Agility of Justice may improve the business environment
Author: Joaquim Castanheira
Source: ETCO Magazine, No. 13, August 2009
Months ago, the Federal Attorney's Office announced that it intends to make an agreement
to put an end to an old legal dispute with Varig. THE
airline claims compensation for losses caused by freezing
ticket prices imposed by the government in the period between 1986 and 1992. The
account already reaches the fantastic sum of 5 billion reais. If the two parties
finally reach a common denominator, it would be the epilogue of a clash that
drags for more than 15 years in the courts and that involved, in addition to Varig, the two
other major companies in the sector at that time, Vasp and Transbrasil.
None of them exist anymore. Vasp and Transbrasil stopped flying years ago, and
Varig was split in two. One part is under judicial reorganization
renamed Flex. The other became a Gol brand. That is, the companies
pass, the judicial pending remain. And how they look. A demand in Justice in the
State of São Paulo lasts, on average, five years - that is, if there is no recourse to
higher instances in Brasilia. Otherwise, the average term extends to
eight years, according to calculations by Domingos Fernando Refinetti, partner of the banking
Machado, Meyer, Sendacz and Opice and director of the Lawyers Association
of São Paulo, AASP. This is a scenario that causes harmful impacts on the
business environment. “Until recently, Law and Economics were topics that
they ran in parallel. Today, it is clear that the legal issue has
direct effects on economic development ”, warns Maria Tereza Sadek, professor of
Political Science at USP and student of the subject. “In addition to excessive legislation,
there are several fraud mechanisms, mainly through resources and measures
precautionary measures. ”
“A lawsuit in the State of São Paulo lasts, in
average, five years - if there is no recourse to higher levels in
Brasilia. Otherwise, the average term extends to eight years ”
For the business world, this situation creates a climate of insecurity and
turns the legal issue into an inhibiting factor for the attraction of
investments, mainly foreign, in the country. The slowness of Justice causes
still an extraordinary financial cost, certainly passed on to prices, and
a risk component that makes it more difficult for interest rates to fall sharply in
Brazilian economy. There are at least two barriers to the business environment. a
of them is the existing legislation in Brazil, now obsolete, now disconnected from
economic needs. “Many laws are made without taking into account
peculiarities and the reality of the markets ”, affirms André Montoro, president of the
ETCO. Furthermore, the slowness of Justice is another obstacle for the universe
corporate. “More and more, time is money in business. There is pressure
for fast decisions within companies. And in the courts the pace is
slower, ”says Montoro. "There is a clash between the nature of the two activities."
It is a shock that is difficult to measure. Therefore, ETCO sponsors a
study, conducted by Professor Maria Tereza, to assess the impact of this
issue in the day-to-day life of companies and in their business strategies. In that
work, the holders of the legal departments of the companies will be heard
associated with ETCO, in order to identify “the perception of these
professionals regarding the Legal Power and its evaluation with regard to the
different branches of Justice and the performance of its different instances ”, as
explains Maria Tereza. In addition, she will conduct some case studies with the
objective of showing the degree of influence of judicial decisions in the management of
business organizations. The results of the work will be discussed in the cycle
of Law and Economics debates, conducted by ETCO.
There is no doubt, however, that companies pay a high price due to
the lack of agility in the Judiciary. Jurist Luiz Olavo Baptista, professor
retired from the Faculty of Law of the University of São Paulo, estimates that, “if
the delay in the process was halved, GDP would grow between
3% and 5% just for that. ” And it lists a number of effects on business and,
mainly, business costs. One of them: interest on financing is
greater, as the delay in recovering credits is embedded in this cost.
Other: the creativity of inventors, designers and entrepreneurs is hindered
negatively, since delay makes patent privileges useless,
copyright and similar records. More: “corporate life is affected,
because delay in resolving disputes discourages people from claiming their
rights, ”says Baptista.
“Contract is a private and not a social instrument. But
Based on this concept, the Judiciary discusses the social function of a
financing, for example. In other countries, if someone does not pay a debt,
this is bad debt ”
Jairo Saddi,
director of the Center for Law Studies at
Insper Institute of Education and Research of São Paulo
This scenario is not exactly a novelty in Brazilian society, but
received an involuntary stimulus just over 20 years ago, when the current
Brazilian constitution was promulgated, recalls Refinetti. The 1988 Charter
expanded the population's access to the courts and created other instruments of
action of Justice, such as public civil actions and special courts,
known as Small Claims Courts. In addition, in the years
specific laws, such as the Consumer Protection Code.
While making citizens aware, these sets of laws
encouraged to seek the shelter of Justice. “It all means an advance of
citizenship and should be hailed as a victory for democracy. But the structure of
Judiciary did not keep up with the increase in demand and there was no downsizing
of the instruments used to postpone judicial decisions ”, ponders
Refinetti. To load a little more into the dark inks in this painting, some
“debatable” concepts crystallized in the country's legal environment, complete
Jairo Saddi, doctor of Economic Law and director of the Center for the Study of
Law of Ibmec São Paulo. For example: the so-called social function of the contract.
"After all, what is that?" He asks. “Contract is an instrument
private and not social. But, based on this concept, the Judiciary discusses the
social function of a financing contract, for example. In other countries, if
someone does not pay a debt, this is called default. Not here in Brazil.
You can even argue the issue of income distribution in these cases. ” Saddi
warns of a common mistake in this type of situation. “Judges believe that, thus,
defend society. But companies and banks protect themselves from this risk
increasing interest rates and restricting credit to the various agents
economical. In the end, the bill is more expensive. ” The result today can be seen
on the tables of judges and in the archives of courts across the country: piles of
folders tied with string and crammed with documents. Today, there are about
of 70 million lawsuits running in the Brazilian courts, while in the United
United this number does not exceed 10 million, although the American GDP is ten times
higher than in Brazil, compares Saddi.
All this helps to explain the slowness of Justice, but it would be simplistic
affirm that the other agents do not have shares of responsibility in that
situation. The excess in the number of lawyers in the country, instead of guaranteeing greater
process fluidity, has become yet another ingredient in the inefficiency of
Justice. According to Refinetti, from AASP, there are now 1.100 law schools in the
Brazilian territory, with 700 thousand students enrolled. “Only in the State of São
Paulo, there are more students than in the United States ”, says Refinetti. Each year,
between 70 and 80 students receive a bachelor's degree. Although only
20% to 25% of the trainees pass through the exam sieve of the Bar Association of
Brazil, a small army of professionals invades the job market. "In
somehow, these lawyers need to work, and the easiest way is to leave
for litigation, ”says Refinetti. The profusion of professionals helps to create
what lawyer Hamilton Dias de Souza calls “judicialization of relations”.
“Many issues that could be resolved in the business environment
stop in the courts, ”he says.
Other problems originating in law classrooms cause
harmful effects to the economic scenario. One of the main ones is the formation of future
lawyers. “Most Brazilian law schools are restricted to
basic materials, not giving sufficient emphasis to matters related to the economy and
management ”, says João Grandino Rodas. Former Chairman of the Board of Directors of
Economic Defense (Cade), Rodas can talk (no pun intended) about the
subject matter. Since 2006, he is director of the Faculty of Law of the University of São
Paulo. “Law schools should be more concerned, from now on, with what
their students only graduate if they have at least basic economics dyes
and business, ”he says. “However, the high number of judges, prosecutors and
lawyers without the most basic notions makes schools have the mission
contribute strongly to the closing of this gap, through education
continued. ” The little intimacy of professionals in the area with issues
helps to make justice even slower. “Judges and prosecutors
need a lot more time to analyze processes when they encounter issues
connected to business. In general, they need to know even the concepts
basic management skills before speaking, ”says Dias de Souza. For Wheels, the
Brazil could follow the example of other countries to supply professionals
of the area with economic knowledge. “Here, the trends have not yet echoed
glimpsed in other countries, which enable law students to study
a few more semesters and obtain a degree in Economics, or vice versa ”, says
he.
Jurist Luiz Olavo Baptista: “If the delay in the course of the
processes were cut in half, GDP would grow between 3% and
5% ”
Improving the training of lawyers, magistrates and prosecutors will not,
however, sufficient to oil the entire judicial machine in the country, although it is
an important ingredient in the improvement recipe. Experts show that
one of the first steps should come from the judges themselves. "They should
take a strict stance to avoid the avalanche of delaying resources and
including imposing fines when they identify attempts to do so by
lawyers or public prosecutors ”, suggests Dias de Souza. Similar rigor
should also be charged to legislators and public entities, such as the
Federal Revenue and regulatory agencies. Monthly, dozens of decrees,
ordinances, normative instructions, provisional measures among others are
published. The constant metamorphosis in the set of laws and rules that govern
Business relationships are a stress factor between entrepreneurs and executives.
First, because they demand time for the assimilation of the new parameters and the
adaptation of the company to them - in other words, administrative costs
bigger. In addition, as Jairo Saddi warns, “legislation is a living being, which
it is born, develops and matures ”. “Whenever a new law comes into force, it is
a time of maturation in which a regulatory and regulatory process takes place.
interpretation by lawmakers and magistrates, ”he says. "That
requires years. In each change or novelty in the legislation, this process
restart." In this case, there is only one solution: the change in attitude of all
parties involved, whether the government, the legislature, or the judiciary. But,
for specialists, without pressure from society, this movement is hardly
will be triggered. “Entrepreneurs, who feel the lack of
adequate laws regarding the lack of justice distribution 'in time
economic ', should use the power they have to change such a state of affairs ”, suggests
Wheels. “If, in addition, the press were more sensitive, certainly the
problems would be alleviated in a short time. ”
At the same time, the three Powers should come together in a marathon to “clean up”
the legislation on debris accumulated over time, reviewing and voiding laws
anachronistic and modernizing codes, such as the CLT, which deals with issues
labor. “Lighter legislation with less possibility of reading
would bring more fluidity to the work of the Judiciary ”, says Maria Tereza
Sadek, from USP. There are good examples of the results obtained by simplifying
judicial procedures. A good portion of the contribution came from the Amendment
Constitutional No. 45, of the Judicial Reform, which meant a severe blow against
the so-called “resource industry”. Among other measures, a kind of
filter so that the Supreme Federal Court, STF, could avoid the judgment of
irrelevant resources. With that, the number of cases that reached the tables
of ministers, in the first half of this year, plunged 42%, falling from 40.082
to 23.378. In the Superior Court of Justice, STJ, the reduction reached 20%,
thanks to the application of the Repetitive Resources Law.
Maria Tereza Sadek, professor of Political Science at USP: “There are
excess legislation ”
But, while managerial reforms like this don't arrive, companies
they appeal to more agile bodies than Justice. Therefore, arbitration wins
ground as an alternative for resolving disputes between two parties. "The use
arbitration in Brazil had a great boost and it is increasingly used by
here, ”says Luiz Olavo Baptista, an expert on the subject. “Including the country
adopted a trend that had already been noticed in the United States, which is
existence of specialized arbitrations, which was only possible given the increase in
the number of arbitration demands. ” However, the biggest obstacle to development
and use of that mechanism comes from Justice itself. “There is still resistance to
arbitration, especially in the Labor Court, ”says Baptista. "An
misinterpretation of the law of arbitration causes the
unavailable rights, those that are not subject to discussion, with proof
that the person fulfills certain requirements to exercise those rights. ”
For example: the right to vacation is unavailable, but proof that the employee
has taken the time to enjoy them can be the subject of discussion. Anyway,
as it turns out, there is considerable distance for legal activity to achieve
more closely follow the fast pace of business. It is a path
long and tortuous, but that has to be covered if the country really wants to
enter an era of sustained and sustainable economic growth.
“Judges and prosecutors need a lot more time to
analyze processes with themes related to business. They have to find out until
even basic management concepts ”
João Grandino Rodas, former president of Cade, Board
Administrative Defense of Economic Defense
ETCO Magazine (No. 13, August
2009)