptable solution.
- Agreement: If the parties reach an agreement, the mediator helps draft the settlement terms, which are then reviewed and signed by the parties. This agreement can be made enforceable by a court order if necessary.
- Closure: If mediation concludes without an agreement, the parties may proceed with litigation or explore other forms of alternative dispute resolution (e.g. arbitration).
How are mediators chosen and what is the role of the mediator?
In the Brazilian legal system, according to Federal Law 13.140/2015 mediators are typically chosen either by agreement between the parties involved or appointed by the court if mutual agreement cannot be reached. The selection process is facilitated by the presence of registered mediators who meet specific qualifications as outlined by the National Council of Justice, which ensures that they have undergone appropriate training and adhere to a set of professional standards.
The role of the mediator in Brazil is to act as a neutral facilitator in the dispute resolution process. Their primary function is to assist the parties in understanding the issues at hand, exploring potential solutions, and negotiating a mutually acceptable agreement.
The mediator’s objective is to guide the communication process in a way that promotes understanding, addresses interests and needs, and moves the parties towards a voluntary and informed resolution of their conflict.
About Priscila Kei Sato
I am Priscila Kei Sato, a Brazilian attorney, admitted to the bar in 1998. My professional focus is on managing significant and complex litigation cases. Since 2006, I have had the honor of serving as a partner at Arruda Alvim, Aragão, Lins & Sato Advogados. In this capacity, I have dedicated myself to enhancing my expertise and contributing to the success of our firm. My commitment is to deliver strategic insight in every legal challenge, ensuring our clients receive the highest caliber of legal representation.
About Arruda Alvim, Aragão, Lins & Sato
Our firm, Arruda Alvim, Aragão, Lins & Sato renders legal consulting and litigation services to Brazilian and foreign companies, by means of administrative and judicial measures in various areas of law, through its qualified and experienced team of attorneys. It stands out due to its elevated technical performance, personalized client service with direct engagement from the partners, handling high-complexity litigation with large social and economic impact, namely in class actions, direct actions of unconstitutionality, and procedures for the standardization of case law.
Priscila Kei Sato
Arruda Alvim, Aragão,
Lins & Sato Advogados
Tel: +55 (41) 3301-3800
Fax: +55 (41) 3301-3801
Email: priscilasato@aalvim.com.br
www.aalvim.com.br
Published by: www.lawyer-monthly.com - June 4th, 2024
