Even though Brazil is a civil law country, the New Civil Procedure Code of 2015 has brought elements of common law jurisdictions to the Brazilian courts. Certain precedents rendered by the Supreme Court and the Superior Court of Justice – the country's highest courts for constitutional and federal law issues, respectively – are now binding on the lower courts.
The old judge-centric model has been somewhat mitigated in favour of a more flexible system, whereby litigants may enter into procedural agreements outlining the number of court submissions, deadlines and the type of evidence to be presented.
The legal process is conducted mainly through written submissions (albeit in electronic form). Oral arguments are generally heard only at the appellate level, where judges rarely (if ever) engage with the parties' lawyers during their presentations. Jury trials are unavailable in Brazil for civil cases.
Court filings and proceedings are generally open to the public, but judges may seal the records to protect privacy, as well as public and social interests. This also applies to matters involving arbitration and family law.
Commercial and civil cases are decided in Brazil by either the federal or state courts. There are also courts of special jurisdiction which decide labour, military and electoral cases.
Federal courts handle all cases involving the federal government or its instrumentalities (agencies and federal companies). State courts have residual jurisdiction (ie, they decide all cases that are not within the jurisdiction of the federal courts, including family and probate matters).
Both federal and state courts have trial courts – where single judges decide the matter – and appellate tribunals – where three or more judges review the case de novo. Decisions by federal judges are appealable to federal regional tribunals, whereas those rendered by state judges go to state appellate tribunals.
The Supreme Court and the Superior Court of Justice may review decisions rendered by both federal and state courts only when a constitutional (Supreme Court) or federal law (Superior Court of Justice) issue is involved. Therefore, access to these courts is not automatic and their standard of review is limited to questions of law, as they do not review the evidence produced in the lower instances.
Small claims courts are available at both the federal and state level for less complex matters involving up to 40 times the minimum wage (approximately $10,000). Small claims courts are subject to informal and streamlined proceedings and decisions can be appealed to a panel of three first-instance judges.
Brazilian litigants must pay litigation costs incurred during the proceedings until the final judgment is rendered by the trial court. For example, a plaintiff must advance the filing fees and costs to effect service of process. A defendant will also incur filing costs if they assert a counterclaim. Both parties usually share the costs of expert witnesses, unless only one litigant requires the particular evidence.
A plaintiff who is not resident in Brazil and does not own real estate there must post a bond that is sufficient to cover court costs and the defendant's court-awarded legal fees in the event that the lawsuit is unsuccessful. A bond is not required to confirm a foreign judgment or arbitral award or in cases where the plaintiff holds a title that can be directly enforced (executed) before the Brazilian courts, such as a promissory note.
The losing party in a Brazilian litigation must reimburse the prevailing party for the costs incurred throughout the proceedings, such as filing fees, service of process and court-appointed experts.
The losing party must also pay the so-called 'court-awarded' legal fees, which vary from 10% to 20% of the award. In this respect, court-awarded legal fees are not the actual costs incurred with lawyers (contractual legal fees), but rather a percentage based on the amount in dispute.
Court proceedings: from initiating cases to appealing judgments
During the pleadings phase, the parties exchange written submissions (initial complaint, defence, reply and rejoinder). This normally takes from six to 12 months to be completed. If the judge deems that the evidence presented by the parties is sufficient, they may render their final judgment within this timeframe.
However, most commercial cases require technical expert examinations or the testimony of the parties' representatives and factual witnesses (evidentiary phase). In these cases, where an evidentiary hearing is scheduled (and depending on the judge's docket), a final judgment may be rendered within 18 to 24 months after the initial complaint is filed.
Pleadings phase Lawsuits are initiated with the so-called 'initial complaint', during which the plaintiff must:
- state both its factual and legal arguments;
- assert its claims; and
- attach all available documentary evidence.
The plaintiff may amend the initial complaint (and change the claims and causes of action) at any time before the defendant is properly served. Once service of process occurs, the plaintiff is authorised to amend the initial complaint only on express consent by the defendant.
Although litigants may enter into procedural agreements, the pleadings phase normally follows a pre-determined sequence of events:
- the plaintiff files its initial complaint;
- if both parties agree, a conciliation or mediation hearing is scheduled;
- if that hearing is unsuccessful, the defendant must present its defence within 15 days;
- the plaintiff presents its reply; and
- the defendant presents its rejoinder.
The plaintiff may request in its initial complaint that the case be decided on its merits without the need for an evidentiary stage. Conversely, the defendant may argue in their defence that the plaintiff lacks standing to sue. The judge decides these dispositive requests once the pleadings phase has run its course.
Service of process Service of process is conducted by the court through registered mail, a court-appointed process server or through publication in the Official Gazette. A defendant who resides outside Brazil can be served through letters rogatory. Brazil is a signatory to the Inter-American Convention on Letters Rogatory.
A defendant who fails to respond to a lawsuit will trigger the effects of judgment in absentia. In that case, all factual allegations asserted by the plaintiff will be deemed true, unless the lawsuit involves non-negotiable rights or the plaintiff's allegations are untruthful or inconsistent with the evidence attached to the court records.
Injunctive relief Injunctive relief may be awarded in order to:
- seize a particular asset;
- freeze bank accounts; or
- enjoin a defendant from performing a certain action.
To obtain these preventive measures, the plaintiffs must usually show a likelihood of success on the merits and a threat of irreparable harm.
A party can apply for injunctive relief (provisional measures) to be dealt with on an urgent basis. In this case, the applicant must show the strength of its legal position (likelihood of success on the merits of the case) and the threat of irreparable harm in case the injunction is not promptly granted.
Evidentiary phase Once the pleadings phase is over (initial complaint, defence, reply and rejoinder), the judge will either:
- decide whether the case is ready for a final judgment; or
- authorise the production of further evidences, such as expert examination and testimony witnesses.
If the case requires technical expertise, the judge will appoint an expert and assign a deadline for the presentation of the expert report. The parties may appoint assistant experts, who work alongside the court-appointed expert during the technical examination and may submit their own independent report into the records.
The judge may then schedule an evidentiary hearing to take the testimony of the court-appointed expert, who will respond to additional questions that the parties or the judge may have. In this evidentiary hearing, the judge and lawyers may also question the parties or their representatives and officers, alongside any factual witness (up to 10 for each side).
Once the evidentiary hearing is complete, the plaintiff and defendant will each have up to 30 minutes to make an oral presentation of the case. Alternatively, as is normally the case, the judge will assign a deadline of 15 days for each side to present final written statements. A final judgment is due 30 days after the evidentiary hearing (in case of oral presentations) or after the final written statements are presented.
Availability of discovery in civil cases There is no US-style discovery in Brazil. In other words, the parties have no the right to seek documents from the other side before trial. The evidentiary phase is judge-oriented, as judges have discretion to order the production of any evidence that they deem appropriate or deny that which they consider irrelevant to the case.
As a rule, the parties must present all available evidence in the pleadings phase. In other words, plaintiffs are supposed to present all of their evidence together with the initial complaint, whereas defendants must put forward their documents with the defence. Only new documents or documents that became available after the initial complaint and defence may be presented later in the proceedings.
Courts may compel the production of documents by the other side (either before or during legal proceedings), but the respective application must individualise each document sought and indicate precisely why it is relevant to the case.
The judge – ex officio or on application by the parties during the pleadings phase – may authorise expert examinations and the taking of witness testimony. In these cases, the judge schedules the evidentiary hearing, during which the lawyers and the judge direct enquiries to the court-appointed expert and factual witnesses.
Appeals As a rule, an appeal to the federal regional tribunal or the state appellate tribunal automatically stays the enforcement of the final judgment rendered by the federal or state court, respectively.
Certain decisions rendered by trial courts during first-instance proceedings – such as the concession of injunctive relief – are subject to interlocutory appeal filed directly to the competent appellate court (the federal regional tribunals or the state appellate tribunals).
Appellate courts may review the entire first-instance decision (de novo review). Factual issues that were not explored at first instance may be taken at an appeal, provided that the party proves that it failed to do so for reasons of force majeure.
While final judgments rendered by trial courts are always appealable to the respective appellate courts (federal regional tribunal or state appellate tribunal), appeals to the Supreme Court and the Superior Court of Justice are subject to more stringent requirements.
The Supreme Court and the Superior Court of Justice review decisions rendered by both federal and state courts only when either a constitutional (Supreme Court) or a federal law (Superior Court of Justice) issue is involved. These courts' standard of review is limited to questions of law, as they do not review the evidence produced in the lower instances.
For further information on this topic please contact Fernando Eduardo Serec or Antonio M Barbuto Neto at TozziniFreire Advogados by telephone (+55 11 5086 5000) or email ([email protected] or [email protected]). The TozziniFreire Advogados website can be accessed at www.tozzinifreire.com.br.
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