Brazil updates

Arbitration & ADR

CAM-CCBC settles 20-year dispute over largest container port in South America
  • Brazil
  • 11 April 2019

A recent decision rendered by an arbitral tribunal constituted under the Centre for Arbitration and Mediation of the Chamber of Commerce Brazil-Canada has ended a 20-year dispute over the largest container port in South America. The outcome of this arbitration is positive, as it demonstrates that Brazil's arbitral framework is well established and well functioning – even in disputes involving public administration.

CAM-CCBC award set aside due to alleged irregularities in arbitrators' appointments
  • Brazil
  • 31 January 2019

The Superior Court of Justice recently upheld a Sao Paulo State Appellate Court decision which had set aside an arbitral award due to alleged irregularities during the formation of the arbitral tribunal in the context of a multi-party dispute. The Superior Court of Justice's decision confirms the appellate court's opinion that the proceeding which had been adopted to form the arbitral tribunal contravened public policy.


Aviation

Contributed by Basch & Rameh Advogados Associados
Use of GATS in Brazilian aircraft transactions
  • Brazil
  • 18 November 2020

In June 2020 the Global Aircraft Trading System (GATS) was launched to facilitate aircraft trading and financing by reducing the burden on industry participants – in particular, airlines. Since the GATS relies on the use of trusts, a traditional common law concept, a question arises as to whether the GATS can be used in jurisdictions such as Brazil that are not based on common law.

Home office closings in Brazil
  • Brazil
  • 29 July 2020

The COVID-19 crisis has brusquely forced businesses and professionals to close offices and work from home. Luckily, the Brazilian government began implementing measures relating to electronic filings and electronic signatures approximately 20 years ago, all of which have made closing aircraft deals from home offices relatively easy. The Brazilian Aeronautical Registry has adjusted some of its requirements on an interim basis to serve the aviation community by facilitating compliance with necessary formalities and filings.

Withholding tax on aircraft lease rentals – new rules finalised
  • Brazil
  • 10 June 2020

Brazil's airlines are now being subjected to a withholding tax that has not been charged on most leases for more than three decades. Airlines may be able to successfully challenge the legality of the withholding tax; however, this will require dedication of legal and administrative resources that might have been used elsewhere to fortify the airlines. In any event, under the final text of the law, the likelihood of lessors being liable for withholding tax has been reduced significantly.

Emergency draft legislation may violate Cape Town Convention
  • Brazil
  • 22 April 2020

A draft law providing emergency relief due to the COVID-19 pandemic has been submitted to the lower house of Congress. The impact of the draft law on the rights of aircraft lessors would be significant and would place into question Brazil's compliance with the Cape Town Convention on International Interests in Mobile Equipment and the Protocol to the Convention on Matters Specific to Aircraft Equipment.

Changes in Brazilian withholding tax
  • Brazil
  • 15 January 2020

The Federal Government recently issued an executive order with the potential to change the tax treatment of commercial aircraft leasing. Subject to that determination, the executive order sets new rules for commercial aircraft and engine leases. However, the executive order has created considerable confusion and doubts in the aviation sector.


Banking & Financial Services

Equity crowdfunding: alternative method of fundraising during COVID-19 pandemic
Freitas Ferraz Advogados
  • Brazil
  • 01 December 2020

Equity crowdfunding is a form of online fundraising conducted via an electronic platform for participatory investment which can help to boost business. Unlike regular crowdfunding, parties which participate in equity crowdfunding expect a financial return on their investment. In view of the characterisation of this form of investment as a public offering, the Brazil Securities and Exchange Commission recently commenced a public consultation in order to review Brazil's equity crowdfunding rules.

CVM eases investment crowdfunding rules
Freitas Ferraz Advogados
  • Brazil
  • 17 November 2020

In light of the growing popularity of crowdfunding as a means of financing and maintaining small businesses' operations, it has remained on the Brazilian Securities and Exchange Commission's (CVM's) agenda, leading to discussions as to how the existing regulation can be improved. Thus, in August 2020, in the context of the COVID-19 pandemic, the CVM published a new resolution which has made temporary changes, on an experimental basis, to the existing regulatory requirements.

Presidential decree simplifies foreign investment in Brazilian banking sector
  • Brazil
  • 01 November 2019

A recently issued presidential decree has authorised the Central Bank of Brazil to recognise the government's interest in establishing branches of foreign financial institutions in Brazil and increasing foreign equity participation in Brazilian financial institutions without the need for further presidential authorisation. Prior to the decree's enactment, these matters required the express approval of international treaties or presidential decrees recognising that investments were in the government's interest.


Competition & Antitrust

Petrobras closes abuse of dominance investigations through divestment commitments
  • Brazil
  • 26 September 2019

State-owned oil and gas company Petrobras recently reached two settlements with the Administrative Council for Economic Defence to close five investigations into alleged abuses of dominance in the oil refining and domestic natural gas markets. The settlements have drawn significant attention, as they constitute the first time that divestment commitments have been adopted as a remedy in a dominance case.

Importance of contractual control in merger review
  • Brazil
  • 06 June 2019

The Administrative Council for Economic Defence recently issued a decision on the definition of 'de facto control' under Brazilian competition law. While the decision establishes certain criteria that companies should consider when determining whether their contractual relationships with close partners may confer de facto control, these criteria are somewhat unclear and do not allow companies to assess, with sufficient certainty, whether an agreement should be subject to mandatory review.

Just desserts: CADE fines company for exclusivity practices in ice cream market
  • Brazil
  • 07 March 2019

The Administrative Council for Economic Defence (CADE) tribunal recently fined Unilever R29.4 million for abusing its dominant position in the impulse ice cream (ie, ice cream for immediate consumption) market. According to CADE, Unilever had violated competition law by adopting different types of agreement with its points of sale, which had resulted in their de facto exclusivity to sell Unilever ice creams under the brand Kibon.


Corporate & Commercial

COVID-19 and increased liability of company managers
Freitas Ferraz Advogados
  • Brazil
  • 14 December 2020

The COVID-19 pandemic has led to considerable financial and operational losses in several economic sectors. In this context, it is easy to imagine dispute scenarios involving manager liability – for example, with respect to their adoption of loss-mitigation measures which later result in a loss of revenue. In such situations, it would be difficult to ascertain which losses were actually attributable to the company's managers and which were exclusively a result of the COVID-19 pandemic.

Technology's role in commercial contracts
  • Brazil
  • 22 April 2019

Simple legal transactions and contracts can often be completed at the click of a button. However, there are a growing number of investment rounds in start-ups based on Brazilian versions of Silicon Valley contracts that unfortunately have not benefited from the critical eye and practical expertise of experienced lawyers who can examine the contracts under Brazilian law.

Stock options: local law and international accounting rules
  • Brazil
  • 25 February 2019

It is hardly surprising that Brazil's adoption of the International Financial Reporting Standards did not mesh perfectly with the Corporations Law. This article discusses the reasons for this incongruity, including that the international accounting model draws more inspiration from common law systems than from Brazil's civil law tradition and the temporal distance between the Corporations Law (although it remains modern in spirit) and the accounting rules, which are constantly evolving.