Bill aims to standardize monetary adjustment and interest rates in cases of default
The Brazilian House of Representatives has approved Bill No. 6,233/2023 (the “Bill”), which aims to standardize the index for monetary correction and the interest rates applicable in cases of default on civil obligations. The Bill stipulates that, in the absence of specific contractual or statutory provisions, the applicable monetary adjustment index shall be the National Broad Consumer Price Index (“IPCA”), and the default interest rate shall be the Special System for Settlement and Custody (“SELIC”) rate, less the IPCA.
The Bill seeks to amend Articles 389 and 406 of the Brazilian Civil Code, the current wording of which leaves room for controversy. Presently, Article 389 of the Brazilian Civil Code merely states that interest and monetary correction are due “according to officially established indices”, while Article 406 of the CC Brazilian Civil Code provides that, in the absence of specific contractual or statutory provisions, default interest “shall be set according to the rate in effect for late payment of taxes owed to the National Treasury.”
(Bill No. 6,233/2023)
Superior Court of Justice rules that health insurance must cover medication added to ANS list during litigation
The Third Panel of the Brazilian Superior Court of Justice has ruled that a health insurance provider must cover home-use medication that was added to the list of the National Supplementary Health Agency (“ANS”) even if the inclusion occurred during litigation seeking such coverage.
According to Justice Nancy Andrighi, the Reporting Justice, while the ANS resolution imposing the obligation to cover the medication cannot be applied retroactively, “once the home-use medication is included in the ANS list of procedures and health events, the health insurance provider can no longer refuse its coverage, otherwise, it will constitute an improper denial of coverage.”
(Superior Court of Justice, Special Appeal No. 2105812/SP, Third Panel, Reporting Justice Nancy Andrighi, ruled on 03/19/2024)
Key Updates to the IBA Guidelines on Conflicts of Interest in International Arbitration
The International Bar Association (“IBA”) has updated its Guidelines on Conflicts of Interest in International Arbitration, which guides arbitrators’ duty of disclosure. Key updates include:
- An arbitrator’s failure to disclose a particular fact or circumstance does not automatically constitute a conflict of interest or necessitate the arbitrator’s removal.
- An arbitrator should not accept an appointment if they are unable to disclose relevant facts due to professional confidentiality obligations.
- Parties are obligated to conduct reasonable investigations independently and to disclose all relevant information.
- There is a presumption that a party is aware of any facts or circumstances that might constitute a potential conflict of interest if such facts could have been discovered through reasonable investigation at the outset or during the arbitration proceedings.
- Parties must disclose any relationships between arbitrators and persons/entities over which they exert influence or between arbitrators and persons/entities that exert influence over one of the parties in the arbitration.
(IBA Guidelines on Conflicts of Interest in International Arbitration, May 25, 2024 – https://www.ibanet.org/resources)
Superior Court of Justice recognizes lis pendens between declaratory action for annulment and challenge to enforcement of arbitral award
The Third Panel of the Superior Court of Justice, in a unanimous decision, held that lis pendens exists between a declaratory action seeking the annulment of an arbitral award and a challenge to the enforcement of the same arbitral award where the annulment is also sought.
The Court of Appeals of Rio de Janeiro had previously ruled that there was no lis pendens between the two actions, reasoning that the challenge to the enforcement of the arbitral award was merely a defense limited to the issues listed in Article 525, paragraph 1, of the Brazilian Code of Civil Procedure and not a separate action.
However, the Superior Court of Justice clarified that, concerning arbitral awards, annulment may also be argued through a challenge to enforcement under Article 33, paragraph 3, of the Brazilian Arbitration Law. In such cases, it is not permissible for both a declaratory action seeking annulment and a challenge to enforcement asserting the same annulment to coexist, as this could result in conflicting outcomes.
(Superior Court of Justice, Special Appeal No. 2105872/RJ, Third Panel, Reporting Justice Nancy Andrighi, ruled on 02/06/2024)
Superior Court of Justice rules that fiscal court may order the freezing of funds of a company under judicial reorganization
In a jurisdictional conflict case, the Second Section of the Superior Court of Justice ruled that the fiscal court has jurisdiction to order the freezing of funds of a company undergoing judicial reorganization.
According to the Reporting Justice, Ricardo Villas Bôas Cueva, in the context of tax enforcement actions, “the jurisdiction of the reorganization court is limited to replacing enforcement measures that affect essential capital assets necessary for maintaining the business operations” (Article 6, §7º-B, Law No. 11,101/2005), and funds do not constitute capital assets.
(Superior Court of Justice, Jurisdictional Conflict No. 196553/PE, Second Section, Reporting Justice Ricardo Villas Bôas Cueva, ruled on 04/18/2024)
Key Highlights of New CVM Resolution on Shareholders’ Meetings
The Brazilian Securities and Exchange Commission (“CVM”) issued, on June 4, 2024, CVM Resolution 204, which amends CVM Resolution 81 and brings changes to shareholders’ meetings. Key highlights include:
- The mandatory use of remote voting ballots for all shareholders’ meetings (general or special, ordinary or extraordinary).
- Extension of the deadline for submitting voting instructions by shareholders to four (4) days before the meeting.
- Provision allowing voting instructions to be submitted through the central securities depository, in addition to direct submission to the company, the custodian, or the registrar.
- Requests for the installation of a fiscal council made through remote voting ballots will be disregarded if there are no candidates for the council.
- Removal of the possibility for shareholders to monitor, via remote voting, the decision taken by the majority of those present in case the management proposal for any item on the agenda is altered.
- The possibility for non-listed public companies to hold fully or partially digital meetings.
CVM Resolution 204 will take effect on January 2, 2025.
(CVM Resolution 204, June 4, 2024)
Superior Court of Justice rules that specific provisions of the Brazilian Corporate Law apply to nullities in shareholders’ meetings in intra-corporate relations
The Fourth Panel of the Superior Court of Justice ruled that the regime established in the Brazilian Corporate Law (Law No. 6,404/1976) for nullities of resolutions in shareholders’ meetings of corporations prevails in intra-corporate relations between shareholders or between shareholders and the company itself so that the general rules of the Brazilian Civil Code apply only to those situations where the effects of the resolutions affect third parties.
In the case at hand, the São Paulo Court of Appeals had ruled the nullity of a shareholders’ meeting in which the administrator voted on the approval of his accounts, based on the nullity rule of Article 166, VI, of the Brazilian Civil Code.
The Superior Court of Justice overturned this decision, reasoning that under the special regime of the Brazilian Corporate Law, the issue would be one of annullability, not nullity, of the shareholders’ resolution. This implies the possibility of ratification of the act, either by a new resolution free of the defect – without the administrator’s vote – or by the lapse of the limitation period for declaring nullity.
(Superior Court of Justice, Special Appeal No. 2095475/SP, Fourth Panel, Reporting Justice Antonio Carlos Ferreira, ruled on 04/09/2024)
Theme 1,250 of the Superior Court of Justice will address attorneys’ fees in cases of credit challenges in judicial reorganization and bankruptcy
The Second Section of the Superior Court of Justice has selected special appeals to define, through the repetitive appeal procedure, “whether the awarding of attorneys’ fees is applicable in the event of upholding the credit challenge in judicial reorganization and bankruptcy proceedings”. The issue is the subject of Theme 1,250.
The repetitive appeal procedure is governed by Articles 1,036 and following of the Brazilian Code of Civil Procedure and allows the application of the same legal understanding to multiple cases with identical controversies, aiming to achieve procedural economy and efficiency.
(Superior Court of Justice, Theme 1,250, Second Section)