Mediation and conciliation are alternative means of resolving conflicts in relation to the traditional state or arbitral jurisdiction. Both cases involve a third party who will act, in case of mediation, to facilitate dialogue and composition between the parties and, in case of conciliation, more actively, suggesting alternatives and mediating conversations. In both cases, the processes depend on the agreement of the parties. In addition to the legal requirement of voluntary submission, the success of these mechanisms certainly depends on the willingness and interest of the parties to submit their dispute to them.

The 2015 Code of Civil Procedure (CPC) has expressly included the institutes in the law to encourage their use aiming at better social pacification and relieving state justice - so burdened by the volume of lawsuits. In this sense, §§2° and 3° of Art. 165 of the CPC generically defined that the conciliator acts in cases in which there is no previous connection between the parties, assisting them in understanding the issues and interests in dispute. The mediator acts in cases in which there is a previous bond between the parties, seeking to facilitate the communication so that consensual solutions can be identified.

Also in 2015, Law 13.140 specifically addressed the mediation and its role in the resolution of disputes, providing as general principles of its practice the impartiality of the mediator (which would prevent the judicial trustee to act as mediator), equal treatment of the parties, orality and informality, the autonomy of the parties' will, confidentiality and good faith.

The use of mediation and conciliation in recovery proceedings faced some resistance at first, considering the volume of legal provisions involving the process that could not be modified or opted out by the parties. On the other hand, it is undeniable that the recovery procedure is a major negotiation, with a distribution of burden between creditors and debtors, and that it can benefit from a “multi-door” conflict resolution system.

Before the amendment of Law 11.101/05 promoted by Law 14.112/20, the matter had already arisen in some instances. Statement No. 45 of the First Journey of Prevention and Out-of-Court Settlement of Disputes of the Council of the Federal Justice (CJF) (I Jornada de Prevenção e Solução Extrajudicial de Litígios do Conselho da Justiça Federal), 2016, established that "mediation and conciliation are compatible with the judicial and extrajudicial recovery proceedings and bankruptcy of the businessman and the business company, as well as in cases of overindebtedness, provided that legal restrictions are observed".

In 2019, Recommendation 58/19 of the National Council of Justice (CNJ) proposed to magistrates "the use of mediation, in order to assist in the resolution of any and all conflicts between the businessman/company, in recovery or bankruptcy, and its creditors, suppliers, partners, shareholders and third parties interested in the process". More specifically, the recommendation mentions the use of mediation in the following cases:

  • credit check incidents;
  • negotiation of a judicial recovery plan;
  • definition of the need of substantial consolidation;
  • resolution of disputes between the debtor's partners/shareholders, between concessionaires/permitholders of public services and regulatory bodies; and
  • situations involving creditors not subject to recovery.

In 2020, the Court of Justice of São Paulo began to offer two types of business mediation to mitigate the judicial crisis and the effects of the covid-19 pandemic: one for businessmen and business societies in relation to conflicts arising from the pandemic, under the CG Provision 11/20, and another for disputes related to judicial recovery and bankruptcies, in accordance with CG Provision 19/20.

Subsequently, the broad reform of the Recovery and Bankruptcy Law of 2020 expressly set forth the possibility of using conciliation and mediation in such proceedings and included arts. 20-A to 20-D in Law 11.101/05. The change intended to provide greater speed to recovery and bankruptcy proceedings and to unburden the judicial system, which, since 2004, according to data from the CNJ, receives more processes than it can finalize, generating a high congestion rate.[1]

In short, the law has expressly set forth the possibility of using mediation and conciliation in all degrees of jurisdiction. They can be carried out in advance or in an incidental character to the recovery processes, not suspending the deadlines. Therefore, the recovery and bankruptcy law, as amended, reinforced the provision of Article 3, §3, of the CPC and brought greater clarity regarding the use of conciliation and mediation in the judicial and extrajudicial recovery and bankruptcy proceedings, including for related professionals, such as judicial administrators, companies in crisis, creditors and judges.

The law also indicated a list with examples of matters in which conciliation and mediation could be used, including, in addition to part of the hypotheses provided by the CNJ, the existence of credits excluded from the recovery proceeding (extraconcursais) against companies in recovery during the state of public calamity to ensure the continuity of the rendering of essential services. It is important to highlight that the legislator did not expressly indicate the collective bargaining of the judicial recovery plan as one of the hypotheses.

In the event of negotiation between the company in crisis and its creditors in advance, if the company meets the requirements to request recovery, it may apply for precautionary urgency by suspending executions for a period of 60 days to enable the attempt to resolve the conflict in proceedings before the Cejusc (Judicial Center for Conflict Resolution and Citizenship - Centro Judiciário de Solução de Conflitos e Cidadania) of the competent court or specialized chamber. If a request for judicial or extrajudicial recovery is made, the period of 60 days will be deducted from the legal stay period.

In addition, if a request for judicial or extrajudicial recovery is distributed within 360 days as of the agreement signed in the conciliation or pre-procedural mediation, the creditor will be returned to its prior position with the rights and guarantees under the conditions originally contracted, minus the paid amounts.

The law prevented the use of conciliation and mediation in relation to disputes about the nature and classification of the credits and voting criteria at creditors’ general meetings. The prohibition aims to protect the interests of other creditors, avoiding greater liens on debtor's assets.

Cases in which conciliation and mediation procedures are successful, the settlement agreement shall be approved by the competent judge.

Practical cases show that the use of mediation and conciliation in recovery proceedings – even before the amendment of the law – can be quite productive. An example of this was the first use in the case of Oi's judicial recovery,[2] that enabled the conclusion of more than 55,000 agreements involving more than R$ 3 billion. Another paradigmatic case was the judicial recovery of Saraiva.[3] Established in a preventive form in two phases, before the presentation of the judicial recovery plan and before the creditors’ general meeting, it helped the better adjustment of the plan to the interests of creditors and the company.

It is also worth mentioning that Art. 20-D allowed mediation or conciliation sessions to be held by virtual means.

Even with the recommendation of the CNJ and the amendment of the law, conciliation and mediation shall respect the limits of the rules applicable to recovery proceedings to secure, for example, that the principle of pars conditio creditorum pars is not violated. Provided that these limits are observed, mediation and conciliation can certainly help recovery proceedings to be more efficient, modern and effective, as already demonstrated in several concrete cases.

 

[1] Data from the Justice reports in Numbers of the CNJ. Available at https://paineis.cnj.jus.br/QvAJAXZfc/opendoc.htm?document=qvw_l%2FPainelCNJ.qvw&host=QVS%40neodimio03&anonymous=true&sheet=shResumoDespFT, access on October 2, 2021.

[2] TJRJ, Process 0203711-65.2016.8.19.0001, Dr. Fernando Cesar Ferreira Viana, 7th Business Court.

[3] TJSP, Case 1119642-14.2018.8.26.0100, Dr. Paulo Furtado de Oliveira Filho, 2nd Bankruptcy and Judicial Recoveries Court of the District of The Capital.