Comments on proposed changes to Brazilian collective litigation law

Fernando Dantas M Neustein

Mattos Filho Advogados, São Paulo

fdantas@mattosfilho.com.br

Isabela Campos Vidigal Takahashi de Siqueira

Mattos Filho Advogados, São Paulo

ividigal@mattosfilho.com.br

Pedro Henrique Reschke

Mattos Filho Advogados, São Paulo

pedro.reschke@mattosfilho.com.br

Laura Lambert da Costa

Mattos Filho Advogados, São Paulo

laura.lambert@mattosfilho.com.br

Introduction

The recent years have witnessed several attempts to change Brazil’s body of laws governing collective litigation. One such initiative is a bill[1] currently pending before the House of Representatives, which proposes the creation of a new Public Civil Action Law.[2] In late 2023, an opinion within the House of Representatives (the ‘House’) was issued for the constitutionality of the bill and proposed adjustments to it, which resulted in a substitutive bill. Both the opinion and the revised bill will now be voted on by a specialised committee before being reviewed by the other members of the House.

Among the extensive list of changes proposed by the substitutive bill are:

1. the expansion of the scope of collective litigation to include tax and welfare matters;
2. more detailed rules governing fluid recovery; and
3. incentives for wider popular participation in such procedures.

These are only a few examples. Some of these proposals should be praised – others, not so much. Among these are two provisions which seem to be specially concerning: changes in the laws governing jurisdiction and the possibility of mid-lawsuit adjustments to the reliefs requested by the plaintiff.

Jurisdiction

The current Public Civil Action Law provides that public civil actions dealing with facts that carry national repercussion should be filed in any state capital or in the Federal District. Although the substitutive bill does not change this rule, it proposes to grant courts the power to refuse to entertain a public civil action, even when their jurisdiction has been properly invoked, if they find that it would be more efficient to transfer the public civil action to another forum.[3]

This proposal seems to have been inspired by the common law doctrine of forum non conveniens, which allows a court properly seized with jurisdiction to dismiss a case if it finds that there is a more convenient alternative forum – to prevent forum shopping. However, although this doctrine make may sense in common law countries where often overly broad jurisdictional rules offer plaintiffs more discretion in forum selection choices, it makes less sense in civil law countries – such as Brazil – that adopt clear-cut jurisdictional rules. If the Brazilian legislator considers that the jurisdictional rules for public civil actions are too broad, it could be more effective to simply change them instead of introducing a case-by-case safety-valve that is alien to our courts’ traditional practice.

Also, allowing Brazilian courts to decline properly invoked jurisdiction for reasons of ‘efficiency’ may increase legal uncertainty. After all, different courts may have different interpretations about what makes a court more ‘efficient’, leading to similar cases being treated differently. Or worse, courts deemed to be more efficient may end up receiving too many cases, possibly resulting in a disproportionate increase of their workload and, paradoxically, inefficiency.

Adjustments to reliefs requested

The substitutive bill proposes that, after the parties have submitted their initial rounds of pleadings (complaint, defense, reply and, if necessary, rejoinder), courts be allowed to make the ‘necessary adjustments’ to the reliefs requested by the plaintiff, which may include expanding, reducing or splitting claims.[4] The proposal is problematic for three main reasons.

First, although the court can and should take the necessary measures to move the case forward, including by ordering the plaintiff to correct defects in the complaint, granting the court powers to directly adjust the reliefs requested after the defense goes too far. Such powers would allow courts to unduly interfere in plaintiffs’ exclusive prerogative to set the limits of their own claims.

Second, the proposal does not expressly provide that defendants be given the opportunity to amend their defenses considering the court-determined adjustments to the reliefs, which could jeopardise the defendant’s right to be heard and to present a full defense.

Third, even if the defendant is allowed to amend its defense, the court-determined adjustments would still reopen the pleading phase, which may slow the proceeding and thus increase the time courts take to resolve cases.

Final remarks

The intention to improve the legislation governing collective litigation is positive but it should comply with the rules of due process. Proposing amendments that bring a great dose of discretion to the judge will increase legal uncertainty and make it harder for defendants to properly defend themselves, impacting their right to a full defense without improving the effective protection of collective rights.