On April 5, 2024, the Brazilian Supreme Court, ruling on a Constitutional Complaint, ratified the imperative of Article 97 of the Federal Constitution and Binding Precedent 10, overturning a ruling by the Regional Labor Court of the 2nd Region, which had ruled out the application of Article 82-A of Law 11.101/2005 (Bankruptcy Law).

BACKGROUND

The Federal Constitution is the basis of our country's legal system and must be observed by all. Compliance with constitutional rules guarantees legal certainty, protection of fundamental rights, and the validity of other norms. To this end, it is essential that jurists, judges and other actors in the legal system act in accordance with the principles and provisions established in the Federal Constitution, ensuring the coherence and stability of the Brazilian legal system.

To determine whether laws are constitutional, Brazil adopts a mixed system: concentrated control - which, as far as the Federal Constitution is concerned, is carried out only by the Supreme Court - and diffuse control, which has its origins in the United States.

Diffuse control of constitutionality can be carried out by any judge or court, but in the case of the courts, the Plenary Reserve Clause, set out in Article 97 of the Federal Constitution, applies, which states that a given statute only may be incidentally declared unconstitutional if such a decision is issued by an absolute majority of the members of the court or its special body.

Provoked to express its opinion on the matter on several occasions (RE 240096, RE 319181, RE 544246, AI 472897 AgR, and RE 482090), the STF, in 2008, issued Binding Precedent 10, which states that a decision by which a fractional body of a court strikes down a law, even without expressly declaring it unconstitutional, violates the Plenary Reserve Clause.

THE STF’S DECISION

Although Binding Precedent 10 was issued by the Supreme Court more than 15 years ago, there are still judges who fail to observe it and lawyers who fail to argue its applicability, especially in the labor courts.

This legal inertia, unfortunately, allows malign decisions to continue taking effect, without the Supreme Court being able to intervene. Occasionally, however, individuals and companies affected by these decisions manage to bring them to the attention of the Supreme Court for relief.

That is what happened last Friday. In the case brought before the STF, an individual was ordered by the São Paulo Labor Court to respond to an incident of disregard of the legal personality of the bankruptcy estate of a company.

When defending itself, the businessman argued that the Labor Court had no jurisdiction to analyze the matter, pursuant to Article 82-A of the Bankruptcy Law, which states that “the disregard of the legal personality of the bankrupt company, for the purposes of holding third parties, groups, partners or administrators liable for its obligations, can only be decreed by the bankruptcy court.”

The Labor Court in which the case was being heard, however, dismissed the application of the aforementioned legal provision, on the grounds that the Superior Labor Court considers that jurisdiction lies with the Labor Court. The 5th Panel of the Regional Labor Court of the 2nd Region upheld the decision, in turn.

In a complaint to the STF, the businessman argued that the 5th Panel of the Regional Labor Court of the 2nd Region – in violation of Binding Precedent 10—dismissed the application of Article 82-A of the Bankruptcy Law, indirectly declaring it unconstitutional, on the grounds that – despite the provisions of the rule – declaring the jurisdiction of the Labor Court would not violate the law, nor would it imply usurpation of the bankruptcy court's attributions.

In his decision to uphold the complaint, Justice André Mendonça pointed out that the 5th Panel of the Regional Labor Court of the 2nd Region, despite not having expressly declared the unconstitutionality of article 82-A of the Bankruptcy Law, emptied its content and eliminated its hypotheses of application, violating Binding Precedent 10, for non-compliance with the Plenary Reservation Clause.

CONCLUSION

According to Justice Gilmar Mendes, of the 4,781 constitutional complaints received by the STF in 2023, more than half (2,566) challenge the decisions of the Labor Court.

The number may seem excessive, but it is expected to grow in the coming years, especially if individuals and companies – duly advised by lawyers able to navigate the law – succeed in bringing more cases to the STF for analysis, through well-constructed and well-founded constitutional complaints and the use of extraordinary appeals prepared with the same technical meticulousness.

Any movement in this direction – despite increasing the number of cases before the STF at first—would not be harmful. On the contrary, the systematic adoption of appropriate legal techniques to take certain discussions to the higher courts could encourage the Labor Courts to review some of their historical positions, and adopt additional precautions in their decisions, avoiding, for example, new violations of the Plenary Reserve Clause and the provisions of Binding Precedent 10.

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