Brazil’s Supreme Court rules on whether amendments to improbity law apply retroactively

On August 19, 2022, Brazil’s Federal Supreme Court (STF) decided against retroactively applying amendments to the Administrative Improbity Law (Law No. 8,429/1992) to misconduct lawsuits. As a result, the amendments (introduced by Law No. 14,230/2021) will not affect cases where a final conviction has already been handed down and the award is in the process of being executed. However, in cases where a final and unappealable decision has yet to be handed down that involve acts of culpable (unintentional) misconduct that occurred before the amendments took effect, the majority of the STF’s justices voted in favor of retroactively applying the amendments.

The STF also determined that changes to the statute of limitations provided for in Law No. 14,230/2021 are not to be applied retroactively, even in cases that have yet to receive a final, unappealable ruling that could benefit the defendant. The law had extended the statute of limitations for misconduct from five to eight years after the fact – or in the case of continuous violations, eight years from when the misconduct ceased. Therefore, the new statute of limitations only applies to administrative misconduct lawsuits filed from October 26, 2021, when the current law took effect.

The STF’s view of this matter was rendered by the full panel of justices as part of Extraordinary Appeal (ARE) No. 843,989. The court recognized the appeal met the requirement of general repercussion based on the following theses:

• To define an act as administrative misconduct, it is necessary to prove subjective liability. Articles 9, 10 and 11 of Law No. 14,230/2021 require willful misconduct;
• By virtue of Article 5, XXXVI of Brazil’s Federal Constitution, Law No. 14,230/2021’s revocation of willful administrative misconduct is non-retroactive. This has no bearing on the effectiveness of res judicata, nor during the imposition of penalties and their consequences;
• Due to the revocation of the previous law, Law No. 14,230/2021 applies to culpable acts of administrative misconduct committed while the previous law was effective and which have yet to arrive at a final, unappealable conviction. Thus, the court with jurisdiction must analyze any willful misconduct on the part of the defendant;
• The new statute of limitations set forth in Law 14,230/2021 is non-retroactive; as such, the new timeframes are applicable from the date of this law’s publication.

The table below outlines how the Federal Supreme Court voted on each of the four main points discussed during the sessions:

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