In a recently published judgment, the 3rd Section of the Superior Court of Justice (STJ) affirmed the understanding that the termination of the legal personality of the company resulting from its incorporation resembles the death of the individual. In Casu, it was considered that the termination of legal personality extinguishes the punishability for environmental crime, as it occurs when an individual dies.

The case relates to charges pressed against an agricultural company for pollution by launching solid waste (Article 54, § 2, item V, of Law 9.605/98). The defense argued that the complaint must be dismissed because the defendant had been incorporated by another company and, therefore, its liability would have been extinguished by analogy to the case of death of an individual. The new company, on the other hand, could not become a defendant in the criminal proceedings for absolute illegitimacy of parties, since it had not committed the alleged criminal conduct.

The first-degree court rejected the defense's arguments and ordered the continuation of criminal prosecution. Thus, the defense filed a warrant before the State Court of Justice of Paraná (TJPR), arguing that the first-degree decision would have violated the right to defense and the due process, since the theses presented on the illegitimacy of part and extinction of the liability for incorporation were not even analyzed in the decision.

The TJPR[1] accepted the arguments of the defense and granted the warrant, recognizing that there was a violation of the rights in question. The court decreed the nullity of the order, but did not assess the thesis of illegitimacy of part or extinction of the liability, on the grounds that such analysis would characterize the suppression of instance.

The case returned to the first-level judge, where the preliminary theses of extinction of liability and active illegitimacy were expressly rejected. According to the court decision, the corporate incorporation implies the receipt of both the liabilities and the assets of the incorporated company so that the responsibility for acts performed by the company incorporated remain. Otherwise, one could make room for impunity.

The defense filed another warrant before the TJPR, reinforcing the extinguishment of the liability by incorporation under Article 107, item I, of the Penal Code.

The TJPR[2] granted the warrant ruling in favor of the extinguishment of the liability by the incorporation thesis. According to TJPR, the crime described the complaint corresponded to activities carried out ten years before the incorporation, and the extinction of the legal entity would correspond to the death of the natural person, which extinguishes the criminal liability by law.

The court noted, however, that the extinction of liability is restricted to the criminal jurisdiction, resisting the civil obligations of the company.

The Public Prosecutor's Office then filed an appeal to the STJ, arguing that the extinction of liability by death and the principle of personality[3] of the penalty would be restricted to individuals.

When judging the appel[4], the rapporteur of the case in the STJ raised the following points:

  • The non-equalization by analogy of the principle of intransferability of the liability to the company would result in a strict liability to the defendant.
  • By the very logic of law, it would be impractical to legally prosecute and punish an agent who no longer exists for the purposes of Brazilian law.
  • There must be an analogy interpretation of Article 107, item I, of the Penal Code, which lists the death of the agent as the cause of extinction of the liability, to the case in question, since there would be the interruption of the existence – in legal terms – of the active subject of the conduct investigated.
  • The fact that criminal law allows business societies to be charged with environmental crimes implies that, even if there are specificities for their punishment, these defendants must have all the fundamental guarantees ensured in the context of due process.
  • It would be a failure of the isonomy of criminal law if the protective institutes directed at the defendants were denied to legal entities, since they also constitute themselves as taxable persons of criminal prosecution in this situation.
  • The principle of personality of the criminal penalty must be maintained even if there are particularities related to the defendant, not being removed by its corporate character. Although it is understood that the original intention of the institute targeted individuals, this is due to the historical impossibility of having reference to moral entities, and there should be analogy in favor of the defendant in this gap. Moreover, it would not be reasonable to fill that omission in criminal matters by the transmissibility of civil law provided for in the arts. 1,116 cc and 227 of Law 6,404/76.
  • Criminal liability does not equate to the constitution of the property obligation, which would be transmitted to the incorporator. This differentiation is due to the nature and purpose of the institutes. While the constitution of obligations comes from the human will in relation to the legal system and can be completed by payment, the sanction is imposed by an imposition of obligation and responsibility by the public authorities, and it is necessary to mediate it for its application. The legal consequences also differ, therefore, while the obligation affects the property by the adoption (spontaneous or forced) or generates the resolution in losses and damages, the punitive claim implies the application of penalty, which can reach the freedom, individual rights and the life of the sentenced, in addition to his assets.

The rapporteur then voted to maintain the decision of the TJPR and to recognize the incorporation as the cause of extinction of the liability. It was followed by the majority of ministers who set the extinction of the liability by incorporation, provided that absent evidence of fraud in carrying out the incorporation.

The recognition of the extinction of liability, however, was not a consensus among ministers. There were also divergent votes to overrule the TJPR's decision, with the following arguments:

  • The criminal types provided for in Law 9.605/98, applicable to legal entities, establish accountability through obligations to give and do, which could very well be transmitted to the incorporator in the determinations of civil law.
  • The incorporation is only a fictitious death, since the incorporated remains alive in the subsequent company through its activities and economic functions. The equivalent of an analogy of "death" should be reserved for cases in which there is the dissolution and liquidation of the company, since there would be a complete cessation of its activities.
  • Incorporation cannot be equated with death both by a lack of legislative provision and by the fact that it is not an irreversible and definitive issue.
  • The developer has particular means for the investigation of criminal or administrative procedures involving the incorporated, and the liability cannot be extinguished due to the fact that the operation took place in the absence of due diligence deliberate blindness.
  • The extinction of the liability by death would not be appropriate in cases of incorporation due to a divergence of purpose of the institutes. While the first is for the logical impediment of punishment, the second is a particular act, and this cannot extinguish the punitive claim.
  • The extinction of liability in these cases would deflate the effectiveness of environmental criminal devices, since, in case of possible punishment, the existence of the legal entity may be terminated, preventing its liability.
  • Even if it is understood that legal entities have procedural guarantees when subjected to criminal prosecution, only those possible should be applied and the framing of the principle of personality is not possible.
  • There would only be substantial offense to the principle of personality if a dissenting partner or director in the decision that gave rise to criminal conduct were also punished, which did not occur in casu.
  • By comparison with Spanish criminal law, it is observed that the punishment of the incorportor would not be a transfer of punishment from one person to another, but rather the perpetuation of the liability of a previously committed crime.

With the ruling of the STJ for the extinction of criminal liability of the legal entity by the incorporation, a very well-delimited barrier of the scope of the criminal punishment is established, which is limited to the agent of the imputed conducts. With this, a brake is established on the persecution expansionism that characterizes corporate criminal law.

It should be noted, however, that this decision applies to the criminal liability of legal entities. However, any damages or violations of environmental legislation may have repercussions in three distinct and independent spheres: administrative, civil and criminal. As the STJ's thesis is restricted to criminal repercussions, it is possible that the liability of incorporated companies persists in other spheres.

The STJ pointed out that there were no indications that the incorporation had occurred fraudulently to exempt the incorporated, but did not detail the criteria to be observed to identify a fraudulent incorporation.

The issue can still be analyzed by the Supreme Court (STF) under the aspect of constitutional compliance, but, in the short term, the STJ's thesis may influence any ongoing criminal proceedings and even convictions pending of appeal.

 

[1] Decision given in a writ of security on 15 August 2019.

[2] Decision given in a writ of security on 10 October 2020.

[3] It is the principle rule that provides that the penalty cannot transcend beyond the person to whom the typed conduct has been imputed. It is positive in the Article 5, item XLV, of the Constitution of the Republic.

[4] STJ, Special Appeal 1.977.172/PR, 3rd Section, Rel. Min. Ribeiro Dantas.