The application of Article 413 of the Brazilian Civil Code, which allows for the equitable reduction of contractual penalties, has been the subject of increasing judicial debate, particularly regarding its ex officio application by courts at different levels of jurisdiction.
Although prevailing case law recognizes Article 413 as a mandatory rule of public order, subject to ex officio review by judges, judicial practice has raised important concerns about compliance with the adversarial principle, especially in appellate decisions issued without prior opportunity for the parties to be heard or without evidentiary proceedings on the matter.
The issue becomes even more relevant in light of the enhanced concept of adversarial proceedings introduced by the Brazilian Code of Civil Procedure of 2015, which strengthened party participation in judicial decision-making and expressly prohibited so-called “surprise decisions,” including in matters subject to ex officio review.
Within this context, the article examines how courts have been applying Article 413 of the Civil Code, the limits of such judicial intervention in view of the requirement of prior and effective adversarial proceedings, and the procedural impacts of this practice on the parties involved.
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