Editor's note: Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados’s Fernando Dantas features at the top of Chambers and Partners’ Consumer Law ranking table since 2018. Widely recognised as a formidable litigator, he has a 23-year career, having represented Chevron before the Superior Court of Justice in an USD18 billion landmark case. He currently represents Philip Morris in a prominent case against Brazil’s government, which seeks compensation for its health public system for the treatment costs of 27 diseases caused by the use of tobacco in the last five years.
Fabio Ozi is also ranked in Consumer Law and has more than 20 years of experience. He has advised prominent clients from the car industry sector in key consumer law disputes, including those connected to a major recall of vehicles with defective airbag inflators. Both partners team up at Mattos Filho’s Consumer Law practice. The firm is among Brazil’s very best and tops several Chambers Brazil ranks in contentious and non-contentious areas. Dantas and Ozi co-sign the following article which explains some of the challenges around the evolution of Brazil’s Consumer Protection Code, where they advise: “It is simply impossible to do business in Brazil without considering consumer protection laws.” The code’s principles are the basis for new legislation on regulating the internet and data protection laws and they guide collective disputes in the country. Although, the authors warn: “The promise of a simpler, more timely and more efficient way of solving court disputes via collective claims is still far from coming to fruition.”
CONSUMER PROTECTION IN BRAZIL: PROGRESS, CHALLENGES AND FUTURE LANDSCAPE
The Brazilian Consumer Protection Code (Federal Law No. 8,078/1990) was the result of a wide civil society movement in the 1980s to expand the influence of the law to cover unexplored areas. Drafted by a highly regarded team of scholars and supported by influential politicians, the Code’s precise and comprehensive language helped companies and individuals to adapt relatively quickly.
The Code has led to changes in the way business is conducted and civil law is enforced in Brazil over the thirty years since it was enacted. It imposed a long list of obligations on product manufacturers and service providers while granting powers to a range of government entities. The Code’s creation of a sophisticated framework for handling collective claims has also been key to collective rights in Brazil, changing how individuals may pursue their rights in court.
Over the years, the legal community has faced the challenge of interpreting the Code’s highly innovative concepts regarding substantive and procedural rights. When it comes to substantive rights, the results have been quite positive: while there is room for improvement in some specific economic sectors, Brazil has established and institutionalised fundamental principles concerning the awareness and enforceability of consumer rights. In many fields, it is now simply impossible to do business properly without having considered the consumer protection laws.
From a procedural rights perspective, the challenges have been greater. The Code has been decisive in shaping collective litigation in Brazil, bringing a new, broader mentality to how rights may be pursued in court. Concepts such as diffuse, collective and individual homogeneous rights have been incorporated into the daily life of lawyers, prosecutors and judges, who have found themselves forced to abandon a traditional model of operating the legal system in favour of a more complex, multidisciplinary and challenging one.
However, the promise of a more timely and efficient way of solving court disputes via collective claims is still far from coming to fruition. The superficial way the Code defines “individual homogeneous rights” has been one of the main obstacles to managing consumer class actions in Brazil. Experience has shown that additional criteria would be helpful in allowing these cases to proceed, especially on how to clearly define the class in the early stage of the case, in order to avoid harm to due process. Just as crucially, it could also help to satisfy the legitimate expectation of consumers that class actions should be worth pursuing in cases of mass consumer law breaches.
The United States’ long experience in dealing with this procedural mechanism should be examined for ways to improve Brazilian law, though the peculiarities of Brazil’s civil law system should be taken into account. Concepts such as superiority, predominance, numerosity of the class and adequate representation have proven to be helpful outside Brazil, allowing for a better definition of a class beforehand while endowing these cases with a higher level of reliability. Some of these concepts could be easily adapted to the Brazilian system, benefiting plaintiffs, defendants and the courts themselves.
This would be especially welcome now that two emerging areas of law are being increasingly influenced by the Code’s principles: (i) digital law, which was officially born out of the Internet Act (Federal Law No. 12,965/2014), which defined the rights and obligations of internet providers and users; and (ii) the new Brazilian Data Protection Law, also known as LGPD (Federal Law No. 13,709/2018), which again lists the rights and obligations of public entities, private businesses and individuals while also establishing a national data protection watchdog. The future of consumer protection in Brazil will be shaped by these three legal frameworks.
Disputes arising from the relationship between law enforcement authorities, internet providers and users have already become a routine occurrence in Brazilian courts. They are bound to increase as new technological tools are introduced. The same issues are also certain to arise regarding the LGPD, which aims to find a challenging balance between the fundamental rights of privacy, intimacy, honour, human dignity, free speech, free enterprise, innovation and economic development. Any collective litigation involving the Internet and Data Protection laws will either be governed or strongly influenced by the procedural rules of the Brazilian Consumer Protection Code. Therefore, the time has arrived to adapt these rules to a new and more sophisticated reality, so that the Code can remain a trusted tool in resolving disputes.
Brazil has made significant progress in the consumer protection arena over the past three decades. At the time it was enacted, the Brazilian Consumer Protection Code was original, well crafted and innovative, and for the most part it has aged well. However, adjustments are now required to prepare the Code for the upcoming era of complex and conflicting principles. These principles demand a well-balanced collective claims architecture that does not demonise private businesses – hurting due process – while still ensuring that legal breaches are met with meaningful and timely responses from Brazilian courts.