Brazil updates

Arbitration & ADR

Sao Paulo State Appellate Court decides on interpretation of Article 4(2) of Arbitration Act
  • Brazil
  • 27 September 2018

The Sao Paulo State Appellate Court recently rendered an important precedent on the interpretation of Article 4(2) of the Arbitration Act. The appellate court ultimately dismissed the franchisee's appeal, despite arguments that, among other things, the franchise agreement entered into by the parties was a contract by adhesion, pursuant to Article 54 of the Consumer Protection Code. As such, the arbitration clause was invalid because it did not follow the requirements contained in Article 4(2) of the Arbitration Act.

Superior Court of Justice rules on consequences of successful challenges to arbitral awards
  • Brazil
  • 13 September 2018

The Superior Court of Justice recently decided on the consequences of a successful application to set aside an arbitral award. The court's decision resulted from a declaration by the state courts that the nullity of arbitral awards is provided for in Article 33 of the Arbitration Act. Notably, this case was considered under the original version of the Arbitration Act (ie, before its 2015 amendment) due to the date on which the lawsuit had been filed.

Superior Court of Justice decides on pre-arbitral interim measure for production of expert evidence
  • Brazil
  • 12 April 2018

The Superior Court of Justice recently held that an arbitral tribunal has jurisdiction to (re)assess a pre-arbitral interim measure relating to an agreement containing an arbitration clause that was previously filed before the judiciary as soon as it is constituted. The controversy brought before the court concerned a recurring issue in the field of arbitration: the intersections between state courts and arbitral tribunals, especially when dealing with the establishment of competent jurisdiction.

Arbitration in labour law
  • Brazil
  • 30 November 2017

The recently approved labour reform allows arbitration in individual employment agreements, provided that the employee's monthly salary is twice as high as the cap on social security pensions and the arbitration clause is proposed or expressly agreed by the employee, according to the Arbitration Law. This means that employees with a higher level of education and income can now sign employment contracts for the settlement of any disputes through arbitration.

Court refuses recognition and enforcement of $100 million US arbitral awards
  • Brazil
  • 02 November 2017

The full bench of the Superior Court of Justice recently refused the recognition and enforcement of two arbitral awards issued by an arbitral tribunal seated in New York under the International Chamber of Commerce Rules. This decision is historic and important for arbitration, as it is one of the rare cases in which the Superior Court of Justice failed to recognise a foreign arbitral award.


Asset Finance

The Beauty of Assignment of Fiduciary Ownership Agreements
  • Brazil
  • 13 October 2004

According to recent changes to the Civil Code, the perfection of a security interest over equipment (through equipment pledge agreements) must meet certain conditions which differ from those for security interests over other assets.


Banking & Financial Services

New rules for credit fintech companies
  • Brazil
  • 27 July 2018

The National Monetary Council recently issued Resolution 4,656, regulating credit fintech companies. The resolution will allow direct credit companies and interpersonal loan companies to conduct loan and financial operations through electronic platforms. Although it is still uncertain how the market will react to the new rules, the industry is optimistic, considering the significant developments in this area that have been observed in other markets.

CADE and Central Bank sign memorandum for further cooperation
  • Brazil
  • 13 April 2018

The Administrative Council for Economic Defence (CADE) and the Central Bank recently entered into a memorandum of understanding. This initiative strengthens the relationship between the two authorities and promotes greater cooperation among them for the analysis of merger cases and anti-competitive practices by financial institutions. It also represents an important step forward, signalling the end to the longstanding dispute between CADE and the Central Bank over jurisdictional conflicts.

Introduction of structured notes proves popular
  • Brazil
  • 11 February 2014

Structured notes were first regulated by the Brazilian authorities in late 2013 and began to circulate in the market in January 2014. In the first month of their formal existence, the total amount raised by local banks through Brazilian structured notes has proved significant, demonstrating that the creation and regulation of the product anticipated and met relevant market demand.

Commission amends rules on organisation, administration and operation of FIPs
  • Brazil
  • 22 October 2013

A new rule recently entered into force that governs the organisation, administration and operation of private equity investment funds (FIPs) in Brazil. The new rule introduces the possibility for a FIP to provide certain guarantees on approval of its equity interest holders at a duly convened quotaholders' meeting, and modifies the deadlines for approval by quotaholders at such meetings.

Primacy of substance over form in the accounting system
  • Brazil
  • 20 December 2011

The significant development of Brazil's capital market in recent years and the country's improving economy have led to calls for regulatory improvement. In line with this aim, the Securities and Exchange Commission recently issued Opinion 37, which sets forth the primacy of substance over form in the accounting system and the significance of presenting a true and fair view.


Competition & Antitrust

Abuse of dominance enforcement – what's next?
  • Brazil
  • 14 June 2018

Since the start of 2018, following a period in which it focused on the persecution of cartels, the Administrative Council for Economic Defence (CADE) has directed more resources towards concluding pending abuse of dominance matters and occasionally launching new dominance cases. In so doing, the most pertinent question has become: how will CADE deal with dominance in future?

CADE and Central Bank sign memorandum for further cooperation
  • Brazil
  • 12 April 2018

The Administrative Council for Economic Defence (CADE) and the Central Bank recently entered into a memorandum of understanding. This initiative strengthens the relationship between the two authorities and promotes greater cooperation among them for the analysis of merger cases and anti-competitive practices by financial institutions. It also represents an important step forward, signalling the end to the longstanding dispute between CADE and the Central Bank over jurisdictional conflicts.

Ministry of Finance restructures advocacy agency in order to promote competitiveness
  • Brazil
  • 15 February 2018

The Ministry of Finance recently issued Decree 9,299/2018, which partially changed the structure of the Brazilian Competition Policy System (BCPS). The BCPS undertakes three main activities: preventive control, repressive control and competition advocacy. The restructuring focuses on the promotion of competition advocacy in the country.

Guidelines for private agents in transactions subject to merger control approved
  • Brazil
  • 02 July 2015

In its May 20 2015 judgment session the Administrative Council for Economic Defence (CADE) approved the Guidelines for Gun Jumping Analysis in Merger Filings. The primary purpose of the guidelines is to prevent the implementation of a transaction (full or partial) before receiving CADE's final approval. The guidelines enable parties to perform their activities in a legal way, minimising the risk of penalties

CADE regulates procedure for requesting clarifications
  • Brazil
  • 02 April 2015

The Administrative Council for Economic Defence (CADE) recently approved Resolution 12, which regulates the consultation process stipulated under the Competition Law. Although the new consultation process is an important tool for clarifying questions regarding the application of competition laws, the submission of consultations must be considered with caution, as the CADE tribunal can initiate administrative procedures using the evidence that it has already received.


Corporate & Commercial

Apostille Convention ratified in Brazil
  • Brazil
  • 07 March 2016

The government recently ratified the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents. The convention aims to remove the requirement of diplomatic or consular legalisation of foreign documents. The government's goal in ratifying the convention is clearly to reduce bureaucracy. For companies, this reduction will decrease the expenses associated with, among other things, validating foreign documents.

Court considers retroactive effect of amendment to articles of association
  • Brazil
  • 03 March 2014

The Superior Court of Justice (STJ) recently invalidated a power of attorney that had been granted by two partners in favour of a former partner with the intent of transferring certain company assets as payment in kind for the former partner's quotas. The STJ found that such power of attorney could not be deemed valid, as it was not issued by the company's legal representative at the time of its issuance.

Court rules on piercing corporate veil of family-owned company
  • Brazil
  • 06 January 2014

The Superior Court of Justice recently pierced the corporate veil and found that it was not possible to exclude the liability of one partner of a family company if there was no evidence in the case proceedings to prove who effectively acted as the company's manager. The decision could represent a dangerous precedent for family-owned companies, if each future case is not carefully analysed on its own merits.

Extrajudicial exclusion of partners from Brazilian limited liability companies
  • Brazil
  • 05 August 2013

The Civil Code expressly provides for the extrajudicial exclusion of a limited liability partner. However, before such exclusion can take place, companies must insert such a provision into their articles of association. Ultimately, the decision will depend on the other partners' subjective determination of what is deemed an act of undeniable severity that would jeopardise the continuity of the company.

Disproportionate distribution of profits in limited liability companies
  • Brazil
  • 29 July 2013

Among the essential rights of partners in limited liability companies are the right to vote on company matters and the right to earn profits from the company's business activities. The distribution of profits other than in proportion to each partner's share of a company's capital is permitted only where all partners receive some portion of the profits and the company's articles of association expressly provide for such distribution.