Brazil passed a new Federal Law on June 12 to create an “emergency and transitory legal regime” during the pandemic that may have positive impacts for foreign and Brazilian creditors and investors.
The main provisions of the bill (N. 14.010) affecting foreigners are:
1. Statute of Limitation. Any statute of limitation occurring from June 12 to October 30, 2020 is suspended. This provision preserves the rights of creditors holding credit against Brazilian persons to collect/enforce debts and obligations in any jurisdiction of Brazil during such transitory period, regardless if they are domestic or foreigners.
Any statute of limitation becoming effective at any time through October 30 is suspended and will become effective thereafter.
2. General Law of Data Protection (known as LGPD). The new law states that the administrative sanctions of Brazil’s data protection law will only be applied starting on August 1, 2021. Such sanctions include warnings, fines, suspension of activities, among others.
3. Activities Subject to Antitrust Clearance. During the period between March 20 and October 30, 2020, (i) it will not be deemed “competitive illicit” (a) sale of goods or services unreasonably below the cost price; and (b) partial or total cancelation of a company’s activities without proven cause, and (ii) the associative contracts, consortiums or joint ventures will not need to be notified to Brazil’s antitrust authority (CADE) for prior control (although there may be a subsequent analysis and investigation of any infraction).
The introduction of the “emergency and transitional legal regime” will result in greater legal certainty with regard to the resolution of judicial and administrative conflicts for Brazilian and foreign creditors and investors in this pandemic moment.