The legal jabuticaba

Helena Najjar Abdo
Cescon Barrieu Flesch & Barreto Advogados, São Paulo; Communications Officer, IBA Academic and Professional Development Committee
helena.abdo@cesconbarrieu.com.br

Jabuticaba is a fruit that is said to grow only in Brazil. The fruit is small, round and has dark purple skin. The inside is a white jelly-like pulp, with the sweetness of the lychee and the texture of Niagara grapes. It is a unique fruit that is distinctly Brazilian – not Latin American or tropical. While there have been attempts to grow jabuticaba trees in other countries, the fruit tends to be smaller and less flavourful than those grown in Brazil. Additionally, the trees can be susceptible to pests and diseases in non-native environments.

Similarly, legal systems around the world have their own jabuticabas, that is, their own unique features. Our main distinctive legal feature is what we call honorários sucumbênciais or honorários de sucumbência. This term is used in Brazilian civil procedure to designate the fees paid by the defeated party in a lawsuit to the prevailing party’s attorney.

In general, while the specific terminology and procedures for the payment of attorney's fees may differ across legal systems, the concept of requiring the losing party to pay the winning party's legal costs, including attorney's fees, is a common feature in many legal systems worldwide. Examples of jurisdictions where this concept is usual include France, Germany, the UK and the US, especially in cases of abuse of procedural rights, unreasonable conduct and bad faith litigation.

However, when Brazilian lawyers deal with foreign clients or foreign legal cultures, or when teaching comparative law, explaining the meaning and the application of honorários sucumbênciais can be both interesting and challenging.

More than just a particular characteristic of the Brazilian procedural system, honorários de sucumbência are often a factor of encouragement or discouragement for litigation. They are usually applicable in judicial proceedings of any nature, but there is ongoing discussion about their application in arbitrations and pre-arbitration precautionary measures.

In simple terms, honorários de sucumbência refers to the fees that the losing party in a legal dispute must pay to the attorney representing the prevailing party. They are an independent award of attorney's fees, directly paid by the losing party to the prevailing party's attorney. These fees are not a reimbursement of expenses incurred by the prevailing party but are directly awarded to their legal counsel as a result of the losing party's defeat in the legal dispute.

In most jurisdictions, cost orders or cost awards are intended to cover some or all of the legal expenses of the prevailing party, which is the one entitled to receive payment or reimbursement for these costs. However, in Brazil, the concept of honorários sucumbênciais differs in that they belong to the prevailing party's lawyer, acting in court or before an arbitral tribunal, rather than to the prevailing party themselves. These fees are considered to be a part of the total fees owed to the prevailing party's lawyer.

It is also important to distinguish honorários de sucumbência from the attorney's fees that the prevailing party may have paid to their own legal counsel. While the prevailing party's attorney may have a separate fee agreement with their client honorários de sucumbência are an additional financial obligation imposed on the losing party of a dispute in court or in arbitration.

Honorários sucumbênciais are usually set as a percentage of the disputed amount or the amount claimed by the plaintiff in monetary terms. The rules provided in the Brazilian Code of Civil Procedure for determining the disputed amount revolve around these terms. For example, in a lawsuit aimed at collecting a contractual penalty (contractual fine), the disputed amount will be equivalent to that of the fine itself. If the claim also includes a request for compensation for losses and damages, the disputed amount will be the sum of both claims (fine and compensation).

The criteria for awarding honorários de sucumbência in Brazilian civil proceedings are set forth in Article 85 of the Brazilian Code of Civil Procedure. They are usually awarded as a percentage (ranging from ten per cent to 20 per cent) of the amount at stake or the disputed amount. The percentage may vary depending on factors such as the stage of the proceedings, the complexity of the issues involved, the extent of the legal work performed by the winning party's lawyer, the nature and importance of the matter and, sometimes, the conduct of the parties during the proceedings.

Just like honorários sucumbênciais, the setting of court fees, which are due to state judicial bodies, are also based on the disputed amount. Therefore, when projecting the costs of litigation, whether as a plaintiff or defendant, parties must take into account the potential liability for the payment of these additional fees in case of a negative outcome.

From a law and economics perspective, the inclusion of honorários sucumbênciais as part of the prevailing party lawyer's total fees introduces an interesting dynamic that considers the impact of these fees on incentives, behaviour and resource allocation.

From one point of view, honorários de sucumbência can serve as a powerful tool to deter frivolous or meritless litigation. By imposing the risk of bearing these additional costs, this mechanism can discourage parties from pursuing weak claims or engaging in excessive litigation. It promotes efficient allocation of resources by encouraging parties to carefully evaluate the strength of their case before proceeding to court or, in some cases, arbitration.

Moreover, this mechanism acknowledges the lawyer's contribution to achieving a successful outcome and provides an economic incentive for diligent representation. By assigning a specific financial reward to the lawyer, the Brazilian system aligns the interests of the prevailing party and their counsel, as their compensation becomes intertwined.

However, in aiming to promote efficient dispute resolution and discourage unnecessary litigation, honorários de sucumbência can, on the other hand, create barriers to access to justice, particularly for individuals with limited financial means to pursue legitimate claims. This can result in a lack of equality of arms between parties, potentially favouring economically stronger parties in court litigation or even in arbitration.

Overall, the payment of legal fees by the losing party is a significant aspect of the Brazilian legal system. Given the complexity and significance of honorários de sucumbência in the Brazilian legal system, it is crucial for parties to carefully consider the costs and benefits of litigating in Brazil. Seeking advice from experienced local counsel specialised in Brazilian law is highly recommended. They can provide valuable guidance to obtain a comprehensive understanding of rights, obligations and the potential impact of honorários de sucumbência on the overall litigation strategy.

Furthermore, exploring alternative dispute resolution methods, such as mediation and arbitration, can provide distinct advantages, as they typically do not involve the application of honorários sucumbênciais. In these methods, fees and costs are commonly shared based on a prearranged formula or proportion. When it comes to arbitration, it is advisable for parties to proactively address the potential application of honorários de sucumbência by including specific provisions in the arbitration clause. By doing so, parties can avoid surprises and retain control over the decision-making process, as the arbitration panel must decide within the framework established in the agreement.

In conclusion, honorários de sucumbência play a significant role in Brazilian civil proceedings and serve as a form of compensation provided by the law itself to the lawyer representing the winning party. These fees, awarded by the court, are borne by the losing party and are determined based on the disputed amount, complexity and the extent of the legal work performed. Understanding the criteria and implications of honorários de sucumbência is crucial for both parties and legal professionals to navigate the civil and commercial dispute system in Brazil.