The entrepreneurial environment in Brazil, including that in relation to multinational companies that have a commercial relationship with the country, is directly influenced by the failings of the Brazilian judicial system. Long drawn out procedures, in many instances taking over 10 years, had become a major obstacle to increased investments in the country.
As of 1990, a number of changes were made to the Brazilian Civil Procedure Code, which dates from 1973, seeking a more swift resolution to judicial disputes. Since 2005, this objective seems to be closer with the enactment of several laws. In summary, it can be said that this group of laws has the purpose, inter alia, of creating a greater uniformity of jurisprudence; increasing the value placed on certain precedents from the Federal Supreme Court, which also bind the Government both directly and indirectly; curbing appeals and decisions contrary to the rationale previously established by the Federal Supreme Court; paving the way to electronic proceedings; eliminating frivolous proceedings; and facilitating the means of enforcement, bringing swiftness and certainty to the procedure.
Therefore, even though Brazilian legislators are still crawling towards the perfect world in terms of judicial disputes, the aforementioned package of measures, together with other legislative provisions, such as the new Bankruptcy Law, enacted in 2005, are already having positive effects to the Brazilian economy to a certain extent. This can be seen in the willingness of financial institutions to decrease their interest rates in order to improve the credit market, as the credit risk tends to diminish with such measures. It becomes even clearer in terms of foreign investments in the country, which has been increasing exponentially during the past years.
Some might say that these results are just a reflection of the world´s propensity in investing in the developing countries, commonly referred to as BRIC (Brazil, Russia, India, and China). Definitely, such "natural" movement of funds is responsible for the recent results in Brazil´s economy. However, one cannot ignore the fact that Brazil is attracting increased investments due to opportunities arising as a result of a group of measures, including the ones referred to above.
Undeniably, the soundness of the local credit market, with an enhanced tool for reducing default statistics, is also intimately related to the mood of investors around the world, as the opposite represents two losses: the investment itself and the high costs deriving from a weak judicial system. In this respect, Brazil is on an upward trajectory.
Lawyer admitted in Brazil, England and Wales and Portugal. GATT and WTO panelist. Brazilian government ad-hoc representative for the Uruguay Round of the GATT. Post-graduation professor of the law of international trade.