Procedural legal transactions under the new Brazilian Code of Civil Procedure – what is allowed?

The new Brazilian Code of Civil Procedure (CPC) introduced the principle of party autonomy and prioritized self-composition, now called party empowerment, leading to the execution of procedural legal transactions that concern the process itself in its structure and dynamics.

Procedural legal transactions are not necessarily new. The 1973 CPC already included typical procedural transactions, such as the choice of forum, agreements on the burden of proof, and the suspension of proceedings for settlement negotiations. We can even mention liquidation by arbitration.

What is new and interesting is that it opens up a topic that was typical to the possibility of parties agreeing through atypical procedural transactions. Thus, negotiation will be possible in all areas of procedural law, such as the production of evidence, procedural deadlines, attachment orders, etc.

The parties can also negotiate procedures – for example, in complex cases requiring more expert opinions and experts, the parties can shape the procedure, simplifying the case and establishing shorter procedures, according to their wishes. Negotiation can occur before the start of the process or while the process is underway.

Corroborating this empowerment of the parties, we have Article 3 of the CPC (Brazilian Code of Civil Procedure), which prioritizes the autonomy of will, formally favoring the amicable resolution of conflicts.

Subsequently, in line with substantive law, with which it now goes hand in hand, Article 5 of the CPC establishes the rule of obedience to the principle of good faith and, in Article 8, determines that the guiding principles of civil procedure are the dignity of the human person, proportionality, reasonableness, legality, publicity, and efficiency.

In this context, Article 190 appears as one of the greatest innovations of the new Brazilian Code of Civil Procedure (CPC), since it established the possibility of entering into procedural legal transactions, which can be defined as a legal transaction entered into, in or out of court, with the intention of producing procedural effects, before the process (pre-efficacy of the procedural transaction), during the course of the process, or after the process has ended (post-efficacy of the procedural transaction).

However, the autonomy of the parties’ will is not absolute, and, for example, the suppression of the right to defense, the right to a fair hearing, the right to file appeals, and the right to produce evidence, etc., cannot be negotiated.

We can also cite, as limits to autonomy, the need for judicial approval for the effectiveness of the procedural legal transaction, and that this, in accordance with Brazilian positive law (Article 2035, Civil Code), is limited by public order.

What, then, are examples of procedural legal transactions that can be freely performed by the parties? Transactions that: (i) establish the chronology of the procedure (as already occurs in arbitration proceedings – CPC 191); (ii) establish a no-appeal clause, provided it is bilateral, that is, that there will only be a decision on the merits in the first instance; (iii) stipulate a waiver of the right to appeal; (iv) dispense with certain evidence, for example, expert evidence; (v) agree on the distribution of the burden of proof; (vi) choose the forum in which the action must be processed and judged; (vii) establish an arbitration clause to submit the dispute to arbitration; (viii) stipulate the application, in the proceedings, of the  solve et repete clause  (waiver of the exception of non-performance of the contract); (ix) waiver of the right to appeal; (x) determine which law is applicable to the case (in the arbitration agreement it is possible to: choose the applicable law, freely choose the rules of law to be applied in the arbitration [LArb 2, paragraph 1], choose the language in which the proceedings will take place, grant the arbitral tribunal the possibility of deciding by equity, etc.); (xi) authorize the state judge to decide by equity, even outside the cases provided for by law; (xii) agreement on non-seizure; (xiii) agreement and apportionment of expenses; (xiv) agreement on extrajudicial mediation or conciliation; and (xv) agreement not to apply suspensive effect to appeals.

Recently, the São Paulo Court ordered the blocking of a debtor’s passport, driver’s license, and credit card. Could the parties agree that the judge would not apply these measures cumulatively? We believe so. What cannot be done is to negotiate that a certain coercive measure will not be applied. But we can say that they would not be cumulative or that they would be applied in a specific order.

Ultimately, in procedural legal transactions, it will be up to the judiciary to control the validity of the agreement, rejecting it when there is: (i) nullity (fraud, coercion, matters subject to legal reserve or matters of public order, matters that are not within the parties’ sphere of availability, rules that violate fundamental rights, etc.); (ii) abusive insertion in an adhesion contract (there is no abusive limitation in an adhesion contract per se – procedural negotiation is possible in adhesion contracts, what is not permitted is abusive procedural negotiation).