October 28, 2008
***Remarks Delivered at a Luncheon Event Hosted at AS/COA New York on October 28, 2009***
The market is a judicial institution. In spite of the ongoing debate on the appropriate level for judicial regulation of the market, so that it can be more efficient, we cannot deny the need – even in the simplest of markets—for rules that regulate at least the property and transfer of goods, and conflict resolution.
The issue of institutional and legal design is of great importance for the adequate functioning of the markets. In many cases, simple rules will suffice, guaranteeing the observance of contracts and reducing manipulation and asymmetry of information, while in others more sophisticated legal and institutional designs will be required. Yet, in any of these contexts, mechanisms for conflict resolution are essential requirements to ensure adequate levels of legal security.
Actually, legal security, as a sub-principle of the Rule of Law, assumes a unique value in the legal system in its differentiated role in the realization of the very idea of justice. Moreover, considering the natural incertitude inherent in lower or higher risk transactions, the security of the rules of the game is a fundamental guarantee for those who invest their capital in different projects.
In this context, the Judicial Reform implemented by Constitutional Amendment n. 45, from December 2004, introduced important innovations, with the goal of increasing the transparency and efficiency of the Brazilian judicial system, which should foster the realization of the principle of legal security in a higher degree.
Among the innovations introduced by constitutional Amendment n. 45, we should highlight the establishment of (i) the National Council of Justice; (ii) the institution of the binding precedent; and (iii) the general repercussion requirement.
The Reform of the Judicial System
The National Council of Justice
An efficient and expedite justice system is a necessary prerequisite to the realization of the principle of legal security. Thus one can state that the absence of a decision may be worse than any decision.
This way, in order to improve the public service of providing justice, one must necessarily seek the continuous improvement of administrative management, with the reduction of costs and the maximization of resource efficiency.
For this reason, one of the most important innovations brought about by Constitutional Amendment n. 45 in the reform of the Brazilian Judiciary was the creation of the National Council of Justice.
The National Council of Justice is an organ for oversight of the Judicial Branch, made up of representatives from judges, public prosecutors, lawyers, and civil society, charged with supervising its administrative and financial conduct.
Contrary to the experience of other countries, in Brazil the institution of the National Council of Justice did not came about in response to demands from the bench for increased autonomy and independence, or to prevent other Branches from mingling into the Judiciary. It occurred rather as a means to integrate and coordinate the several jurisdictional organs in the country through a central organism in charge of administrative, financial and correctional control and oversight.
In Brazil, as the autonomy and independence of the Judiciary are already very much guaranteed since the Constitution of 1988, the creation of the National Council of Justice was aimed primarily at the adoption of mechanisms to provide an efficient control of administrative activity of the several jurisdictional organs. Therefore, the council was constituted rather as a coordinating and planning entity for the administrative activities of the Judiciary than as a disciplining body.
The authority exerted by the National Council of Justice must envisage the needs of the several entities that make up the Brazilian Judicial Branch, taking into account, as an inevitable premise, that those entities are primarily responsible for their own destinies. The central organ will act only when confronted with their clear insufficiency or deficiency.
Thus the National Council of Justice is charged with answering the challenges of modernization and the shortcomings generated by fragmentary views and practices of the administration of the Judicial Branch.
As an organ for administrative coordination and planning of the Judicial Branch, the activities carried out by the National Council of Justice are fundamental to the enhancement of the Brazilian legal system and to the realization of the ideal of an expedite and efficient justice, a prerequisite for the realization of the principle of legal security.
The National Council of Justice is entrusted with the mission of formulating policy and strategy for the Judicial Branch as an essential means to increase the degree of correction and efficiency of the Brazilian justice system. This increased efficiency, on its turn, ensures greater legal security for business dealings by reducing the role of procrastination as an instrument for gain in Brazilian courts.
The Binding Precedent
Another innovation introduced by Judicial Reform with Constitutional Amendment n. 45 was the authorization granted to the Federal Supreme Court to issue binding precedents, which render obligatory, as a rule, a certain decision from a court, similarly to what occurs in Anglo-American law.
It has the effect of establishing a direct link between judicial bodies and agencies of the Administration, opening the possibility that any interested party could seek the enforcement of a decision of the Federal Supreme Court. This instrument plays an obvious role in stabilizing expectations and in reducing the overload of cases in the Judiciary in general and specifically in the Federal Supreme Court.
Establishing mandatory observance, by all other courts and tribunals, as well as by agencies of the Administration, of the decisions ruled as binding precedents by the Federal Supreme Court brings about a disincentive to the judicialization of conflicts related to issues which have been the object of such precedents, whose final decision may be foreseen with the highest degree of certitude.
According to the Constitution, the binding precedent must be approved by a two-thirds majority of the votes at the Federal Supreme Court (eight votes); it must deal with constitutional matters that have been the object of repeated decisions by the Court; and it has the goal of overcoming a current controversy over the validity, interpretation and efficacy of specific norms that may generate legal insecurity and a significant multiplication of court cases. It encompasses, therefore, current questions on the interpretation of constitutional norms or of these in light of infra-constitutional norms.
The pre-existence of repeated decisions on a constitutional matter is a requisite for the issuance of a binding precedent. So, on one hand the subject matter of the binding precedent must have been debated in the Federal Supreme Court; on the other hand, the repetition of decisions should enable the maturity of the controversy.
The approval, as well as the review and the annulment of a binding precedent, may be proposed by anyone qualified to file a direct unconstitutionality action.
Regarding the relation between the binding precedent and the principle of legal security, it is important to stress that the Federal Supreme Court can, for reasons of legal security or exceptional public interest, by a decision of two-thirds of its members (eight Justices), restrict the binding effects of the precedent or decide that it will only come into force at a later moment.
Furthermore, in order to ensure the efficacy of the binding precedent, a complaint may be filed before the Federal Supreme Court against a court ruling or administrative act that counters it, denies its validity, or applies it inappropriately, without barring other appeals or admissible means of impugnation.
The filing of complaints against court decisions contrary to the binding ruling is widely practiced. If the complaint is accepted, the Court (or the Chamber) may: a) demand to hear the proceeding in which its competence has been usurped; b) demand that the written proceedings be urgently delivered to it; c) annul the contrary decision or determine an adequate measure to the observance of its jurisdiction.
In short, the concern with legal security permeates the institution of the binding precedent as a whole. Not only there is an evident natural relation between the issuance of a binding precedent and the degree of security relative to its subject matter, but the very form of the institution advances the principle of legal security by: a) requiring repeated decisions on a specific matter as a prerequisite for issuing a binding precedent; b) demanding a qualified majority for its issuance; c) establishing a rigid procedure for its review; and d) setting up expedite and efficient mechanisms for its execution.
The General Repercussion requirement
The Judicial Reform implemented by Constitutional Amendment n. 45 also introduced significant change to extraordinary appeals, dictating that their admission be subject to a filter as to the general repercussion of the constitutional issue discussed in the case.
According to this innovation, in order to establish the general repercussion, the Court will assess the existence or not of relevant questions from the economic, political, social and legal viewpoint that go beyond the subjective interest of the case. General repercussion will also be presumed whenever the appeal seeks to reverse a decision which is contrary to the prevailing jurisprudence of the Court. This new instrument should enhance the objective features of extraordinary appeals.
If the Court denies the existence of a general repercussion, the decision will be valid to all appeals dealing with identical matter, which will be preliminarily dismissed. In order to reduce the flood of cases that reaches the Supreme Court, originating courts can select one ore more appeals which are representative of a certain controversy and send only them to the Federal Supreme court, while suspending other similar appeals. On one hand, if the Court denies the existence of a general repercussion, the appeals that were suspended are automatically dismissed. On the other hand, if the Court affirms the existence of a general repercussion and examines the merit of the extraordinary appeal, the suspended appeals are heard by the originating courts, which may then dismiss them or overturn their original ruling.
As it contributes to a drastic reduction in the number of cases that reach the Court, as well as to limiting the object of decisions to constitutional questions of an objective nature, the new requirement of general repercussion for extraordinary appeals opens up promising prospects for constitutional jurisdiction in Brazil, especially as to the Federal Supreme Court assuming the typical role of a truly constitutional court.
Hence, the requirement of general repercussion for extraordinary appeals has a double purpose: on one hand it seeks to ensure that suits on incidental constitutional issues, which for their irrelevance should not be brought to the Federal Supreme Court, indeed do not arrive at the Court and reach a faster conclusion. On the other hand, by ridding the Court of innumerable suits that are aimlessly brought to it, general repercussion enables the Court to decide more expeditiously matters which it must effectively settle.
The potential benefits of this institution are evident for the timeliness and effectiveness of justice – and therefore to fostering legal security in Brazil.
The recent innovations introduced in the Brazilian legal system by the reform brought about by Constitutional Amendment n. 45, from 2004, intend to fulfill the constitutional promise of a Judiciary that is at once effective and expedite, strengthening legal security in our country.
This is demonstrated in the three dimensions we can identify in the Judicial Reform: a) the modernization of judicial administration; b) the respect by all other judicial entities and the public Administration to binding precedents affirmed by the highest court in the land; and c) the assurance that millions of appeals which would pointlessly overload the Federal Supreme Court are finally decided before they reach the Court.
The realization of an expedite and efficient Judiciary is not only a mandate dictated by the constitutional precept of the effectiveness of justice, but also a prerequisite for the very economic development of Brazil.
The assurance of a speedily resolution of conflicts is a requirement for the process of development and an undeniable stimulus for foreign investments in the country.
We expect that the constant efforts undertaken to modernize the Brazilian judicial system may serve not only to ensure the fulfillment of the constitutional right of access to justice, but may also constitute an incentive to the economic development of the country.
Finally, as a brief addendum, it would be appropriate to recall the continuous initiatives carried out in Brazil to promote the out-of-court settlement of conflicts. If the building of an efficient Judiciary is a precondition for development, we cannot fail to confront, at the same time, the challenges presented by the excesses of a “judicialist” culture which has been strongly established in our country, according to which all disputes must be submitted to judicial review in order to be settled. This ends up overloading the Judiciary by calling it to arbitrate the resolution of controversies whose settlement could do without it.
Only in this way can the Judiciary stop being the sole conduct for the most urgent claims of the citizenship and truly fulfill its constitutional mandate.