The Primerus Paradigm - Winter 2013 Page 52

T H E P R I M E R U S P A R A D I G M

The Brazilian Civil Code and
The Bona Fides Principle

Eduardo Montenegro Serur is the chairman of partners and founder
at Serur & Neuenschwander, and heads the business, commercial
and corporate team of the firm.

Serur & Neuenschwander Advogados
Rua Senador José Henrique,

nº 224, 11º andar
Emp. Alfred Nobel, Ilha do Leite
Recife-PE, Brazil 50070-460
+55 (81) 2119 0010 Phone
+55 (81) 2119 0011 Fax
eduardo@snadvogados.adv.br
www.snadvogados.adv.br

Eduardo Montenegro Serur

A major change in Brazil's legal struc-
ture took place 10 years ago: a new Civil
Code was issued to replace the one until
then enforceable, promulgated in 1916.
With that new legislation, civil and com-
mercial obligations were unified and the
legal statutes concerning companies and
corporations were inserted therein.

The Code also made the bona fides
principle enforceable in private rela-
tionships and especially those between
shareholders and quota holders.

How-

ever welcome and necessary, the legal
concept brought to the Brazilian Civil
Code demands that judges apply the
good faith principle taking into account
its cultural nature,

and considering it as

human creation. In other words, judges
and lawyers alike are now requested to
use equity

, a principle our Roman tradi-

tion (on which Brazilian Law is based)
has neglected throughout centuries of
legislated and written law.
Despite the ancient differences
between Roman and Common Law, after

that radical change made possible by the
new Brazilian Civil Code, it is undeni-
able that the experience with corpora-
tions throughout American history will
strongly benefit any lawyer who wishes
to undertake a professional experience
in Brazil. Moreover, one must consider
that the two models Roman and Com-
mon Law have become intertwined,
especially in the U.S., where there is a
growing number of legislated and written
law in spite of the case law tradition.

One has then to study good faith as a
dogmatic factor and therefore capable of
providing solutions to conflicts between
shareholders, bearing in mind that
Brazilian legislators were not able to
define the precise frames of the so called
`objective'

good faith they had idealized,

thus imposing the understanding of the
principle upon analysis and comparison
of concrete cases

Although one may say that to some
extent the Roman bona fides has been
mythified,

it is clear that Brazilian Law-

yers and Professors of Commercial Law
currently need to look into Common Law
to better understand the very essence of
that principle and comprehend its vari-
ous facets, or at least establish guide-
lines to answer the following questions:

1) Must good faith orient the actions

of a major shareholder in a limited
company, or those of the minority?

2) How does one balance that principle

with the power of control?

3) Can a decision be considered legiti-

mate use of the power of control and
at the same time not be an act of good
faith?

4) Can commercial relationships man-

age to maintain their competitive
nature and still be guided by such a
moral concept?

Literature to provide answers to these
questions is very limited in Brazil though
abundant in the U.S. and England.

stated before, Brazilian judges have not
yet been able to combine good faith and
company law in their sentences, always
prevailing the idea that a free economy
could allow a certain laissez faire to be
the compass of the relationship between

Latin America & Caribbean