BRAZIL Law and Practice Contributed by: Octaviano Duarte, Henrique Forssell, Marcelo Lucidi and Mayara Rahman Rufino, Duarte Forssell Advogados
bankruptcy proceeding, thereby recovering the property with preference over other creditors. However, under Brazilian law, it is generally not possible to establish a proprietary claim with precedence over unsecured creditors against property that represents the converted proceeds of the original fraud. This limitation reflects legal principles aimed at preserving the integrity of insolvency proceedings and equitable distribu - tion of assets among creditors. 1.6 Rules of Pre-Action Conduct In Brazil, there are no specific rules of pre-action conduct that apply exclusively to fraud claims. However, certain general principles and proce - dural rules may be relevant when initiating legal proceedings involving fraud allegations. These principles aim to ensure fairness, efficiency and the protection of the parties’ rights throughout the litigation process. Brazilian law imposes a duty of good faith on par - ties involved in legal proceedings. This includes a duty to act honestly, fairly and co-operatively throughout the litigation process. Parties are expected to disclose relevant information and evidence in a timely manner and to refrain from engaging in fraudulent or deceptive conduct. Prior to initiating formal legal proceedings, par - ties may engage in pre-litigation investigation and informal dispute resolution efforts to gather information, assess the strength of their claims or defences, and explore potential avenues for settlement. 1.7 Prevention of Defendants Dissipating or Secreting Assets In Brazil, victims of fraud have access to some of the most sophisticated tools and legal recourse to prevent defendants from dissipating or secret -
ing assets with the intention of avoiding the con - sequences of a judgment. Preliminary Injunction or Seizure Under Brazilian law, the claimant may petition the court for a preliminary injunction or seizure order to prevent the defendant from dissipating assets or concealing them. This involves pre - senting evidence to substantiate a risk of asset dissipation or concealment and demonstrating a likelihood of success on the merits. Brazilian courts typically consider factors such as the strength of the claimant’s legal arguments, the availability of evidence and the potential harm to both parties when assessing the likelihood of success. Non-compliance with a court order may result in freezing orders, monetary penalties, criminal prosecution or other consequences, for parties to judicial proceedings as well as third parties. SISBAJUD (Freezing of Bank Accounts) SISBAJUD, which stands for “Sistema de Busca de Ativos do Poder Judiciário” (Judiciary Asset Search System), is a centralised electronic sys - tem used by the Brazilian Judiciary to facilitate the search and freezing of assets held in finan - cial institutions. It is primarily utilised in civil and enforcement proceedings to enforce court orders, judgments and other legal obligations. The SISBAJUD system covers all financial insti - tutions operating in Brazil, including banks, credit unions, investment firms and other finan - cial entities. It allows judicial authorities to search for and identify assets held in accounts belonging to debtors or defendants named in legal proceedings. Judges access the SISBAJUD system through a secure online portal. They can input specific
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