Licks Attorneys' Government Affairs & International Relations Blog

Doing Business in Brazil: Political and economic landscape

Licks Attorneys' COMPLIANCE Blog


No items found.

Public civil actions were endorsed by Article 129, III of the  Federal Constitution of 1988 and have become one of the Federal Prosecution Officer’s (MP) institutional functions, regulated by Law No. 7,347 / 85.  They target diffuse, collective, and homogeneous individual rights.  They are intended to prevent and prosecute violations to collective interests such as the environment, consumers, historical or cultural heritage, including administrative impropriety, economic order, urban order.

Public civil actions can be filed by the MP, the Public Defender’s Office, the Union, States, Municipalities and the Federal District, by a public company, foundation, or mixed-capital company and also by an association constituted for more than a year, and that includes the protection of public and social heritage, the environment, consumers, the economic order, free competition, the rights of racial, ethnic or religious groups or artistic, aesthetic, historical, tourist and landscape heritage among its institutional purposes. Even if the MP is not the plaintiff, their participation as a legal monitor is mandatory. This procedure is unique, and no court fees are charged, except in cases of bad faith by plaintiffs.

Even though it was enacted as ordinary law in 1985, it was only after Law 8,429 / 92 (Administrative Improbity Law) identified the scenarios that could include administrative improbity that there was an incentive to employ public civil actions to curb and penalize such offenses. It is important to note that acts of administrative impropriety are often linked to acts of fraud and corruption.

This crucial tool of Brazilian law recently played a prominent role when the Supreme Federal Court (STF), 2021, judged the Extraordinary Appeal (RE) No. 1,101,937 / SP, resulting from a lawsuit led by the Brazilian Institute for Consumer Protection (IDEC), requesting a review of real estate financing contracts issued by several financial institutions in a trial whose final decision was just issued on April 7.

The STF’s decision was symbolic, having declared the unconstitutionality of Art. 16 of Law 7,347 / 85, which established that civil sentences were res judicata erga omnes (have effects covering everyone), but only within the court’s territorial jurisdiction. In fact, since the adoption of Law 8.078 / 90, the Consumer Protection Code (CDC), the effects of collective action were, as a rule, erga omnes, thus conflicting with the provisions of Article 16 of Law 7,347 / 85, which restricted the scope of such effects to the territorial jurisdiction of the court.

Therefore, the STF decision established the following rule:

1. Art. 16 of Law 7,347 / 1985, as amended by Law 9,494 / 1997.

2. In the case of public civil action with national or regional effects, the jurisdiction must comply with Art. 93, II, of Law 8.078 / 1990. As the scope is regional, the forums or circumscriptions of the capital of the State or the Federal District will apply, provided that they are inserted in the region where the effects of the decision are projected; if the scope is national, the applicability between the state capitals and the Federal District will be concurrent.

3. When multiple public civil actions of national or regional scope are filed, the prevention of the judgment that first met one of them is signed to determine all related demands.

In this way, the Supreme Court resolved numerous conflicts of interpretation that existed on the subject among both jurists and judges.

The decision has also been an incentive to enforce cases against fraud and corruption related to the themes addressed by the law.

No items found.