The declaration of state of emergency in the municipality of São Paulo (Decree No. 59,283/20), on March 17, sheds light on a determining aspect of the global crisis unleashed by the coronavirus pandemic (covid-19): its pervasive effects on various areas of Brazilian and international law.
Among the various challenges imposed on this legal analysis are the unfeasibility of fulfilling contractual obligations and the consequent loss of functionality of commercial contracts, the potential liability of employers and/or service providers for infections contracted on their premises, or the increased risk of insolvency and unsustainability of corporate debts.
The pandemic also has a number of implications for public law in Brazil resulting especially from (i) the urgent need for specific laws and regulations to deal with this public calamity; (ii) the possible conflict between, on the one hand, the measures proposed to prevent contamination and, on the other, individual rights or other aspects of Brazil's legal system; and (iii) the repercussions of this crisis for public services, the infrastructure sectors, and any of their private suppliers.
The regulations designed to confront the coronavirus originates from Ordinance 188 of the Ministry of Health, of February 3, 2020, responsible for the declaration of state of emergency in public health of national importance (pursuant to Decree No. 7,616/11). The ministerial regulation initially sought to issue guidelines for health and sanitary authorities to contain the epidemic.
Immediately after the declaration of state of emergency, on February 6, 2020, Law No. 13,979 (the Coronavirus Law, later regulated by MS Ordinance No. 356, of March 11) was passed, which provides for measures related to combating the covid-19 outbreak, such as: (i) provision for isolation, quarantines, compulsory examinations and tests, or temporary closure of Brazil's borders; (ii) the waiving of bidding for the acquisition of goods and services intended to deal with the emergency and the authorization to request goods and services from individuals and legal entities (notably private hospitals, without the need to enter into an administrative contract, and health professionals, without the formation of employment relationships), therein ensuring fair compensation; and (iii) the obligation, even for legal entities under private law to disclose information that may contribute in identifying persons infected or suspected of being infected by covid-19, if requested by a health authority.
After the official declaration of the coronavirus pandemic by the World Health Organization (WHO) on March 11, a series of state (and even municipal) decrees, such as the recent declaration of state of emergency in the municipality of São Paulo, have been added to the federal program. Among the states that provided for emergency prevention measures are: (i) Minas Gerais (Decree No. 47,886, of March 12, 2020); (ii) São Paulo (Decree No. 64,862, of March 13, 2020); (iii) Rio de Janeiro (Decree No. 46,970, of March 13, 2020); (iv) Rio Grande do Sul (Decree No. 55,115, of March 13, 2020); (v) Espírito Santo (Decree No. 4,593-R, of March 13, 2020); and (vi) the Federal District (Decree No. 40,520, of March 14, 2020).
The provisions of the aforementioned state decrees range from mere internalization, in the respective state legal systems, of the provisions and instruments contained in the Coronavirus Law; issuance of commands binding on state government agencies and entities, to suspension of events, collective activities, and classes for a determined period of time. Some provisions, however, gain prominence, particularly in the decrees of the Federal District and Rio de Janeiro. The instrument from Brasília, in its article 5, states that it will be considered an abuse of economic power to increase prices, without just cause, with the purpose of arbitrarily increasing profits on inputs and services related to the confrontation of covid-19 (both in the manner set forth in Law No. 12,529/11 and Decree No. 52,025/63). The Rio de Janeiro decree, in turn, provides, in its article 6, that "private legal entities providing services to the general public should observe the good practices provided by the World Health Organization."
However, despite the seriousness of the outbreak that plagues the country (in social, economic, and political terms), conflicts may arise regarding the interventions proposed to contain covid-19, especially the most severe remedies, such as mandatory hospitalization of contaminated people or mandatory closure of commercial establishments.
On the one hand, there are those who argue that, even under such circumstances, such strict restrictions on individual rights, such as freedom of movement or free initiative, would demand a decree of state of emergency, with a view to "preserving or promptly restoring, in restricted and determined places, public order or social peace threatened by serious and imminent institutional instability or affected by calamities of great proportions in nature" (pursuant to article 136 of the Federal Constitution). On the other hand, it can be argued that, in the balance between individual rights and the collective rights to health, protection, safety, and assistance, the latter would prevail, especially in such a critical context as a pandemic.
Another legal issue to be considered involves the regulation of the recommendations released by various public authorities in the current context (such as the Minister of Health himself, governors, mayors, and emergency health operation centers at various levels), in addition to the legal effects arising from non-compliance therewith, especially with regard to liability regimes, at least in the civil sphere.
From a Brazilian public law perspective, the coronavirus outbreak also brings about profound challenges related to the provision of public services and essential public infrastructure by private partners. Examples include risks such as (i) frustration of demand projections in concession contracts, either due to a spontaneous fall in the circulation of people or to the compulsory imposition of a curfew to prevent contagion; (ii) acute exchange rate variations resulting from volatility in domestic and international financial markets, all the more accentuated by the simultaneous oil crisis; or (iii) the generalized increase in risks identified by rating agencies that affect the bankability of strategic projects. A clear example of these risks is the plan for emergency measures currently under consideration by the federal government to provide financial assistance to airlines.
Although the treatment of each case will depend fundamentally on how such risks have been addressed in the respective contracts, some institutes will gain particular relevance and should soon be brought before judicial and administrative bodies. Force majeure provisions (for which China alone has already issued more than US$ 38 billion in certificates to exempt its exporters from fault for breaches of contract), unforeseen circumstances, and claims for economic and financial rebalancing should play a key role in accommodating contracts and enabling continuity of the services affected.
