BRAZIL: An Introduction to Brazil

ECONOMIC, LEGAL AND POLITICAL TRENDS AFFECTING THE LITIGATION SCENARIO

Both the Brazilian infrastructure and technological sectors may be affected in 2020 by changes to be implemented in the national legal framework and in Federal Government initiatives that are expected to take place during the year. This agenda will likely have an impact on the current litigation scenario, including the role of the Judiciary, the nature of the disputes that may arise in court, and how the public and private entities and individuals can be affected by court decisions.

Seeking to boost the Brazilian economy, the Federal Government has wide-ranging proposals that aim to reduce Federal expenditure and to encourage private actors to participate in public infrastructure projects. Such measures should impact both the macro and microeconomic levels and the Federal Government is hopeful that it will boost the country's economy and help overcome the difficulties that have been holding the Brazilian economy back for the last few years.

Among the main measures that focus on stimulating the economy, there are three Constitutional Amendment Proposals (“PEC”), which form the basis of the Mais Brasil Act. The goal is to improve the distribution of royalties deriving from the pre-salt oil drilling to the federative entities; reduce the number of existing municipalities in the national territory; create a means to control public expenditure and to grant tax benefits to Government entities; and also to eliminate costly state funding.

In addition, on the infrastructure side, there should also be an increase in privatisation (the Government plans to raise BRL 490 billion in 4 years with the revenue generated from the sale of some of its state-owned enterprises), divestments (as a result of the sale of shares held by the Government in several companies – whose projected income for 2020 is BRL 150 billion), public-private partnerships and investment partnership programmes (mechanisms created by Law No. 13,334/2017 to foster investments in infrastructure by means of partnerships with the private sector).

The implementation of these measures is already under the scrutiny of the Federal Supreme Court (“STF”) and has been debated in the Federal Courts. In 2019, the STF decided that no legislative authorisation is required for the sale of Government-controlled companies and subsidiaries, as well as for mixed-ownership companies. Said decision clearly paves the way for the Government's privatisation agenda in 2020.

Furthermore, although new lawsuits may arise as a result of the implementation of the privatisation agenda, state courts are expected to decide according to their understanding that Government companies and mixed-ownership companies that are economically active should have more flexible procedures to sell assets and assign rights, given the need to ensure their competitiveness in the market.

As for the area of technology, the entry into force of the General Data Protection Law (“LGPD”), in August 2020, is one of the main developments of the year. The LGPD regulates the handling of personal data of customers and users by the Government and private companies. Individuals will be entitled to know how their personal information and data will be processed and for what purposes it will be used.

As a result of the LGPD coming into force, there will be a growing need for law practitioners to specialise in this topic and to master the technical aspects involved. Companies will feel obliged to invest in the development of internal digital compliance structure and policies, as well as to review the terms of use of their services.

Another relevant issue in the area of technology is the scheduling of a public hearing set to discuss the constitutionality of art. 19 of the Law No. 12,965/2014 (the Brazilian Civil Rights Framework for the Internet) which establishes the principles, guarantees, rights, and duties for the use of the Internet in Brazil. The controversy in such legal provision relates to the need of a prior and specific judicial order directed at Internet service providers, websites and social media application managers for the takedown of a content deemed inappropriate.

The decision to be rendered in the case is expected to be a landmark in terms of the liability of Internet service providers and will involve the balance of principles such as freedom of expression and the protection of individuals against offensive content.

A final relevant issue in the technology field is the STF’s ruling on whether WhatsApp can be blocked by court decisions for failing to comply with wiretap orders in view of encryption (Direct Action of Unconstitutionality – ADI No. 5527 and Claim of Non-Compliance with Fundamental Precept No. 403). Such lawsuits involve considerations regarding the protection of user rights to privacy and free and safe communication, which are absolute imperatives in modern society.

The trending topics above in the infrastructure and technological sectors will likely have impacts on Brazilian society and should bring challenges as well as good opportunities for lawyers to create intelligent solutions to handle this new framework.

A biref summary of the “Mais Brasil” package is available in the following published article: Link 1, Link 2, Link 3