Contributed By Pinheiro Neto Advogados
General Product Safety Legislation
In Brazil, the main laws and regulations of the product safety legal regime are the following.
Sector-Specific Product Safety Legislation
Existence of double regulation sometimes leads to a legal antinomy. For example, currently Ordinance No 619/2019 provides that the supplier must send the recall notice to Brazil's main product safety authority, the Department of Consumer Protection and Defence (DPDC) and include the information on the model of the consumer risk warning. ANVISA's RDC No 55/2005, on the other hand, provides that the consumer warning message must be submitted to prior approval by ANVISA.
The main regulator for product safety in Brazil is the Department of Consumer Protection and Defence (DPDC), responsible for (i) examining claims involving relevant general and national interests, (ii) applying administrative penalties, and (iii) undertaking preliminary investigations and administrative proceedings, among other measures.
The federal government, states and/or Federal District and cities, may also have a Consumer Protection Office (PROCON), which has the power to carry out administrative proceedings and apply administrative penalties to suppliers within the scope of their jurisdiction.
In addition, there are various rule-making and regulatory authorities with the power to establish standards to be complied with by suppliers. Each sector has its own regulatory authorities, and we list some examples below.
Note that compliance with normative standards established by the referred bodies is mandatory by law, pursuant to Article 39, VIII of the Brazilian Consumer Protection Code.
According to the Brazilian Consumer Protection Code, products and services placed on the consumer market cannot pose a health or safety hazard to consumers.
If a supplier only acknowledges the harmful and/or hazardous nature of the product or service after it has been placed on the consumer market, it will be responsible for a recall campaign immediately after the defect is discovered in order to correct the defect or replace the product.
The Brazilian Consumer Protection Code and Ministry of Justice Ordinance No 618/2019 establish several formal requirements that suppliers must observe during a recall procedure. The main formal requirements are immediate notice to (i) the DPDC; and (ii) the pertinent rule-making or regulatory body. Besides, that supplier is responsible for the advertising campaign and the follow-up reports.
With regard to the advertising campaign, the law establishes that, besides informing the relevant authorities, suppliers should immediately make consumers aware of the hazardous nature of the product by means of an “advertising” campaign broadcast through radio, television, print media or the internet (YouTube, podcasts or others), including the supplier's website, at the supplier's expenses.
The advertisements must contain very specific information about the product, its defect, and its possible effects, among other requirements. The size of the advertising campaign should be based on the number of consumers affected by the recall and the supplier may choose the means of communication in accordance with the consumers’ profile, justifying this to the DPDC and aiming to reach consumers and running an effective recall campaign.
In turn, the follow-up reports must be sent once every four months to the DPDC. The reports must contain information on the number of products collected from the market so the authority may analyse the effectiveness of the procedure.
Current regulation does not specify a risk level for applicable corrective actions to be taken. Even if there is a remote risk to consumer health, the supplier will be responsible for commencing corrective actions and running mandatory advertising.
The above-mentioned regulation is applicable to all products, but ANVISA also has specific rules on recall of medicines and food (Board Resolutions No 55/2005 and No 24/2015). In this regard, it is also mandatory to notify ANVISA if the supplier acknowledges the harmful and/or hazardous nature of medicines or food.
In Brazil, the obligation to notify the authorities in respect of product safety issues is risk-based. Thus, should a defective product pose any health or safety hazard to consumers, the reporting obligation will be triggered, regardless of the level of the risk in question.
Under Brazilian law, the word "supplier" means any individual or legal entity (including unincorporated entities), public or private, Brazilian or foreign, engaged in the production, assembly, creation, construction, transformation, import, export, distribution or marketing of goods, or in the provision of services. Any such individual or entity that participated in the placement of the product or service on the market must perform a recall upon becoming aware of the danger of products or services placed on the market.
It is worth noting that should a supplier suspect the existence of products or services placed on the consumer market that may be harmful or hazardous to consumers' health or safety, the supplier must inform the DPDC, within 24 hours, and start an internal investigation in order to verify if the suspected defect actually exists. This investigation must be completed within ten days, but the supplier can request an additional term if it proves to be necessary. The authority must be informed of the outcome of the investigation (ie, either the reasons why the recall is not necessary or that the recall will be performed).
If the supplier decides to not perform the recall, it is important to present documents and technical subsidies to justify the absence of a risk to consumers' health and safety.
It is important to note that, regardless of the time taken to conduct an investigation, if the supplier already has knowledge of the defective product or concludes the investigation before the final term acknowledging a defect, the supplier must immediately inform the consumer protection authorities and the consumers. In other words, the warning to consumers and to the public authorities must be provided promptly and immediately after the supplier becomes aware of the defect. Of course it is always tricky to establish exactly when the supplier became aware of the defect, but when informing the relevant authorities about the recall campaign, the supplier must inform them of when it became aware of the defect and can argue that it had to conduct a proper investigation, retaining technical analysis and expert opinions, when it was first informed of the potential defect.
If the supplier decides to perform the recall, the notification to the DPDC must be written in Portuguese and include detailed information, such as the:
The notification to the authorities may be signed by the company’s legal representative, whose powers must arise from the company by-laws or from a power of attorney attached to the records of the administrative procedure.
Brazilian law also does not establish that the local entity must be involved in the recall procedure. Thus, a foreign entity may issue the notification to the authorities and to consumers. Nevertheless, it is possible – and quite common – that authorities issue notifications requesting information about the recall specifically from the local entity, in cases where there is one.
Besides, it is worth mentioning that there is a recommendation in place from the Group of Permanent Studies of Accidents of Consumption (Gepac) (not mandatory, merely informative) asking that the subsidiaries or importers of suppliers of products and services subject to recall abroad inform the Brazilian authorities about these recalls, even if such products have not been distributed in the Brazilian market.
Failure to comply with the reporting obligations mentioned in 1.4 Obligations to Notify Regulatory Authorities may carry administrative, criminal and civil penalties.
In the administrative sphere, should the authorities hold that the supplier violated the provisions of the Brazilian Consumer Protection Code, such as the obligation to commence a recall or the obligation to market safe and adequate products, an administrative proceeding can be initiated. If the violation is confirmed after such administrative proceeding, the supplier is subject to penalties that can be imposed separately or together. The penalties that may be imposed are the following:
Suppliers are also subject to criminal investigations in cases of lack of communication, late communication or insufficient communication of a recall campaign. Failure to inform the competent authorities or to withdraw harmful or hazardous products from the market is a crime carrying a prison sentence of six months to two years, and a fine.
Regardless of the administrative and criminal proceedings, consumers, public bodies and associations may also file civil and class actions seeking compensation for property and/or moral damage caused by the defective product.
For illustrative purposes, on 1 September 2010, the São Paulo State Consumer Protection Agency imposed a fine of BRL232,000 (approximately USD60,000) on two companies due to the late reporting of a safety issue involving some models of vehicles. The companies filed a lawsuit to discuss the validity of the fine so imposed and, on 17 February 2016, the State Court of Appeals of São Paulo maintained the Lower Civil Court decision that held the penalty valid (Case No 0022095-11.2013.8.26.0053).
In 2011, another automaker was fined BRL1.351 million (approximately USD350,000) for a 60-day delay in reporting a safety issue involving its vehicles.
A food company was fined over BRL980,000 (approximately USD255,000) for failure to inform that an ice cream contained gluten.
In 2018, authorities also initiated investigations, still ongoing, to inquire into the cause of accidents involving cars subject to a previous recall campaign. If the investigations conclude that the automaker did not take all the measures to correct the defect, the above-mentioned penalties may be applicable.
Penalties Imposed by Sector-Specific Regulators
In addition to those penalties contemplated in the Brazilian Consumer Protection Code, depending on the product, each sector has its own regulators with the power to impose penalties.
As an example, in relation to medicines, failure to run recall campaigns in accordance with ANVISA Board Resolutions No 55/2005 and No 24/2015 can subject the company to the penalties set forth in Law No 6,437/77, these comprise:
It is worth noting that the majority of the case precedents involve suppliers taking all the measures established by the law in order to conduct recall campaigns, yet remaining liable for individual lawsuits related to the defective product even if the consumer did not comply with the recall campaign and did not take the product for repair or replacement (Case No1010392 / RJ).
In Brazil, the Consumer Protection Code governs all consumer relations. According to the law, consumer relations refer to the processes for production and placement of goods and services on the market, and their subsequent acquisition and use by the public. Consumer relations occur between purchasers and/or end users, and suppliers.
The law defines a "consumer" as any individual or legal entity that acquires or uses products or services as an end user.
In turn, “supplier" means any individual or legal entity (including unincorporated entities), public or private, Brazilian or foreign, engaged in the production, assembly, creation, construction, transformation, import, export, distribution or marketing of goods, or in the provision of services.
There are two types of liability under the Brazilian Consumer Protection Code:
In relation to product liability claims, the law attributes strict liability to Brazilian and foreign manufacturers, producers, builders, and importers. In other words, they are liable regardless of fault, for redress of damage caused to consumers by defects resulting from the design, manufacture, construction, assembly, formulas, handling, presentation or packing of their products, as well as by insufficient or inadequate information as to the use and risks thereof (Article 12 of the Brazilian Consumer Protection Code).
In relation to liability for a flaw in the product, all suppliers of durable or non-durable consumer products are held jointly and severally liable for defects in quality or quantity that render the products unfit or inadequate for the consumption for which they are designed, or that decrease their value, and for defects resulting from any disparity with the information provided on the container, packaging, labels or advertising message, with due regard for variations ensuing from the nature of the products (Article 18 of the Brazilian Consumer Protection Code).
Any consumer suffering property and/or moral damage due to a defective product may bring an individual lawsuit against the supplier.
In addition, court precedents have also established that relatives or persons maintaining strong affective ties with the victim may also file a lawsuit and seek compensation if they prove to have been personally affected. In fact, the case precedents from the Superior Court of Justice are in favour of the préjudice d'affection doctrine, which allows close family members of a consumption accident victim to pursue indemnification for moral damages against suppliers (Case No 876448 / RJ).
Moreover, there is also the possibility to file class actions to defend consumers rights. Class actions may be filed by:
According to the Brazilian Consumer Protection Code, the right to claim indemnification for damage caused by the defective product or service becomes time barred within five years from the date the damage and its perpetrator becoming known (Article 27 of the Consumer Protection Code).
It is also worth noting that in Brazil there are circumstances that can suspend or interrupt the statute of limitation. In general, the statute of limitation is suspended when:
Also, in general, the statute of limitation is interrupted by:
According to Decree No 4,657/1942, Brazilian courts will have jurisdiction over product liability claims if the consumer is domiciled in Brazil or the contracted obligation has to be fulfilled in Brazil. Lawsuits are usually filed in Brazil to obtain redress on behalf of Brazilian citizens – but in theory they could also include foreign plaintiffs.
Nevertheless, unlike the situation in other jurisdictions, Brazilian law does not offer particularly favourable options for foreign plaintiffs, so cross-border actions, though possible, are rare in practice.
Pursuant to Article 83 of the Brazilian Civil Procedure Code, foreign plaintiffs may be required to post bond when bringing suits in Brazil.
According to the Brazilian Federal Constitution, the law shall not exclude any injury or threat to a right from the assessment of the Judiciary Branch. Thus, there are no mandatory steps to be taken before the consumer files an indemnification action related to product liability.
However, there are growing calls in Brazil for consumers to commence conciliatory proceedings at administrative level before bringing lawsuits, as a way to diminish the number of ongoing proceedings and efficiently reach solutions to cases.
We note that Brazil is increasingly stimulating online dispute resolution (ODR) methods. The Brazilian National Consumer Authority (SENACON) is responsible for a website (www.consumidor.gov.br) where which suppliers can choose to join and address consumer complaints.
Also, the Brazilian Civil Procedure Code – in force since 2016 – establishes that conciliation, mediation and other consensual dispute resolution mechanisms must be encouraged by judges, lawyers, public defenders and members of the Public Prosecutor’s Office, even during the course of a judicial proceeding.
In product liability claims, the supplier usually bears the burden of proving that the product complies with technical standards and is not defective. The consumer will only have the burden of proving the damage and the chain of causation.
There is no specific rule on preservation of evidence, but non-preservation places a direct burden of counterproof on whoever had a duty to safeguard that evidence. In this regard, if a consumer brings a product liability claim, the consumer has the duty to preserve the alleged defective product. If the consumer does not take the necessary measures and the defective product is lost, it will be upon the consumer the burden to produce counterproof.
Despite the lack of a specific remedy in such situations, any party is entitled to file a motion for anticipated discovery where:
As a general rule, the parties are responsible for providing and producing their own evidence, according to their position in the case. Under the Brazilian Civil Procedure Code, the burden of proof rests (i) with the plaintiff, with respect to facts supporting its alleged right; and (ii) with the defendant, with respect to facts impairing, modifying or extinguishing the plaintiff’s alleged right. In relation to product liability claims, the supplier has the burden of proving that the product is not defective while the consumer has the burden of proving the damage and chain of causation.
However, should a request for disclosure of evidence be filed by a party, the judge may command the adverse party to disclose documents or things in its possession. Such request must contain:
The adverse party will have five business days to answer this request. The adverse party may either disclose the document or thing or refuse to do so.
According to law, the judge should not accept such refusal if:
Should the adverse party remain silent during the relevant period or fail to disclose the document after a court decision commanding its disclosure, the judge will hold as true the facts which the adverse party sought to prove by means of the document or thing.
The lack of an acceptable reason to refuse to comply with the disclosure order may give cause to a search and seizure warrant.
The Brazilian Consumer Protection Code, which governs consumer relations, does not have particular rules on expert evidence. Thus, the applicable rules are those established by the Brazilian Civil Procedure Code.
Whenever a case involves technical aspects, the court may be assisted by an expert with forensic knowledge. For example, it is very common to have accounting, engineering, graphical and medical evidence in product liability claims.
In such situation, the court appoints its own expert, and the parties are entitled to designate experts to assist in the production of evidence.
The court-appointed expert has the duty to issue a technical and impartial opinion on the matter. After that, the parties may present their own expert opinions and commentaries on the opinion of the court-appointed expert.
As a rule, each party is responsible for paying the costs of its experts and the party that requested expert evidence is responsible for paying the court expert fees. If the expert evidence was requested by the judge or by both parties, the expenses will be shared between the parties. The judge, however, can determine that the supplier should pay the cost of expert examination when the burden of proof is shifted.
After the final decision, the losing party will refund the other party the corresponding amount.
In product liability cases, consumers usually qualify for legal aid, which means that suppliers will be responsible for paying the costs of expert evidence, or a publicly funded institution will be appointed to perform the expert examination where the supplier did not ask the evidence.
Pursuant to the Brazilian Civil Procedure Code, in general the burden of proof rests with the plaintiff to prove the facts supporting its alleged right. In turn, it rests with the defendant to prove facts impairing, modifying or extinguishing the plaintiff’s alleged right.
In cases involving consumer relations (as product liability cases), the consumer (usually, the plaintiff) must prove the damage caused by the product and the chain of causation. The supplier, on the other hand, must prove that:
According to the Brazilian Consumer Protection Code, the judge may shift the burden of proof to the supplier. Shifting of the burden of proof can occur if:
In Brazil, there are summary and ordinary proceedings.
Summary proceedings are aimed at affording a specific treatment to certain cases which, by their nature, call for simplified and informal procedures, backed by oral arguments and procedural economy. Such cases run before the Small Claims Court, in which cases are resolved in a timely and speedy fashion.
By contrast, ordinary proceedings are generally more complex cases, in which issues of fact can only be properly analysed through production of evidence, and the amount in controversy is higher.
Regardless of the type of case, a consumer can file a lawsuit before a first-instance court (either summary or ordinary proceeding, specifically before a federal or state court, depending on the defendants involved in the case). Initially, a single judge will review and decide the case.
If an appeal is filed by any of the parties, the case is sent to the respective second-instance court and a panel of judges will review the case. After that, in some cases, it is possible to file special appeals to the Superior Court of Justice and/or an extraordinary appeal to the Federal Supreme Court. After the second-instance court decision, cases filed before a Small Claims Court are only subject to an appeal to the Federal Supreme Court.
In Brazil, only specific criminal cases are subject to a jury trial.
In addition, the law does not provide for a specific threshold in awards of damages for product liability cases. Thus, the awards are calculated on a case-by-case basis and the courts usually take into consideration the amounts stated in court precedents issued in similar previous cases.
The Brazilian legal system provides for summary and ordinary proceedings.
In ordinary proceedings, the following types of appeals are available in product liability claims.
With regard to summary proceedings, it is possible to file the following appeals.
The Brazilian Consumer Protection Code provides for two types of liability, namely: liability as regards the product itself (personal injury product liability); and liability for a flaw in the product (property damage product liability).
The first type concerns an accident caused by the product resulting in damage to the consumer. In this case, the supplier will only be exempted from liability if it proves:
By contrast, the liability for a flaw in the product does not arise from any damage caused to the consumer. In this case, liability arises from the flaw itself, which renders the product improper or inadequate for consumption, or from a reduction in its value or quantity.
The above-mentioned defences are expressly stated in the Brazilian Consumer Protection Code and shall be applicable to every consumer relation.
Act of God and Force Majeure
Moreover, after the Consumer Protection Code was enacted, part of the doctrine also allowed for other circumstances that, by virtue of the general principle of civil liability, could exclude supplier’s liability. According to such doctrine, despite not being among the referred defences established by the Consumer Protection Code, in the events of an "act of God" or of force majeure, the supplier would be exempted from liability in case of an accident caused by the product. These are well-recognised defences established in the Brazilian Civil Code – applicable to private law relations – to exempt one of the contracting parties from liability due to contractual breach.
At first, this was not a widely accepted theory and only the defences expressly established by the Brazilian Consumer Protection Code were applicable. Today, however, the majority of scholars and the case precedents support the view that a supplier will not be liable in the case of force majeure or an act of God, due to the absence of the chain of causation between a supplier’s conduct and the damage suffered by the consumer.
In fact, the Superior Court of Justice has already stated that although an act of God and force majeure are not explicitly provided by the Consumer Protection Code, such defences can be invoked as exclusionary causes of responsibility of the service providers (Case No 985888/SP).
State of the Art
It is also worth mentioning that the "state of the art" does not represent a liability exclusion provision expressly contemplated in the Consumer Protection Code, and it was withdrawn from the first drafts before sending the bill to the Congressional houses in the 1990s.
Nevertheless, in some cases we understand that it is possible to construct a no-liability stand substantiated on the limit of knowledge demanded by law. To the extent that the level of understanding that the law demands from the supplier to delimit product safety and the information that will be transmitted to consumers is on the level of what is known, or should be known, rather than what could be known, it is possible to argue that the law does not expect that the supplier have unlimited knowledge of the product, but rather reasonable knowledge that is precisely established by the rules imposed by regulatory agencies or inspection bodies. This is an argument that has not yet been extensively tested and hinges on more extensive debate and acceptance by the academic community.
In Brazil, compliance with regulatory requirements is mandatory. A product that does not meet the applicable regulatory requirements cannot be placed on the market. In fact, placing on the market any product or service that does not comply with the rules issued by the competent regulators constitutes an abusive practice under Article 39, VIII of the Brazilian Consumer Protection Code. Moreover, Article 7, II of Law No 8,137/1990 establishes that selling or displaying for sale a product whose packaging, type, specification, weight or composition is not consistent with legal requirements or does not correspond to its official classification is a crime against consumer relations.
However, compliance with applicable rules, in and of itself, might not suffice to release the supplier from liability.
Pursuant to the Brazilian Consumer Protection Code, a product cannot be deemed defective when another product of better quality has been placed on the market.
The Consumer Protection Code does not expressly address this matter, but some legal scholars contend that suppliers should not be held liable if a product defect was not discoverable within the limitations of science available at the time of the development and distribution of said product on the market. Conversely, other legal scholars argue that if the law does not expressly exclude the liability of suppliers due to the development of the product and the state of the art, such liability cannot be excluded. The main argument is that the Consumer Protection Code adopts objective liability and the supplier holds the risk created by its economic activity, while consumers do not have the means to know the risks that a product poses.
In conclusion, compliance with regulatory requirements must be proven by the supplier in order to avoid the presumption that the product had a manufacturing or design defect. The supplier must also prove that the defect could not be identified when the product was developed, due to the state of the art and the scientific resources available. Those arguments, however, might not be accepted by the courts as sufficient to dismiss a product liability case since courts and most legal scholars hold that suppliers are liable for the risk involved in developing products.
As a rule, each party is responsible for paying its own expenses during the development of the case. After the final decision, the losing party will be obliged to fully reimburse the other party for all the expenses incurred, such as court fees and legal costs.
In the sphere of consumer relations, plaintiffs (consumers) usually qualify for legal aid. In Brazil, legal aid may be requested on the grounds of a personal statement of inability to pay court fees and legal costs.
Legal aid beneficiaries are not required to immediately reimburse the other party when they lose the case. If the beneficiary is defeated, enforceability of the obligations arising out of his or her defeat will be stayed and such obligations may only be enforced if, within five years, the insufficient income condition no longer exists.
Apart from public funding (legal aid), there is no regulation of other forms of litigation funding in Brazil.
Class actions in Brazil are regulated by Law No 7,347/1985 and by the Brazilian Consumer Protection Code, which is commonly used in Brazil to discuss, among other things, product liability cases and environmental damage.
With regard to product liability cases, class actions can be filed to protect homogeneous individual rights, these have consisted of landmark initiatives geared toward representing consumers collectively and expediting resolution of recurrent lawsuits involving the common interests of a class. Under Law No 7,347/1985 (Article 5) and the Consumer Protection Code (Article 82), the parties with standing to bring a class action to defend the rights of citizens in court are:
Further, the Public Prosecutor’s Office must also intervene in class actions as a law oversight authority (when it is not a plaintiff in the class action). In Brazil, there is generally no requirement for class-representative adequacy as to the parties with standing to file class actions.
Examples of Class Action
For illustrative purposes, we note a class action filed by the Public Prosecutor’s Office with the purpose of seeking compensation for property and/or moral damages caused by a milk producer. The Rio Grande do Sul Court of Appeals upheld the Lower Court decision, recognising the company’s liability for placing in the market nutritive deficient milk, with the addition of substances harmful to the consumer’s health. Due to that act, the company was sentenced to pay indemnification for collective moral damages of BRL500,000 (approximately USD129,500) and also to publish the full content of the decision in newspapers (Case No 70077499531).
It is also worth noting the public civil action filed by the Commission of Consumers Defence of the Rio de Janeiro Legislative Assembly, against a washing machine manufacturer, pleading for a recall campaign involving the safety lock system of the washing machines manufactured by the company (Case No 0095226-78.2010.8.19.0001).
The public civil action was grounded on a motion for anticipated discovery and an indemnification lawsuit filed by a single consumer, due to an accident involving one of the company's washing machines, in which a child lost an arm after managing to open the washing machine door while it was operating.
In spite of the accident, the Rio de Janeiro Court of Appeals ruled the public civil action groundless, recognising that the existence of a single report of a consumer regarding eventual defects in the safety lock system could not motivate a recall campaign. The Court of Appeals also stated that according to the expert report the original characteristics of the product were modified by the consumer after the placing of the product in the market. Therefore, the decision acknowledged that the original product, presented in the consumer’s market, did not have any defects. Lastly, the Court of Appeals registered that the product was manufactured more than ten years before the indemnification lawsuit was filed, and that neither the plaintiff nor the expert examination proved the existence of a defect.
Other Co-ordinated Proceedings
In addition to class actions, the Brazilian Civil Procedure Code sets out specific rules on incidental proceedings for resolution of same subject-matter lawsuits. Such proceedings were introduced in Brazil in 2016 to:
In general, they can be brought in cases of repeated disputes involving the same matters in controversy (matters of law only) and where there is a risk of violation against equal treatment and legal certainty. As a rule, all lawsuits (including class actions) are stayed until this proceeding is adjudicated upon, and all subsequent judgments must follow the decision on the incidental proceeding for resolution of same subject-matter lawsuits. Nevertheless, the Brazilian court precedents system is not meant to grant court relief directly to plaintiffs, but rather to define legal principles to be followed in all individual and class actions. Consequently, individual lawsuits or class actions will still be necessary to address threats or injuries to rights and interests.
Since the Brazilian Consumer Protection Code was enacted in the 1990s, we have seen many product liability cases (some are still ongoing) such as tobacco litigation and many car product liability issues. Case precedents have also been continuously developing in relation to product liability issues.
In a noteworthy product liability decision, the Superior Court of Justice recognised that a supplier could not be held liable for adverse reactions caused to a consumer by a specific medicine if such adverse reaction was specifically and expressly referred to in a warning in the product leaflet (1599405/SP).
However, in a recent decision a drug manufacturer was held liable for an alleged adverse reaction caused to a consumer. The consumer alleged that the use of the medicine caused her “a gambling compulsion” and the Superior Court of Justice considered the claim to have grounds since there was not a clear and sufficient warning on the product (REsp 1.774.372/RS).
In another recent but worrying decision the Superior Court of Justice stated that a Brazilian company could be held liable for a defective product sold by an affiliate company based abroad and that was purchased by a consumer in a foreign country. Invoking the apparent supplier doctrine, the Superior Court of Justice considered that a company that uses a renowned worldwide brand to market its products should be considered as an apparent supplier, and thus be held liable for the defective product manufactured abroad (REsp 1.580.432/SP). This is not a consolidated and binding decision of the Superior Court of Justice so far and we expect a lot of movement and discussion on this issue in the next few years.
With regard to recent product liability cases, it is worth mentioning that an investigation conducted by Federal Authorities discovered that Backer, a Brazilian company, was allegedly using hazardous ingredients when manufacturing beer (diethylene glycol). Multiple cases of consumer intoxication were identified and three supposed deaths were associated with the defective beer. The company was temporally closed and a recall campaign took place to recover beers from the market.
Recently, the Ministry of Justice passed Ordinance No 618/2019, which regulates the procedures that suppliers must fulfil to launch a recall campaign. This amendment of the former Ordinance (No 487/2012) seeks to conform the recall procedure to the current reality of new technologies, making it more agile and consistent with the necessities of the digital age.
Other than this, data protection and the internet of things (IoT) have been receiving growing and significant attention from regulators.
With regard to data protection, for many years, Brazil has operated without a personal data protection law or a clear rule on the duties of the supplier after detecting data breaches. On 10 July 2018, that scenario changed with the approval by the Brazilian Congress of Bill No 53/2018, which turned into Law No 13,709/2018, called the Brazilian General Data Protection Act.
Nevertheless, it is worth noting that despite being expected for August 2020, the Brazilian General Data Protection Act is not yet in force. The enforcement of this law was postponed due to the COVID-19 pandemic and it is expected to actually enter into force in January 2021.
In turn, there is no regulation of the IoT in Brazil. The only law that mentions the IoT is Decree No 9,319/2018, which establishes the national system of digital transformation. The referred decree only mentions that "in recognising the transformative potential of the Internet of Things, actions and incentives should be established for the continuous evolution and dissemination of associated devices and technologies."
There is currently a trend for cities and states to try to enact specific state or city consumer protection legislation (for example, the state of Pernambuco and the municipality of São Paulo have enacted their own Consumer Protection Codes).
Contrary to the Federal Law (the Consumer Defence Code enacted in 1990), these state or city Consumer Protection Codes are being drafted in order to try to regulate specific sectors, such as supermarkets, transport, cinemas, the gas industry, pharmacies, hotels and hostels, health plans, the internet and auto insurance.
These state or city Consumer Protection Codes are supplementary to the Brazilian Consumer Protection Code, which has a national character. It is worth recording, however, a possible discussion on the constitutionality of these local Consumer Protection Code. The Federal Supreme Court (STF) has already analysed at least two direct actions of unconstitutionality regarding the possibility of states and cities enacting supplementary rules regarding consumer law.
In the judgment of ADI 5745 / RJ, by majority vote, the STF considered that, in the case of issues of competing jurisdiction (CF, Article 24, Item V), the legislative activity of the member states, by extending consumer guarantees, would be valid. However, in the judgment of ADI No 5158 / PE, also by majority vote, the STF considered that "from the systematic interpretation of Articles 1º, IV, 5º, 24, V e VIII, 170, IV e 174, all of the Federal Constitution, impediments to the state legislature can be extracted when elaborating on consumer norms”, thus “extrapolations of competing competence and violations of the principles of isonomy, free initiative and free competition, especially with regard to the creation of a state burden on suppliers, are forbidden”.
As has happened in several countries, the COVID-19 pandemic has severely affected the entire Brazilian legal system and that includes the product safety and liability regime.
One example of this impact, with regard to product safety law, relates to the recall proceedings. According to the National Consumer Office, each case must be assessed individually but there is a general understanding that:
Moreover, with regard to the cancellation of a product or service, on 24 March 2020, the Executive Office of PROCON-SP issued a technical note in which consumers were recommended to convert contracted services into credit for future use, without incurring any break-up fees, fines or other penalties.
So far, state authorities and the government have been targeting specific areas of the economy, aiming to reduce the negative effects on those that are deemed to be most impacted by the social isolation, such as education, tourism and the airline industry.