Brazil updates

Arbitration & ADR

Contributed by Carvalho, Machado e Timm Advogados
Superior Court of Justice decides on pre-arbitral interim measure for production of expert evidence
  • Brazil
  • April 12 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
  • November 30 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
  • November 02 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.

Competence-competence doctrine: an absolute principle?
  • Brazil
  • July 06 2017

The Sao Paulo State Court was recently faced with a dispute between the contracting parties to a franchise agreement. While the judge rapporteur recognised that the Brazilian legal system provides for competence-competence as a general rule, given the circumstances of this case, he declared the arbitration clause in the relevant franchise agreement to be null.

Superior Court of Justice suspends execution lawsuit and declares arbitral tribunal competent
  • Brazil
  • May 18 2017

The Superior Court of Justice recently issued an important decision that not only demonstrates the level of sophistication reached by the superior courts in relation to arbitration, but also the prestige that arbitration has achieved in the country as a dispute resolution method which has a jurisdictional characteristic. The decision is critical for the development of arbitration in Brazil, since it reinforces the state courts' position in favour of arbitration.


Aviation

Contributed by Basch & Rameh
Aircraft interchange agreements
  • Brazil
  • January 03 2018

Interchange agreements are relatively new and have been increasingly used by commercial aircraft operators in Brazil. In response to industry requests, the Brazilian Civil Aviation Agency and the Brazilian Aeronautical Registry recently clarified several applicable rules. Due to their novelty, interchange agreements are not always understood in the industry. While such agreements share some similarities with interline and code-share agreements, they have important distinctions.

Modernising the Aeronautical Registry: electronic filing now available
  • Brazil
  • August 09 2017

For the past few months, the Brazilian Aeronautical Registry has experimented with a new electronic filing system that allows parties to file documents electronically 24 hours a day, seven days a week. This system is now operative for documents relating to commercial aircraft. Documents relating to private aircraft, business aircraft and helicopters are still being filed physically. The new electronic system is expected to become available to them during the second half of 2017.

Brazil designates Ireland as tax haven: impact on aircraft finance
  • Brazil
  • February 22 2017

In September 2016 the Brazilian Revenue Service unexpectedly promulgated a change in its treatment of Ireland, which had the potential to wreak havoc on the aircraft leasing sector for the entire country. After four weeks of considerable uncertainty, the changes – as they apply to commercial aircraft leases – were suspended. While the clarifications temporarily resolve the initial concerns regarding commercial aircraft leases, they provide no relief for other important sectors, such as the air taxi sector.

Interchange and foreign capital investment limits for airlines – changes to legislation
  • Brazil
  • August 17 2016

As the revision to the Aeronautical Code is taking longer than expected, the president promulgated interim legal measures earlier in 2016, including one change particularly relevant to air carriers – restrictions on foreign investment in airlines. Although ultimately vetoed, these measures still merit attention, as they are indicative of future legislation.

Lessor rights in airline bankruptcy proceedings
  • Brazil
  • March 30 2016

Brazil's airlines are facing unprecedented economic and financial pressures. With approximately 15 to 20% of their payment obligations fixed in US dollars, they have seen their operational profits drastically decline and are experiencing significant operating losses. Although no airline has sought bankruptcy protection, the risk that a major airline will do so is considerable and lessors should be aware of their rights and risks should this occur.


Banking

Contributed by BMA Barbosa Müssnich Aragão
CADE and Central Bank sign memorandum for further cooperation
  • Brazil
  • April 13 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.


Competition & Antitrust

Contributed by BMA Barbosa Müssnich Aragão
CADE and Central Bank sign memorandum for further cooperation
  • Brazil
  • April 12 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
  • February 15 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.

Recent trends in leniency agreements demonstrate increasingly mature approach
  • Brazil
  • May 08 2014

As in other jurisdictions, the Brazilian authorities have been striving to build a well-respected leniency programme. Evidence from recent years suggests that before allowing a company to benefit from its leniency programme, the Administrative Council for Economic Defence has become more demanding, requesting strong evidence of the existence of collusion, as well as proof of any (potential) impact in the country.

Associative agreements as reportable transactions
  • Brazil
  • February 13 2014

Under the former Brazilian merger control system, several non-classical M&A transactions were subject to merger review by the Administrative Council for Economic Defence. This broad statutory language left much room for uncertainty. With the introduction of the new law, the open-ended wording of the former law has been replaced by a list of reportable transactions.

When are transactions involving investment funds subject to review?
  • Brazil
  • January 09 2014

Since the entry into force of the new Competition Law, practitioners, investors and the competition authority have spent much time discussing the review of transactions involving investment funds. Most issues in connection to these discussions arise as a result of the authority's regulation that sets forth a broad definition of 'group of companies' whenever investment funds are involved.


Employment & Benefits

Contributed by Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
How to avoid overtime costs: overview of compensatory time off agreements
  • Brazil
  • May 23 2018

In Brazil, employees who work overtime are entitled to statutory premium pay at one-and-one-half times the regular rate. In the past, the courts often voided compensatory time off agreements and granted overtime payment claims to employees on the grounds that their employer had failed to comply with legal requirements. However, the 2017 labour reform introduced more flexible requirements, which should curb litigation on compensatory time off agreements and encourage their use.

Impact of labour reform on awards paid to employees
  • Brazil
  • February 07 2018

The discussion regarding the legal nature of awards is not new to Brazilian labour courts, especially because amounts paid as awards could be considered salary, obliging the employer to include the award in the employee's salary and pay him or her every month or include this amount as a basis for determining the employee's labour rights. The legislative branch has tried to clarify this matter, defining the legal nature of awards, as well as the concept and legal criteria for their application.

Outsourcing and impact of labour reform
  • Brazil
  • November 08 2017

The use of outsourcing has historically been uncertain in Brazil, particularly in relation to the outsourcing of a company's core business. However, once in force, the labour reform will create a scenario of greater legal certainty for outsourcing because it expressly authorises the outsourcing of any activities, including a company's core business.

Buyers' liability for labour debts
  • Brazil
  • October 25 2017

According to a precedent established by the Superior Labour Court, the acquiring company is not liable for the labour debts of other companies within a corporate group that encompasses the acquired company, provided that the entities – at the time of the transaction – were creditworthy or economically viable, except in the case of bad faith or fraud. However, a recent reform to the Labour Code will enter into force in November 2017 and may change the existing understanding in this regard.

Labour reform: equal treatment for litigating parties
  • Brazil
  • September 20 2017

The need to modernise the procedural rules applicable to the labour procedure has long been a concern in Brazil. As such, it was well known that labour relations were being modernised and that the law did not satisfactorily account for this progress. In light of this, the newly enacted Law 13,467/2017 will introduce, among several changes not seen in prior legislative amendments, equal treatment of litigating parties and greater legal certainty for both litigating parties and Brazilian society as a whole.