Brazil

KEYWORDS/SCOPE Shifting of the burden of proof, Brazilian judiciary, Civil procedure, Consumer Protection Code. SUMMARY The shifting of the burden of proof presents challenges to the defense and underscores the importance of legal strategies in Brazil. TEXT Foreign companies operating in Brazil must adapt not only to commercial and cultural differences, but also to the unique features of the local legal system. One such feature is the possibility of shifting the burden of proof - a legal mechanism that can significantly affect how companies should prepare to handle litigation in the country. This procedural dynamic is an exception to the traditional rule that each party must prove the facts it alleges, allowing, in certain situations, the defendant to be required to demonstrate the nonexistence of facts alleged against them. In Brazilian civil procedure, the general rule for the allocation of the burden of proof is set forth in Article 373 of the Code of Civil Procedure (CPC), which establishes that the plaintiff must prove the facts constituting their right, while the defendant is responsible for proving facts that prevent, modify, or extinguish the plaintiff’s right. However, this allocation can be modified by legal provision or by judicial decision, based on the principles of procedural effectiveness and access to justice. The most notable example of a legal provision for the shifting of the burden of proof is found in Article 6, item VIII, of the Consumer Protection Code (CDC). According to this provision, the judge may shift the burden of proof in favor of the consumer when the consumer’s allegations are plausible or when the consumer is at a disadvantage, whether technical, informational, or economic. In practice, this means that, when faced with a reasonable and plausible allegation by the consumer, the supplier may be required to demonstrate, for example, that the product was not defective, that the service was properly provided, or that the information given was clear and sufficient. Although the shifting of the burden of proof under the CDC depends on a reasoned judicial decision, Brazilian case law has shown a strong tendency to apply this mechanism broadly, in order to ensure consumer rights, as consumers are recognized as the vulnerable party in consumer relations. This creates a scenario in which companies must act preventively and strategically, considering that they may be required to produce evidence that, in other legal systems, would be the sole responsibility of the plaintiff. The Code of Civil Procedure, in turn, extends the scope of the shifting of the burden of proof beyond consumer relations. In Article 373, paragraph 1, the CPC provides that the judge may reallocate the burden of proof in cases where producing evidence would be excessively difficult for one party or when the other party is in a better position to produce it. This possibility, although dependent on a request by the parties and governed by the principle of adversarial proceedings, allows the judiciary to adapt the traditional structure of evidentiary allocation in pursuit of substantive justice in the specific case. For companies operating in Brazil, this characteristic of the procedural system is a significant point of attention. The shifting of the burden of proof can result in additional costs, both in the pre-litigation phase and during the course of judicial proceedings, and represents a concrete risk of an adverse judgment in cases where there is insufficient documentary evidence to refute the opposing party’s allegations. In disputes involving consumers, for example, it is common for the company to have to prove that it provided clear and adequate information, that there was no failure in product delivery, or that billing was correctly performed. The absence of evidence or disorganized documentation may lead to a judicial presumption of the company’s liability. For this reason, foreign companies operating in Brazil should adopt strict internal policies for recording interactions with customers, maintain effective systems for tracking products and services, invest in the formalization of contracts and terms of use, and train their legal and operational teams to handle litigation involving the shifting of the burden of proof. Prevention and organization are essential to mitigate risks and avoid losses resulting from an unfavorable allocation of the burden of proof. In summary, the shifting of the burden of proof in the Brazilian judiciary is a tool designed to promote procedural balance and effectiveness in judicial proceedings, but at the same time, it imposes concrete obligations and challenges on companies operating in the country. Understanding this mechanism and preparing accordingly is essential to ensure legal certainty, reduce contingencies, and protect the reputation and sustainability of business operations in Brazil. AUTHORS Raissa Simenes Martins – Partner (Corporate Litigation & Dispute Resolution) Ana Lígia Alves F. Fantinato – Coordinator (Corporate Litigation & Dispute Resolution) Luiza Pattero Foffano – Senior Associate (Corporate Litigation & Dispute Resolution) Isadora Proença Cruz – Intern (Corporate Litigation & Dispute Resolution)

Keywords: [secondary debtor; labor enforcement; Brazilian labor courts; labor liability; service provision; service contractor; TST;] Summary: Brazil’s Superior Labor Court now allows enforcement directly against subsidiary debtors once the main employer defaults, heightening companies’ financial exposure and demanding stricter oversight of third-party contractors. Text: In a recent virtual full-bench session, the TST reaffirmed 17 legal theses, transforming them into binding precedents in accordance with Article 896-C, paragraph 1 of Brazil’s Labor Code (CLT). This mechanism, enhanced by Internal Rule Amendment No. 7/2024, aims to standardize national case law and streamline proceedings on matters already consistently settled by the Court’s Panels and the Specialized Individual Disputes Section (SDI-1). Among the topics addressed was the enforcement of judgments against secondary debtors. The precedent was established in the judgment of Case No. RR 247-93.2021.5.09.0672 and reads as follows: “Labor enforcement may be redirected to the subsidiary debtor upon confirmation of default by the principal debtor, without the need to first exhaust attempts to collect from the primary employer or its shareholders.” This binding formulation now applies to all Brazilian labor courts and has significant implications for companies that outsource services. Specifically, it eliminates the requirement to first attempt collection from the primary debtor before pursuing enforcement against the company held secondarily liable. Broader Impact on Service Contracting Companies This new precedent reinforces an interpretation that has already prevailed within the TST, particularly after the cancellation of the former Precedent No. 12, which had previously required prior attempts at enforcement against the primary employer. The new understanding prioritizes the efficiency of labor enforcement by allowing immediate redirection to the secondary debtor — even in cases of partial default. While this is not a doctrinal innovation, the new binding nature of the rule drastically alters its legal force and imposes a stricter procedural obligation on lower courts. Judges at the trial and appellate levels are now required to apply this thesis without exception, barring extremely rare and well-justified circumstances. From a corporate perspective, the precedent requires companies to reassess the risks involved in outsourcing. Given that mere nonpayment by the service provider can now trigger direct enforcement against the contractor, the financial liability of companies — particularly those engaging with small or undercapitalized service providers—becomes more acute. Practically speaking, this removes from the secondary debtor the ability to challenge the order of liability during enforcement. Defense strategies must now focus on well-established arguments, such as the lack of fault in monitoring the service contract (when applicable) or procedural nullities in the earlier litigation phase. Strategic and Preventive Measures for Companies In light of the new binding precedent, companies must take a more proactive approach to managing labor risk in third-party engagements. Essential steps include: Strengthening third-party due diligence, including tighter selection, monitoring, and auditing procedures; Maintaining up-to-date documentation that proves the labor and contractual compliance of service providers; Drafting more robust contractual clauses, clearly allocating risks and obligations for cost reimbursement; Pursuing timely indemnification claims when early enforcement leads to financial loss. A Shift Toward Enforcement Efficiency in Labor Law The formal adoption of the thesis in RR 247-93.2021.5.09.0672 underscores a broader institutional trend: strengthening the effectiveness of labor enforcement at the expense of some traditional creditor protections found in civil law. For corporate counsel, this means adopting an even more preventive and strategic posture. While case law standardization may enhance legal predictability, it does not eliminate risk; rather, it calls for careful legal planning and proactive governance. In this new environment, companies must closely monitor outsourced contracts and act decisively during the early litigation phase to reduce the chance of being held financially liable. Finally, the procedural innovation introduced through Internal Rule Amendment No. 7/2024 — and the use of virtual sessions for jurisprudential reaffirmation — highlights the TST’s commitment to procedural modernization and consistent case law. However, it also signals the urgent need for companies to adapt their contractual and litigation strategies to avoid unnecessary liabilities. Veridiana Moreira Police – Partner (Labor, Employment and Social Security) Brunna Louise Spedro Arantes - Senior Associate (Labor, Employment and Social Security)

Introduction The Economic Crime and Corporate Transparency Act 2023 (“ECCTA 2023” or the “Act”) constitutes a landmark development in the United Kingdom’s (“UK”) legal framework to combat financial crime and reinforce corporate accountability. Enacted in 2023, the Act introduces two key provisions: the creation of the new corporate offense of failure to prevent fraud, entered into force in September 1st, 2025, and the expansion of the identification doctrine through the senior manager regime, entered into force in December 26, 2023. These new provisions are expected to generate significant challenges for companies both within and outside the UK, as the scope of exposure is broad with potential extraterritorial implications - such as organizations incorporated in the UK and multinationals with UK operations. In this regard, the most effective way to address these challenges is to implement or enhance compliance programs to prevent fraud and ensure appropriate oversight of senior management. This article aims to present the key challenges posed by these new provisions and highlight practical measures that companies should adopt to mitigate them. An essential component of this approach is the periodic review of compliance programs, ensuring that they remain tailored to the company’s risks, regulatory requirements and corporate structures. Preliminary considerations The United Kingdom has progressively reinforced its legal framework to address economic crimes and enhance corporate accountability. A key milestone was the UK Bribery Act of 2010 (“UKBA”), which introduced the pioneering corporate offense of failure to prevent bribery. Under this strict liability regime, organizations may be held criminally liable for bribery committed by an associated person intending to benefit the organization, unless them can demonstrate that adequate procedures had been implemented to prevent such conduct. The ECCTA 2023 represents an evolution. It complements and expands the UKBA by introducing the failure to prevent fraud offense, applicable to large organizations - defined as those meeting at least two of the following criteria: (i) more than 250 employees, (ii) annual turnover exceeding £36 million, or (iii) total assets exceeding £18 million. In addition, the Act expands the identification doctrine, enabling corporate liability for offenses committed by senior managers acting within the scope of their authority, even if they do not hold formal executive titles. Taken together, the UKBA and ECCTA 2023 establish a robust legal framework that shifts the burden onto organizations to proactively prevent misconduct, rather than merely responding to it. This evolution underscores the UK’s enduring commitment to enhancing transparency, accountability, and ethical conduct in corporate environments. As mentioned before, the Act contains provisions with extraterritorial effects. Companies inside and outside the UK may still fall within the scope of ECCTA 2023 if they have relevant UK connections, such as UK-based customers, operations, or assets. Under the senior managers regime and failure to prevent fraud offense, liability may arise regardless of incorporation or location, provided that there is a demonstrable UK nexus. Hence, these companies have an ongoing obligation to continuously monitor and periodically review the effectiveness of their compliance programs. Periodic compliance review as a strategic response Companies subject to the ECCTA 2023 - as well as those operating under other robust anti-corruption frameworks - should carry out periodic reviews of their compliance programs. Such reviews are critical not only to confirm that existing procedures remain adequate, but also to ensure that the program evolve in response to shifting regulatory expectations and emerging risks. The absence of this continuous reassessment exposes organizations to heightened liability, particularly in jurisdictions that demand demonstrable and proactive compliance efforts, as the UK. A compliance review is a structured and in-depth evaluation of a company’s compliance framework. It usually includes a thorough document review, which includes compliance-related policies and internal procedures, training materials and sessions provided, sample analysis of relevant third parties to check whether the appropriate procedures are being carried out. In addition, one effective tool during the review is to perform a general compliance perception assessment, involving structured interviews with key personnel to capture insights on the program’s effectiveness. The findings can then be used to identify and address specific opportunities for improvement, ensuring that the compliance framework remains both responsive and robust. In this regard, periodic reviews have proven to reinforce a culture of integrity. They also promote accountability, particularly at the senior management level, since these leaders are typically engaged in the review process and bear responsibility for supporting compliance across the organization in order to meet the broader governance expectations – expanded by the ECCTA 2023. Within the context of the failure to prevent fraud offense, a well-structured and regularly reviewed compliance program serves as a strategic defense, both to mitigate risks and liability. The reviews may be conducted internally by the compliance department, however, when conducted by outside counsel, it provides added value by ensuring independence, minimizing potential conflicts of interest, and enhancing the credibility of the assessment before regulators and stakeholders. Conclusion The Act has increased legal and operational exposure for large organizations with direct or indirect links to the UK – mainly due to the introduction of the failure to prevent fraud offense. In response to this heightened regulatory landscape, the periodic review of the compliance program assumes a strategic role. By systematically evaluating the practical effectiveness of the internal compliance programs, the review enables organizations to identify and remediate deficiencies before they escalate into regulatory consequences. For Brazilian companies with operations, clients, or assets in the UK, or for UK companies with a presence in Brazil, the September 2025 enforcement underscores the urgency to act. Implementing and maintaining reasonable prevention procedures is essential not only to support a defense under the ECCTA 2023, but to also foster a culture of integrity and accountability across all levels of corporate governance. This resonates with the spirit of the Brazilian Clean Companies Act. Taken together, these legal frameworks highlight the need for companies operating transnationally to align compliance programs to both jurisdictions, embedding continuous monitoring, periodic reviews, and strong governance practices. Authors: Isabela Vidal, Leonardo Kozloswki , Salim Saud.

Partner at Medina Osório Advogados. PhD in Administrative Law from the Complutense University of Madrid, Spain. Master’s in Public Law from the Federal University of Rio Grande do Sul (UFRGS). Former Attorney General of Brazil. Chair of the Special Commission on Administrative Sanctioning Law at the Brazilian Bar Association (OAB). President of the International Institute for Studies of State Law (IIEDE). When accountability fails where it should prevail, the system once again asks whose side the law is on. In 2009, the lawyer Sergei Magnitsky exposed a fraud scheme and died in state custody in Russia. No effective domestic response followed; nor did international mechanisms offer a real remedy. In 2012, the United States Congress enacted an initial act focused on the Russian case; in 2016, faced with the repetition of this pattern of impunity, it broadened the scope and established a general regime: the Global Magnitsky Human Rights Accountability Act. Within US jurisdiction, the Act authorises personal sanctions—asset freezes and visa restrictions—against foreign individuals and entities for significant corruption or serious human rights abuses. In practice, the machinery is administrative: the Department of State and the Department of the Treasury/OFAC conduct designations, and since 2017 Executive Order 13818 (issued under the IEEPA) has structured the regime’s day-to-day operation and listings on the Specially Designated Nationals and Blocked Persons (SDN) List. This is not an international instrument; its effects cross borders by virtue of the dollar’s weight, correspondent-banking networks, and US-regulated technology infrastructure. One should not, however, attribute the Act’s transnational efficacy solely to the dollar’s gravitational pull. The role of the SWIFT system—the backbone of international financial messaging—must also be considered. Although headquartered in Belgium, SWIFT is, in practice, subject to regulatory and political pressures exerted by Washington and Brussels, effectively making it a technical arm of sanctions. The experience of sanctions on Iran showed that exclusion from this network amounts to a form of de facto economic interdiction, cutting off access to global trade flows. Thus, even though the Magnitsky text does not expressly mention it, the Act’s reach is projected over this ecosystem because financial institutions, wary of retaliation, adjust their conduct in advance so as not to jeopardise their continued presence in such a vital network. The legal design is straightforward—and therefore effective. Designation triggers the blocking of assets within US reach, a prohibition on transactions with “U.S. persons”, and restrictions on mobility. The typical targets are non-US nationals—public officials, corporate leaders, organisations. As a large share of global operations settle in USD or touch systems governed by US rules, banks and companies in other countries adapt their behaviour to preserve access to the dollar system and the US market; wherever there is a US nexus (USD settlement, the involvement of a “U.S. person”, or the facilitation of a breach), non-compliance exposes actors to significant fines and, in commercial-regulatory terms, to the risk that dollar correspondents will be lost at counterparties’ discretion (de-risking). On the immigration front, visa restrictions may also be imposed under a parallel statutory basis (§ 7031(c) of the Department of State appropriations acts). Another salient point lies in the limits of judicial control over such designations. Although there is a formal possibility of recourse to US courts, experience shows that the D.C. Circuit adopts a posture of marked deference to the Executive, especially when national security and foreign policy are invoked. The result is a narrow scope for judicial review, in which substantive challenges to sanctions rarely succeed. In this setting, the administrative route of delisting before OFAC becomes, in practice, the only realistic hope of reversal—underscoring the asymmetry between the magnitude of the effects and the scarcity of effective procedural safeguards. It should be emphasised that breaches of Global Magnitsky designations are not confined to commercial repercussions. Under the International Emergency Economic Powers Act (IEEPA), US law provides for administrative and criminal penalties against financial institutions that, even through negligence, facilitate prohibited transactions. Multibillion-dollar fines have been imposed in analogous cases, hitting global banks that violated embargoes on sanctioned countries. Beyond monetary penalties, the greater risk is exclusion from the US market—the core of the international financial system. That scenario turns legal risk into existential risk: a bank unable to access the dollar system will struggle to survive. Liability is not limited to deliberate conduct. The sanctions regime admits attribution for “facilitation”, an open-textured concept encompassing any act that makes it possible, even indirectly, to carry out transactions with designated parties. Thus, the simple settlement of an operation that passes through a US institution, or the use of technology hosted on servers in the United States, may suffice to trigger the law’s application. This interpretive elasticity greatly expands the exposure of foreign financial institutions, which often do not perceive the hidden links that render their transactions reachable by OFAC’s extraterritorial arm. We should be clear about what is at stake. Magnitsky does not export a universal concept of human rights; it enacts, in domestic law, the United States’ legal and political interpretation of “serious violations” and “significant corruption”, and projects that reading through its economic and technological power. The same instrument that protects rights also operates as a lever of foreign policy—indeed, of legal hegemony. Law and power march together; recognising this refines—rather than weakens—the debate. The model has not been confined to Washington. Other jurisdictions have adopted their own regimes—Canada (2017), with the Justice for Victims of Corrupt Foreign Officials Act, and the European Union (2020), with its global human rights sanctions regime (Council Decision (CFSP) 2020/1999 and Regulation (EU) 2020/1998). The common denominator is targeted, name-specific sanctions—focused on natural and legal persons, not countries—with asset and mobility consequences that become effective because the world largely operates on infrastructure connected to the US. Real risks exist: political selectivity in the choice of targets, opaque criteria, and the erosion of procedural safeguards. The regime’s legitimacy depends on public and verifiable criteria, due administrative process with effective avenues of challenge (including delisting petitions to OFAC and, where applicable, judicial review under the Administrative Procedure Act (APA)), and independent institutional oversight. Without that, sanctions become a shortcut to arbitrariness; with it, the message is unambiguous: serious violations carry concrete consequences, within the bounds of legality. The debate that matters in Brazil is not outsourcing parameters to foreign jurisdictions, but strengthening our own. The Constitution enshrines the primacy of human rights in international relations (Article 4(II) of the Brazilian Federal Constitution). To discuss an analogous regime—with objective criteria, publicity of decisions, and opportunities for defence and review—is to discuss coherence between what is written and what is delivered. In an environment where finance, technology and compliance produce de facto transnational reach, sovereignty is also exercised through clear, stable and predictable rules. Thus, legal risks for financial institutions are not confined to regulatory compliance; they extend to institutional viability itself. Magnitsky sanctions have become a driver for the reorganisation of global banking conduct, forcing foreign institutions to choose between fidelity to their domestic legal order and pragmatic adherence to US norms. The room for neutrality is ever narrower: when in doubt, banks opt for over-compliance, abandoning legitimate clients and operations to preserve access to the international financial system. Here, law blends with power—and legal risk takes on the features of systemic risk. The Magnitsky Act achieved global reach not because it is “the law of the world”, but because a significant part of the world operates on US-centred infrastructure. Acknowledging this dual nature—humanitarian and geopolitical—does not relieve us of the need to choose parameters; it compels us to demand criteria, safeguards and institutional responsibility in the application of any regime. Where there is a serious violation, there should be a sanction—with clear rules, oversight and a commitment to legality—so that justice and power are not conflated. More broadly, in the global arena, no nation is beyond accountability to others; international relations imply transparency, reciprocity and a ban on arbitrariness by public authorities. To some extent, although there is neither a truly universal conception of human rights nor even a universal concept of corruption—and while there is no doubt about US global hegemony and China’s rise—it is impossible to ignore the growing importance of international public opinion and of certain ethical standards of integrity demanded in the observance of human rights by contemporary civilised nations. In this context, given countries’ economic, technological and commercial interdependence, the concept of sovereignty has become ever more complex and exposed to international politics and diplomacy. It is precisely in this new environment that legislation with transnational effects, enacted by sovereign powers, emerges and strengthens. Finally, it should be noted that Brazilian financial institutions occupy a structurally vulnerable position amid the conflict between national jurisdiction and the extraterritorial authority of the Office of Foreign Assets Control (OFAC). Domestically, the recognition (homologação) of foreign decisions by the Superior Court of Justice (STJ) is a constitutionally indispensable requirement for property sanctions to take effect against individuals and companies located in Brazil. In the US legal system, however, OFAC—an agency subordinate to the Department of the Treasury and, ultimately, to the President—is not legally obliged to recognise or await that recognition procedure. OFAC’s structure empowers it to administer, supervise and impose financial sanctions immediately under the Global Magnitsky Act, applying them to all institutions that maintain direct or indirect links with the dollar financial system. This means that, even if Brazilian banks invoke a pending analysis before the STJ, OFAC has full discretion to accept or reject that justification—either treating it as a sign of respect for domestic due process or, conversely, as an unacceptable obstacle to the extraterritorial effectiveness of US law. To this equation one must add the spectre of so-called secondary sanctions, through which the Treasury threatens or restricts foreign banks and companies that, directly or indirectly, facilitate transactions for the benefit of designated parties. This is not just a loss of correspondents; it is the concrete possibility of exclusion from dollar payment networks and isolation from the international financial system. The mechanism operates as an indirect instrument of foreign policy, projecting onto third countries the need to conform to US directives on pain of economic marginalisation. The impact, for jurisdictions such as Brazil, is compulsory insertion into a zone of permanent tension between fidelity to the internal constitutional order and practical submission to the functional extraterritoriality imposed by OFAC. The gravity of the situation is heightened by the possibility of class actions in US courts. There are precedents in which victims of human rights violations have sought to hold banks liable for alleged complicity in indirectly financing sanctioned regimes. Even if such claims face evidential hurdles, the mere reputational and financial cost of litigating in US federal courts is a powerful deterrent. The logic is clear: non-compliance—or even the appearance of complacency—with designated parties can open flanks for complex litigation, compounding already severe administrative sanctions. This is, therefore, a field of tension between Brazilian constitutional sovereignty and the United States’ economic-normative power, in which banks are exposed to severe risks of secondary sanctions should OFAC choose not to recognise the authority of the Brazilian judiciary. Fábio Medina Osório