In Brazil, there are many proceedings through which it is possible to protect the interests or rights of determined or undetermined groups of individuals or legal entities. For instance, we have the Civil Public Action (“CPA”), which constitutes a type of claim provided by Federal Law No. 7,347/1985 (“CPA Law”), as well as the procedure established in the Brazilian Consumer Defence Code (“CDC”) (arts. 91 to 100 of the CDC). There are other types of claims and procedures created especially to allow for the possibility of class-actions ; those  worth mentioning are the ‘popular action’ (Federal Law no. 4,717/1965 and art. 5, inc. LXXIII of the Brazilian Federal Constitution “CF”), the ‘class writ of mandamus’ (art. 5, inc. LXX, of the CF), and the ‘administrative improbity action’ (Federal Law no. 8,429/1992).

Amongst the options mentioned above, the most common of the collective redress mechanisms available is the CPA. According to Article 81, items I, II, and III, of the CDC, and Article 21 of the CPA Law, the three types of rights that may be protected through a CPA are i) ‘diffused rights’, because they belong to the entire community without distinction (e.g. defence of the environment); ii) ‘collective rights’, which refer to a specific group of people, individuals or legal entities (e.g. members of an association of consumers who suffered harm) and iii) ‘homogeneous individual rights’, which apply to  all individuals who suffered injury from the same event or product (e.g. consumers who suffered harm caused by a product or service, even when it was used according to the instructions).

In the absence of specific law provisions, the Brazilian Civil Procedure Code (“BCPC”) will be subsidiarily applicable to all collective judicial proceedings (for example, Article 19 of the CPA Law and Article 7 of the Federal Law no. 4,717/1965).

According to Article 5 of the CPA Law, the Brazilian entities with legal standing to file a CPA are:

• the Public Prosecutor’s Office;
• the Federal Government;
• the States;
• the Federal District;
• the Municipalities;
• the Public Defenders’ Office;
• all government agencies;
• all public companies;
• al foundations;
• the government-controlled (private) companies and the associations that: (1) have been created for at least one year; and (2) have among their institutional objectives the protection of: (i) the environment, (ii) the consumer, (iii) the antitrust system, (iv) free competition, (v) historical, touristic, artistic, landscape and aesthetic heritage.

The organisation of the Brazilian judicial system is a constitutional matter (articles 92-126 of the CF), and there is a fundamental internal division between the Specialised Courts and the Ordinary Courts. The three main divisions of the Specialised Courts are the Labour Courts (articles 114-117 of the CF), the Electoral Courts (articles 118-121 of the CF) and the Military Courts (articles 122-124 of the CF), each with its own appellate courts.

As part of the Ordinary Courts, the Federal Courts are organised into Judicial Sections, with Lower Courts where single judges act. The jurisdiction of the Federal Courts of first instance is established in Article 109 of the CF, and in civil matters, it is essentially restricted to the cases in which the Federal Government or certain entities and public bodies linked to it have an interest (article 109, I of the CF).

The jurisdiction for appeals is determined on a regional basis by the Federal Courts (i.e., the Federal Regional Courts) and is established in Article 108 of the CF.

The jurisdiction of the State Courts (Ordinary Court) is residual. It is not defined case by case in the CF and encompasses all the matters that are not under the jurisdiction of the Federal Courts.

Thus, the State Courts have jurisdiction to hear appeals against judgments rendered by first-instance State judges, except when the State judge has decided on a matter of federal jurisdiction (exception provided in Article 108 of the CF).

In conclusion, there is no specialised court to judge class actions in Brazil. So, in theory, any Brazilian court could deal with class actions or collective redress proceedings, and the court distribution will primarily follow the factual (e.g. territorial, as provided by Article 2 of the CPA Law) and legal matters (e.g. violated rights) under discussion.

However, the court where the CPA has previously been filed attracts all further judicial proceedings based on the same claim or subject (Article 2, sole paragraph, CPA Law).

In general terms, the CPA may protect any right that transcends the merely individual sphere. The claim may have a broad scope and may be declaratory or contain an order to pay/to do. Article 1 of the CPA Law establishes the following:

Art. 1 The provisions of this Law govern, without prejudice to popular action, claims for liability for moral and property damages caused:

I – to the environment;

II – to the consumer;

III – to goods and rights of artistic, aesthetic, historical, touristic and landscape value;

IV – to any other diffuse or collective interest;

V – by infringement of the antitrust system;

VI – to the urban zoning system;

VII – to the honour and dignity of racial, ethnic or religious groups,

VIII – to public and social heritage.

This is not an exhaustive list, due to the express provision in item IV: “any other diffused or collective interest”. Moreover, Article 21 was added to the CPALaw, providing that the rules of Title III of the CDC applied to the “defence of diffuse, collective and individual rights and interests”. As a result, the CPA Law was extended to encompass (a) all other types of general and collective rights not previously listed and (b) for the first time, certain individual rights (namely, homogeneous individual rights).

Thus, as noted above, the CPA Law and the CDC now are jointly applied for the defence of diffuse, collective and homogeneous individual interests.

Under Brazilian law, there are some legal restrictions on the scope of available collective civil actions. For instance, civil actions cannot be brought on a collective basis in relation to: (i)  tax issues or social security contributions (all according to Sole paragraph of Article 1 of the CPA Law), (ii) to declare the unconstitutionality of a law or a legal provision.

The filing of collective actions is very common in the Brazilian justice system. According to the National Register of Collective Actions¹ (“CNAC”), linked to the National Council of Justice (“CNJ”), there are currently more than 300 thousand collective actions in progress in Brazil, with issues related to environmental damage being the most recurrent subject of these actions, with around 22 thousand actions addressing this. According to the survey mentioned above, the claimant who generally brings these actions to the Brazilian Judiciary is the Public Prosecution Office (State or federal).

Footnote(s):

¹ https://paineisanalytics.cnj.jus.br/single/?appid=1d54bc4d-81c7-45ae-b110-7794758c17b2&sheet=87f1a661-cf86-4bda-afe4-61dfc6778cd4&lang=pt-BR&opt=ctxmenu,currsel

Frequently, class action or collective redress litigations include competition, data breach, shareholder, commercial contract, consumer and product liability and environmental, social and governance (ESG) claims. The main potential emerging business risks that may be the focus of such litigation are:

Environmental damage: companies that engage in activities that cause harm to the environment, such as dam collapses, oil spills or pollution, may face class actions. These actions can seek full redress in relation to the effects of the wrongdoing including but not limited to reparation of the environment, compensation for property damage, health effects and loss of profit.

Cybersecurity breaches: with the increasing frequency and severity of cyber-attacks, businesses that fail to adequately protect customer data may face class actions. These actions can arise from breaches of personal information such as credit card numbers, Social Security numbers, and health records.

Misleading or deceptive advertising: companies that engage in false or misleading advertising practices may face class actions brought by consumers who were deceived or harmed by such practices. This can include claims related to product quality, safety, or effectiveness, amongst others.

Article 104 of the CDC states that collective actions cannot prevent individuals from pursuing individual actions based on their individual rights, which allows the coexistence of class actions and individual actions on related matters or pleadings.

That said, the Brazilian jurisdiction is an ‘opt-out’ jurisdiction. The final decision granting the collective claim is erga omnes, and all individuals with subjective rights covered in the claim benefit and can voluntarily enforce it throughout the country.

In case of an existing individual action at the moment of the class action distribution, the individual can request the suspension of his/her individual proceeding in order to rely on the final resolution of the class action (Article 104 of the CDC). In addition, the individual member of the group may also ‘opt-out’ from the class action by filing an individual claim (Article 103, § 3, of the CDC). They may also opt not to proceed with the liquidation and enforcement of the final decision issued in the CPA.

The claimant – with standing to sue – must file their particulars of claim before the Court assigned to adjudicate the claim (as per question 3). Such particulars of claim must comply with the provisions set in the BCPC (Article 319) and specify: I – the court to which it is addressed; II – minimum information to identify the claimant and the defendant such as the name and surname, marital status, existence of a civil union, profession, the Individual or Corporate Taxpayer Identification Number, email address, address of domicile and residence; III – the factual and legal grounds of the claim; IV – the pleadings and its details; V – the amount under discussion; VI – the evidence on which the claimant intends to rely on in order to prove the truth of the alleged facts; and VII – the claimants’ intention of either holding or not holding a conciliation or mediation hearing. In addition, the claimant must produce within the particulars of claim all the documents that are indispensable for the claim (Article 320 of the BCPC).

In relation to the indispensable documents for the claim, the burden of proof generally falls on those who are pursuing the claim. However, Article 373, § 1st of the BCPC allows the judge to grant the reversal of the burden of proof based on the pertinence of the factual allegations and the technical capacity between the parties. Following that reasoning, it is not unusual for the courts to shift the burden of proof from the claimants to the defendants in class actions concerning consumer rights (in accordance with Article 6, VIII, of the CDC) and environmental damage (following precedent 619 rendered by the Brazilian Superior Court of Justice, STJ, grounded on the precautionary principle)².

Footnote(s):

² See judgments rendered by the STJ, 1st Chamber, Special Appeal no. 1.997.103/SC, Reporting Minister Paulo Sérgio Domingues, judged on 26 Feb 2024; STJ, 1st Chamber, Special Appeal no. 1.523.674/RS, Reporting Minister Sérgio Kukina, judged on 3 Oct 2023; STJ, 1st Chamber, Special Appeal no. 2.052.112/MS, Reporting Minister Regina Helena Costa, judged on 14 Sep 2023, among others.

Brazilian law does not provide distinct remedies for individual claims compared to class action or collective redress proceedings. The most common remedies for collective redress proceedings, as set forth within the BCPC, are injunctions, interlocutory reliefs, and imposition of affirmative or negative obligations.

These remedies are usually granted to compel the defendant to do something (obligation to do) or for them to refrain from doing harmful conduct (obligation not to do). In addition, the defendants may be subject to payment of a daily fine should they not comply with the decisions rendered by the judge. Obligations to fully redress the damage and/or to provide compensation are the most common remedies.

Brazilian laws do not provide for specific rules for punitive damages but there is substantial case law³ defending the applicability of punitive damages for such claims, especially for deep pockets and repeated offenders.

Footnote(s):

³ See e.g. STJ, 3rd Chamber, Special Appeal 1655731/SC, Reporting Judge Minister Nancy Andrighi, judged on 14 May 2019.

Juries are not used for class actions or collective redress proceedings in Brazil. They are summoned only for homicide trials. On the other hand, collective redress claims are subject to trial before a judge (following the criteria described in question 3.)

Collective redress and class actions aim at providing full compensation to those who are claiming to have suffered damage. The Brazilian Civil Code (“BCC”) states in Article 944 that compensation is measured by the extent of damage. There are two main types of damage in Brazil, “material” or “patrimonial” and “moral” or “non-patrimonial”. For material damage, Article 402 of BCC, ensures compensation for immediate losses alongside any loss of earnings resulting from the damaging event. As for moral damage, the STJ commonly uses a methodology to quantify it called the two-step method (STJ, Special Appeal 959.780/ES). The court usually refers to similar cases and sets a standard value for that type of damage. After that, the judge delves into different criteria such as the circumstances of the case, the extent of culpability of the offender, the magnitude of the violation, a possible concurrent fault of the victim, and the economic capacity of the parties. Nevertheless, this methodology is not set in stone and there are alternate methods for determining damages for specific matters (such as consumer, environmental, health, and labour law etc.)

The Brazilian system of collective proceedings is organised under specific material and procedural laws such as the CDC and the CPA Law and is, therefore, subject to the Brazilian judicial system previously explained. The adjudication of the class action will be primarily determined in accordance with the locality in which the damage or rights violation occurred, with certain matters strictly falling under federal jurisdiction (as per question 3).

In 2021, the Brazilian Supreme Court recognised that limiting the territorial reach of decisions rendered in CPAs in accordance with the Court’s location is unconstitutional.⁴ As mentioned, decisions rendered under collective claims have erga omnes effects and could be enforced by individuals with rights covered by the claim throughout the country.

However, there is still some debate over international cross-border claims and their impacts on Brazilian claims.

Footnote(s):

⁴ STF, Extraordinary Appeal no. 1101937, Reporting Minister Alexandre de Moraes, judged on 8 Apr 2021.

There are no specific limits to the nationality or domicile of claimants, but the criteria that determine the jurisdiction are expressly established in the CPA Law (place of the damage) and the CDC (type of the damage).

Brazil has its own system of collective proceedings that does not rely on international law. Nevertheless, Brazil has ratified or incorporated many international treaties such as the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters and the American Convention on Human Rights.

Article 5, § 6^th, of CPA Law and Article 174, III, of the BCPC supports settlements under CPAs as it allows the defendants to enter into an agreement known as a Conduct Adjustment Agreement (Termo de Ajustamento de Conduta, TAC), which is a common mechanism for resolving CPAs quickly and providing effective compensation. Its terms are broad, and the mechanism typically requires the signatory defendant to adopt a specific measure aiming at ceasing harmful conduct (e.g., degradation of the environment) and to compensate for damages to the community and/or to individuals (e.g., compensating material damages, loss of profits, non-material damages, among others). Noncompliance with the conditions set in the TAC may give rise to penalties and continuance of further CPAs on the same matter.

The standards and requirements for a TAC must adhere to the general rules provided by the BCC and BCPC, as the CPA Law does not set the requirements needed to enter into a settlement under a collective action.

Its terms are negotiated between claimants and defendants. When the CPA is based on homogeneous individual rights, the general clauses of a TAC benefit the collective in the abstract and all individual victims (people suffering damages and/or affected by the wrongful act). Its enforceability will arise from the court’s ratification (Article 487, item III, “b” of the BCPC).

The enforceability will depend on the nature of the TAC, whether it aims to prevent or cease specific conduct, set compensation for individuals, or both. Enforcement can be partial and relates to the part of the obligation that the party is entitled to.

The court in which the CPA is ongoing shall analyse the terms under the TAC to confirm whether its content complies with the law and the interests involved (Articles 840-850 of the BCC and Article 190 of the BCPC). If this is the case, the court will ratify the TAC as a collective settlement, which will be enforceable by all entities and individuals whose rights are covered by the TAC (Article 784, IV, of the BCPC).

It is also possible that the TAC does not cover all the rights and claims addressed by the CPA. In this case, the ratification will partially extinguish the judicial proceeding, and the CPA will continue with a partial judgment on the merits (Article 490 of the BCPC).

In Brazil, regulatory entities have the specific competence to deal with administrative disputes involving such matters (e.g., antitrust/competition, financial market, or telecommunications, among others). Therefore, an unappealable regulatory decision can serve as substantive evidence of a collective rights violation to be discussed and compensated in a collective action.

In addition, there are no legal provisions requiring regulatory bodies to assist on collective claims concerning specific matters of their expertise. However, the regulators can participate in the claim as an amicus curiae through a court decision or at the parties’ request (Article 138 of the BCPC).

No legislation specifically states that the CPA or another class action is the judicial mechanism to enforce ESG matters. However, the CPA is a judicial mechanism to protect violations of diffuse, collective, and homogeneous individual rights, and ESG matters fall within the  scenarios provided by Article 1 of the CPA Law (e.g., damage to the environment, to consumers, to the economic order, etc.).

Some pioneering CPAs in Brazil have been filed by social entities to bring to the fore various contemporary issues including: the social aspects of business or specific markets and companies’ policies or by the Public Prosecution to assess the adequacy of companies’ commitments to protect the environment and mitigate climate change that could negatively affect their operations. However, those CPAs are still ongoing and there is no judgment on the merits to provide an overview of the Brazilian courts’ understanding of these claims.

Additionally, investors could initiate a CPA based on corporate liability (Law 7.913/1989 and CPA Law) to claim specific measures and compensation due to non-compliance with the purposes disclosed to the market and the losses suffered in the stock market or even claiming corporate governance interventio. However, no public dispute in Brazil provides an overview of the understanding of this type of litigation.

Usually, class actions and collective claims are filed by the Public Defenders’ Office, and the Public Prosecution Office which are public entities funded by public resources. However, no legal provision prevents the possibility of a collective claim being brought by associations or foundations funded by private entities.

Conditional fee agreements are admissible and commonly used in Brazil, especially in consumer claims, personal injury, and labour disputes. These agreements align the interests of the attorney and the client by allowing the attorney to receive a percentage of the awarded amount and the client to properly claim their rights in Court without or with minor costs in advance, especially because, in Brazil, social-economic disparity can hinder access to justice.

In accordance with Article 49 of the Brazilian Bar Association’s Ethics Code, contingency fees must be reasonably proportionate and consider several criteria such as the complexity of the case, the work performed by the attorney, the amount involved, and the clients’ financial situation.

Brazilian courts can require the losing party on regular civil actions to pay the attorney fees of the prevailing party’s counsel due to a dismissed claim, as stipulated by Article 85 of the BCPC. However, this provision is not usually applied in CPA judgments on the merits.

The reason for that is that Article 18 of the CPA Law aims to protect claimants from attorney fees and all regular judicial costs due to the social relevance of these cases. This legal provision plays a significant role because CPAs involve collective action, typically entail large sums, and require substantial judicial costs; consequently, the reversal of costs could prejudice the public interest, deter essential litigation from small social entities lacking financial resources, or impose undue burdens on the government by condemning public entities.

Proven bad faith is the only rare exception to a CPA’s principle of no ‘adverse costs’ (Article 17 of the CPA Law). In such cases, the claimant and the managers responsible for its filing would be personally and jointly liable for paying (i) the attorney fees and (ii) the judicial costs, which could be estimated at up to ten times the original amount.

There are ongoing proposals focused on amending the CPA Law before the Brazilian National Congress. Proposals nos. 4,778/20, 4,441/20, and 1,641/21 aim to make substantial amendments to the CPA Law or to enact a new law, which is intended to be passed jointly. Below are some highlights from these proposals:

Proposal no. 4,778/20 aims to: (a) Require the regulatory agency to submit its opinion on matters within its knowledge and supervision before filing a CPA (Article 12, §§1 and 2); (b) Expressly provide for the possibility of settlements under CPAs (Article 13); (c) Waive the need for individual claims to be contemplated by the judgment rendered in a CPA (Article 9, sole paragraph); (d) Not recognise the interruption of limitation due to the filing of a CPA and determine that there is no suspension for individual claims due to the CPA filing (Article 26, §§4 and 5).

Proposal no. 4,441/20 aims to: (a) Allow the regulatory agency to act as amicus curiae in a CPA, as well as require the agency to submit an opinion on matters within its knowledge that could impact the sector under its supervision (Article 18, §3); (b) Expressly provide for rules to guide settlements under CPAs (Articles 27 to 42); (c) Stay individual claims until the CPA judgment is rendered (Article 16), unless the individual expressly opts to continue their individual claim and not be considered for eventual compensation under the CPA (§2), and not to revert this option until the judgment under the individual claim is reached (§3); (d) Interrupt limitation for individual and collective claims due to the CPA filing, based on the same facts (Article 15).

Proposal no. 1,641/21 aims to: (a) Require the regulatory agency to submit an opinion on matters within its knowledge that could impact the sector under its supervision (Article 20, §1); (b) Provide specific rules to guide the court in the analysis of settlements, ensuring the protection of CPA interests (Articles 14, 15, and 37 to 43); (c) Stay individual claims from a pre-trial decision under the CPA judgment (Article 23), unless the individual expressly opts to continue their claim and not be considered for eventual compensation under the CPA (§2), and not to revert this option until the judgment under the individual claim is reached (§3); (d) Interrupt limitation for individual and collective claims due to the CPA filing, based on the same facts (Article 18); (e) Extend the CPA to cover “preventing or compensating any nature of diffuse, collective, or individual rights,” including collective non-material compensation (Article 4).

All proposals are being jointly analysed following a vote rendered by Representative Helder Salomão on 16 October 2023, who supported the current potential amendments to the CPA Law and submitted a consolidated draft.

Salomão’s vote outlined the following: (a) Allow regulatory entities to act as amicus curiae in a CPA, as well as require the entities to submit an opinion on matters within its knowledge that could impact the sector under its supervision (Article 17, §3); (b) Expressly provide for rules to guide settlement under CPAs establishing other types of collective agreements (Articles 25 to 40); (c) Stay individual claims until the CPA judgment is rendered (Article 16), unless the individual expressly opts to continue their individual claim and not be considered for eventual compensation under the CPA (§2), and to not revert this option until the judgment under the individual claim is reached (§3); (d) Interrupt limitation for individual and collective claims due to the CPA filing, based on the same facts (Article 15).