Thaís Vasconcellos de Sá
Bermudes Advogados, Rio de Janeiro

Introduction

As a civil law jurisdiction, Brazil currently has numerous proposed bills before its legislative bodies. In recent years, two pending proposals before the National Congress that could significantly change the landscape of collective proceedings have gained momentum: bill project number 2.925/2023 and bill project number 03/2025. This article summarises the main changes these proposals, as they currently stand, would introduce to the regulatory landscape of collective proceedings in Brazil.

Normative architecture and the scope of public civil action in Brazil

Collective, diffuse and homogeneous individual rights (for example, individual rights arising from the same harmful event) are procedurally persecuted through public civil actions (ações civis públicas or ACPs), regulated by Federal Law number 7.347/1985 (LACP). Originally enacted in 1985, the LACP was designed to protect collective rights and interests mainly relating to the environment; the consumer market; assets with artistic, historical and touristic value; infractions to the economic order; urbanism; the dignity of racial, ethnic or religious groups; and public property.^[1]

Standing is conferred on specific public institutions and qualified associations: the Public Prosecutor’s Office (Ministério Público), the Public Defender’s Office (Defensoria Pública), the Union, States, Federal District and Municipalities, indirect administration entities (autarquias, empresas públicas, sociedades de economia mista and fundações de direito público) and civil associations that meet the statutory requirements of longevity and thematic pertinence.^[2]

ACPs are allowed to deal with pecuniary and non-pecuniary harm and should be brought before the court located in the place where the harmful event occurred. Article 16 of the LACP provides that ACP judgments produce erga omnes res judicata effects ‘within the limits of the territorial competence of the issuing court’.^[3]

Designed to facilitate the safeguarding of its protected interests, the LACP: (1) adopts a facilitating regime on costs, with no advance payment of court costs and expenses^[4] required, and (2) allows broad remedial flexibility, including obligations to do or not to do certain things, damages and preventive or inhibitory relief. This remedial openness was strengthened by the 2015 Civil Procedure Code (CPC): courts may impose specific actions and adopt measures necessary to achieve the practical result equivalent to such actions (Article 497), order compliance acts and coercive measures (Articles 536–537) and exercise managerial powers to adapt the proceedings (Article 139, IV).

The LACP (Article 5, § 6º) authorises the use of a consensual solution via a Term of Adjustment of Conduct (TAC), through which the legitimised entity that pursued the collective action and the obligated party bind themselves to undertaking specific compliance measures, with executive enforceability. TACs have been institutionalised in large-scale environmental and public policy disputes throughout Brazil, in or out of court.

Sums arising from condemnations or settlements as part of CPAs revert, generally, to the Fund for Defense of Diffuse Interests (“FDD”), for the support of projects aimed at repairing or preventing diffuse/collective harm, with specific earmarking of such funds where the harm concerns ethnic discrimination.^[5]

Albeit the LACP has a more general provision stating that a CPA can also be used to protect rights relating to ‘any other diffuse or collective interest’,^[6] harm to the environment, public property and/or consumer markets are recurring themes in the biggest CPAs brought before the Brazilian courts, while several other potential unlawful situations remain either absent or deficiently protected by the CPA regime.

These deficiencies of the current normative architecture have led to new proposed federal legislation on the matter. Two of the most recent and relevant proposals are addressed below.

Bill project number 2.925/2023 and the proposed ‘class action’ to secure damages for investors

One area of individual homogeneous rights that is not currently covered by the normative architecture of the LACP is harms caused to investors, for breaches of the Brazilian capital markets and corporate regulation.^[7]

Bill project number 2.925/2023 proposes closing that gap. Among other changes, the bill includes a provision on Federal Law number 6.385/76, which would grant authorisation for investors harmed as a result of a breach of such regulation to bring a collective proceeding on their own behalf and on behalf of other affected investors within the same class. The opportunity to bring such action would be available to any investor that, immediately before the damage occurs, holds (1) a percentage equal to or above 2.5 per cent of the securities of the affected type or class or (2) a financial interest of R$50m or more.^[8]

The current draft of the proposal further establishes that the existence of such a proceeding must be disclosed to the market by the company, triggering a window for other eligible investors to come forward as co-plaintiffs within a timeframe of 30 days, and that such a regime should also be open to use in the context of arbitration, in instances where arbitral provisions exist within the company’s by-laws that objectively cover the dispute, with such arbitral proceedings being announced publicly.

Practitioners should closely track the final wording of proposed Article 27-H (standing thresholds, disclosure triggers and opt-in windows), the CVM’s future regulations calibrating eligibility and market disclosure and the interface of Article 27-H with ongoing or prospective arbitral provisions, which cover most open-traded companies in Brazil, as they are a pre-requisite for accessing higher listings in the Brazilian stock market (B3).

The emerging framework for civil ‘structural proceedings’: practice and proposals

Other significant legislative changes related to collective proceedings in Brazil are contained within the proposed regulatory framework for ‘structural proceedings’.

Currently, structural proceedings are a practice developed via case law in Brazil upon the recognition that some collective proceedings involve a higher degree of complexity, multiparty disputes and have a broader effect on the structural demands of society. These cases, therefore, entail a different approach by the judiciary and the parties involved than is viable under the LACP and the CPC.

Such cases require a managerial, problem-solving approach to be taken by the courts, which is different to the approaches usually taken in regard to other types of cases. In Brazil, the action of the court is based on the principle of jurisdictional inertia, whereby the judge will only act at the request of a party,^[9] and judicial decisions^[10] are specifically bound by such a request.

Due to its specific characteristics, a structural proceeding cannot be adequately managed, and its underlying controversies adequately addressed, using such a strict approach. The usual practice, developed in the US in the case of Brown v Board of Education of Topeka (1954), unfolds in several phases: diagnosis, design of a remedial plan (with stakeholder participation), iterative monitoring with measurable benchmarks and adaptive oversight of compliance before the court.

In recent years, more complex collective proceedings in Brazil, such as in the cases involving the dam ruptures in Mariana (2015) and Brumadinho (2019), have been subject to a more active and managerial approach by the courts.

These developments have led to the enactment of institutional rules, such as Recommendation 163 issued by the National Council of Justice (Conselho Nacional de Justiça or CNJ), and bill project number 03/2025.

The principal procedural changes proposed (or consolidated) in the bill in regard to structural proceedings are as follows:

• express statutory definition and scope: establishing a definition of a ‘structural case’, by identifying triggers (the purpose being to address systemic dysfunction, the polycentric impact and chronic public policy failures) and eligible ‘subject matters’;
• phased adjudication with remedial planning: formalisation of the relevant procedural stages (diagnosis of the problem, negotiation/design of a structured plan, implementation, monitoring, closure), with interim, revisable decisions and performance milestones;
• governance, public engagement and oversight: broader amici curiae participation, with the possibility of the appointment of technical committees to advise the court, independent monitors, affected-community hearings and legitimisation of the roles of public defenders to participate as custos vulnerabilis (which are already recognised in case law);
• cooperative judicial management and inter-court coordination: based upon the premise of the consolidation of different proceedings where feasible, the bill project promotes the use of CPC Articles 67–69 to coordinate procedural acts between different courts’ and multi-courts’ enforcement of the relevant structural plans;
• enhanced injunctive and coercive toolkit: use of the court’s powers to impose specific performance actions in terms of the relevant obligations,^[11] compliance orders, calibrated coercive fines and substitute measures in order to achieve the underlying proposed goal of the relevant judicial orders;^[12]
• transparency, indicators and data-informed monitoring: procedural duties to set measurable indicators, reporting calendars and public dashboards for compliance, with oversight backed by the LACP/CPC execution rules;
• enhancement of the settlement architecture under the LACP (TACs): integration of TACs into structured plans, with provisions for revisions and judicial supervision to preserve the underlying public interest;
• clarified res judicata reach and case aggregation: harmonisation of the territorial effects of a decision under the CPA with the Supreme Federal Court’s Theme 1.075 and mechanisms to avoid the issuance of fragmented or conflicting structural orders; and
• cost and funding arrangements: preservation of the LACP’s facilitation of access (Article 18) and the channelling of monetary relief to the FDD for systemic remediation projects.

This is another example of a legislative proposal that would significantly change the proceedings for collective and diffuse damages in Brazil. Apart from following the legislative debate closely, practitioners should already be starting to adapt their thinking to this new approach being taken by the Brazilian Courts, as it is already being implemented in practice.

For plaintiff institutions, they should consider specifying a phased plan or put forward a request for a court-managed planning phase, and justify the participatory design and monitoring tools to be used from the outset. For defendants, engagement in the design of the proposed plan is crucial, as well as strategic preparation and execution of such participation to ensure that an adequate and feasible outcome is secured that solves the problem and reduces the risks.

Closing notes

The LACP remains the backbone of collective litigation in Brazil. The ongoing legislative and regulatory work underway on structural proceedings seeks to codify practices that are already visible in superior court case law and in the day-to-day activities involving high-impact ACPs, especially environmental and public policy cases.

Key takeaways in regard to these types of proceedings still involve confirming the standing and venue strategy early, but once the case proceeds and is seen as a structural proceeding, the parties should expect (and adapt to) a much more hands-on approach by the courts, with significant managerial and oversight-related involvement of the judge on the specific themes of the dispute, the diagnosis, the structure and proposals of a tailor-made plan, with judicial oversight on the implementation of this plan. Experience from the most recent collective cases involving the Mariana and Brumadinho dams can help guide such expectations and practice.

As for collective proceedings to pursue harm caused by a breach of Brazil’s capital markets regulation, although significant outcry has been voiced when bill project number 2.925/2023 was discussed before the relevant legislative bodies, there is still much legislative work to be done. Albeit not yet regulated, the practice of so-called ‘collective’ (for example, multi-party) proceedings to address this type of damages is nonetheless being developed within a few arbitration proceedings, so practitioners must adapt their practices going forward in preparation for any forthcoming changes.

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