12/2/2021
It is not new that the Brazilian Judiciary is overwhelmed. The number of lawsuits filed is disproportionate to the number of judges available to rule on them. This is one of the reasons why the average time for a lower court to render a decision is 5 years and 2 months, according to a recent survey issued by the National Council of Justice (CNJ)[1].
This Brazilian reality has put a spotlight on adequate methods of conflict resolution, such as conciliation, mediation and arbitration. Thus, due to the context surrounding its Judiciary, currently, Brazil is a multiport system.
The Code of Civil Procedure, dated of 2015, provided new rules concerning conciliation and mediation (Section V), and, still in that year, the use of mediation was regulated by Law nº 13.140/2015.
Although both institutes were already adopted in Brazil, albeit sparingly, since these legislative innovations, such mechanisms have been put on practice more often, both for solving small and complex cases. As an example, it is worth mentioning the decision of the Superior Court of Justice, dated of 2017, which determined the initiation of a mediation proceeding between the telecommunication company Oi and its creditors during its judicial recovery – at the time, the largest in the country’s history.
As it is known, the judicial recovery procedure is a method that aims to enable the maintenance of the company’s activities during a financial crisis. To that end, it necessarily involves the direct participation of creditors in the deliberation of the company’s recovery plan, considering that the preservation of their interests is one of the structuring pillars of the process.
In this scenario, it is clear that the adoption of a consensual solution is crucial.
Thus, in December 2020, Law nº 14.112/2020 was published, establishing significant modifications in the Brazilian Judicial Recovery Law. Aiming at giving more support to companies struggling with financial difficulties, the new law encouraged the use of mediation and conciliation in judicial recoveries, by admitting their utilization in advance, i.e., before filing the lawsuit, or incidentally, during the course of the process.
In addition, the law listed non-exhaustive situations in which the methods may be used, such as (i) in disputes between partners and shareholders of a company undergoing financial crisis or under judicial reorganization, as well as in lawsuits involving creditors that were not subjected to the judicial reorganization, and (ii) in cases of public calamity, to ensure the continuation of essential services, among others.
In view of this legislative modification, in August 2021, the II Jornada de Prevenção e Solução Extrajudicial de Conflitos (a conference held by the– National Justice Council – in which experts debated matters regarding the prevention and out-of-court settlement of disputes) was held and in this opportunity, several statements related to the use of mediation and conciliation in judicial and extrajudicial recoveries were approved.
In particular, Statement 222 established that: “The judge shall encourage, with the assistance of the trustee, the de-judicialization of the corporate crisis, whether in judicial or extrajudicial reorganization proceedings, as a way to find the most appropriate solution to the case and, thereby, materialize the principle of preservation of the viable activity.”
It is important to emphasize that the members of the conference understood that statuing the use of consensual methods of conflict resolution demands an “important cultural change”, in order to help companies in recovery to find the best method to achieve a fast and efficient solution for their disputes.
Despite the long lapse of time between the Judicial Recovery Law, published in 2005, and the insertion of consensual means of dispute resolution in the Code of Civil Procedure, in 2015, there is currently a consensus as to the benefits of using these institutes in reorganization processes, whether judicial or extrajudicial, given that they help harmonizing all interests involved and avoiding greater clashes.
[1] https://www.cnj.jus.br/wp-content/uploads/2021/11/relatorio-justica-em-numeros2021-051121.pdf
