The team at Pinheiro Neto discuss Brazil’s civil procedure code
Brazil’s Civil Procedure Code (CPC), enacted in 1973, provided for a very few opportunities in which the litigating parties could agree on changes to procedural aspects of the case, eg the choice of forum (forum conveniens) and the conventional stay of the developments for a certain period.
The CPC enacted in 2015 was innovative in overturning several decades of rigid legal provisions, now allowing the parties to adapt the proceedings to make them more suitable to the characteristics and circumstances of each lawsuit.
In this article, Pinheiro Neto Advogados analyses the basic requirements, risks and convenience concerning the use of this new legislative authorisation.
Article 190 of the new code allows parties to adjust the civil procedure to the characteristics of the lawsuit by agreeing on their powers, faculties and procedural duties, before and during the process. It introduces an interesting
mechanism to be adopted by the parties in court or during the negotiation of a contract, especially in cases where the arbitration is not technically or economically viable as the dispute resolution method.
Although the litigating parties may have a certain level of self-determination in providing the procedural rules they intend to adopt during the lawsuit, some of the matters in such agreements must be scrutinised and validated by the court to be effective. This validation will be granted when the agreements on proceedings comply with the principles and provisions applicable to contracts and transactions in general, as well as preserve the material and procedural fundamental rights of the litigating parties.
In our view, the litigating parties could validly agree on, eg: (i) the proceedings to serve process and notifications during the litigation, such as through emails indicated by the parties for this purpose; (ii) a calendar to perform certain procedural acts; (iii) procedures for the production of expert examination; (iv) a feasible distribution of the burden of proof, including the responsibility of preserving evidence to be produced in court.
When it comes to the court’s scrutiny on the agreement, there are no clear boundaries of which provisions may be voided for being considered a breach of fundamental procedural rights of the parties. There is also no clear limitation to the court’s ability to review the parties’ agreement. In this sense, the courts tend to consider invalid agreements on proceedings that limit one of the parties’ right of defence or the court’s power to enforce its decisions.
Acceptance by the courts
Brazilian courts are generally confirming the use of procedural agreements, but as this broad legal treatment is relatively new, there are still no clear guidelines in the case law, creating an undesirable level of uncertainty to the parties and counsels.
The agreement on a procedural calendar, by which the parties provide conventional deadlines for filing defences, documents and performing procedural acts in general, has been widely accepted by the courts. This type of agreement has proved to be useful in expediting the developments of the lawsuit and has been confirmed as valid by several state courts of appeal, who have the jurisdiction to rule on the vast majority of commercial matters.
Limitations by the courts
Brazilian courts have limited the effectiveness or even declared null and void some contractual provisions regarding procedural law under the argument that they may obstruct fundamental procedural rights or undermine the powers of the judge in the case.
The Superior Court of Justice, the highest court in Brazil with jurisdiction to decide on procedural matters, has recently issued a decision confirming that the agreements on proceedings are valid, but they should be interpreted in a restrictive way so as not to subtract from the courts the powers to decide on matters not expressly agreed on between the litigating parties (Special Appeal No. 1.738.656/RJ). Although this decision is not binding to other cases, the restrictive interpretation of a procedural agreement must be accompanied by a solid, concrete assessment of the case, to minimise the risk of the courts reducing and limiting the actual scope of such agreements and the parties’ freedom of will.
The State Court of Appeal of São Paulo (TJSP) has issued several recent decisions invalidating procedural agreements that allegedly disrespected public policy or created procedural benefits only for one of the litigating parties. For instance, in one of these cases, the procedural agreement provided certain conditions in which the assets of the defendant could be attached without the intervention of the Court – the TJSP ruled that the judge would be the sole authority to attach assets as an interim measure.
In another case, the TJSP voided a procedural agreement concerning a lease of a commercial building that aimed at facilitating the eviction in case of non-payment of rent. The TJSP ruled the agreement invalid because it brought procedural advantages only to the lessor in the context of an adhesion contract. The TJSP, however, failed to take into account an important aspect of the agreement, ie, the parties tried to compensate a disadvantage materially imposed on the landlord (the lack of security deposit) with an equivalent procedural advantage (the possibility of a faster eviction proceeding in case of default by the tenant), which from a theoretic point of view seemed perfectly valid and business orientated, and not prohibited by law.
The limited amount of case law recommends careful planning on the use of agreements on lawsuit proceedings in order to maximise the likelihood of their acceptance by the courts. To enhance this likelihood, it is vital to clarify the parties’ rationale when entering into the procedural agreement with a closer look to the particulars of the case.
Diogenes Gonçalves is a partner and co-chair of the litigation practice at Pinheiro Neto, focusing his practice on insurance and reinsurance, fraud, contractual and corporate disputes. He holds an LLB and a master of law degree in civil procedure law from the University of São Paulo, and a specialisation degree from Università degli Studi di Milano. Gonçalves previously worked as a foreign associate at the Italian law firm Piergrossi Villa Manca Graziadei.
Eider Avelino Silva is a partner at Pinheiro Neto and focuses his practice on corporate, civil, commercial, insurance and reinsurance disputes. He holds an LLB and a master of law degree in civil procedure law from the São Paulo Catholic University (PUC-SP). He worked as a foreign associate at Quinn Emanuel Urquhart & Sullivan in the New York office.
Gianvito Ardito is a senior associate at Pinheiro Neto, dedicated to disputes on commercial, insurance and reinsurance matters. He holds an LLB and a master of law degree on civil procedure law from PUC-SP and a specialisation degree from the São Paulo School of Judges. Ardito is a member of the Brazilian Procedural Law Institute.
Pedro Ivo Gil Zanetti is a mid-level associate at Pinheiro Neto dedicated to disputes on corporate and commercial matters. He holds an LLB from the University of São Paulo and a specialisation degree in contract law from Insper, with an extension in law and economics from the University of St.Gallen, Switzerland. He is the author of a book on contracting for procedure in Brazil.