BRAZIL Law and Practice Contributed by: João Areosa, Guilherme Peres de Oliveira and Raphael Rangel, Areosa Advogados
3.12 Settlement and ADR Mechanisms Settlements in Collective Actions Settlement is strongly encouraged throughout Brazil- ian collective litigation, with courts actively promoting consensual resolution. Consent agreement (Termo de Ajustamento de Conduta – TAC) The TAC is a distinctive Brazilian mechanism with no direct foreign equivalent, created by Article 5, §6 of the LACP. Nature and function The TAC is an extrajudicial agreement entered into before litigation (or to terminate pending litigation) between defendants and legitimate public entities, typically the Public Prosecutor. It constitutes an enforceable title equivalent to a court judgment with- out requiring judicial approval, though courts may approve TACs to terminate pending litigation. Key features The agreement must include specific obligations the defendant commits to; compliance deadlines for each obligation; periodic penalty payments ( astreintes ) for non-compliance with specific obligations; monitoring and reporting mechanisms; and often payment of fluid recovery contributions for past violations. TACs are negotiated between the parties. The Public Prosecutor or other public entity investigates viola- tions, discusses remedial measures with defendants and formalises agreements through signed instru- TACs create immediately enforceable obligations – if breached, the beneficiary may directly execute against the defendant’s assets without filing a lawsuit to estab- lish breach. They avoid litigation costs and delays for both parties and may include monetary payments, conduct obligations, or both. They have res judicata effects, preventing relitigation of resolved issues. TACs are particularly valuable for resolving environmen- tal violations, consumer protection issues, urban plan- ning violations, and other matters where negotiated remediation may be preferable to prolonged litigation. ments. Effects
• Cease environmental violations (pollution, defor- estation, illegal activities). • Halt anti-competitive conduct (cartel activities, abuse of dominance). • Cease privacy violations or unauthorised data processing. Prohibitory injunctions are common in consumer and environmental collective actions, addressing ongoing violations. Mandatory injunctions Mandatory injunctions are orders requiring affirmative conduct, for example: • Recall defective products from the market. • Implement safety measures or warnings. • Provide information and disclosures to consumers. • Restore environmental damage. Mandatory injunctions often require ongoing compli- ance and monitoring. Courts may appoint monitors or require periodic compliance reports. Structural injunctions In complex cases, courts may order comprehensive structural changes to defendants’ operations, includ- ing ongoing monitoring, compliance reporting, third- party oversight, systematic reforms to policies and procedures, and training programmes for employees. Structural injunctions are more common in cases involving systematic violations or when simple pro- hibitory/mandatory orders are insufficient to address problems. Monetary Relief Compensatory damages are compensation for loss- es suffered collectively or by individual members, for example: • Economic losses (lost money, property damage, out-of-pocket expenses). • Lost profits and consequential damages. • Modify contract terms or practices. • Implement compliance programmes. • Provide access to services or facilities.
• Costs of remediation or correction. • Expenses incurred due to violations.
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