Post-pandemic legal risks
An analysis regarding the expectations of legal discussions in the coming months from a litigation-focused point of view
As Abílio Diniz says, “if there is one certainty, it is that every crisis passes”. And the lesson of the great businessman, who has lived through several crises, makes us think about the legal effects of the acts that are being practiced during the pandemic. We are not talking about the “new normal”, an expression that, as it has been used so much, started to cause nausea to any minimally updated reader. Our goal, with this article, is to anticipate the legal risks that companies will have to manage in the post-pandemic scenario.
The first point that can be predicted is the increase in lawsuits filed by workers who claim to have contracted the coronavirus in the workplace. This is because contaminated workers, in theory, will be able to search the labor courts in order to see their rights recognized, if they can prove that they contracted the virus in the workplace. The point of attention here will be to verify how the courts will face the doubt about the place of the actual contamination vis-à-vis the preventive measures taken by the companies to prevent infected workers from entering the work environment, as well as the measures taken to avoid the contamination among workers.
In addition to the labor lawsuits proposed by those contaminated by Covid-19, it is expected that demands will also arise in face of health plan operators, in an attempt to obtain full coverage from consumers for medical procedures that may be necessary as a result of the contraction of the virus.
Still on health issues, if a vaccine or drug is developed that effectively prevents or cures the disease, there is a high probability that such a product will have a high initial cost and this will generate discussions not only with health insurance plan operators but also with the government as it is its constitutional duty to assure healthcare to all citizens.
The consumption trends of the population are also changing with the advent of the pandemic and probably after the crisis consumers will continue to adopt the culture of “digital-first”. In other words, many consumers will probably prefer online shopping over physical stores. In fact, since the beginning of the pandemic, 135 thousand new e-commerce stores have been created, according to the Brazilian Electronic Commerce Association (ABComm), and we have widely adopted food delivery, for example, which further reflects this trend. Thus, it is highly likely that new consumer demands will arise from this new consumption profile that is being designed with the crisis.
With the “digital-first” culture, it is reasonable to believe that there will also be demands related to the protection of consumers’ personal data. Currently, a large part of the population provides their data online at some point and the protection of consumers’ personal information is an increasingly recurrent topic, aggravated by the fact that the pandemic caused the extension of the vacatio legis of the Brazilian General Data Protection Law (Law No. 13,709/18), determined by the Provisional Presidential Decree No. 959/20.
It is also important to highlight new risks to which merchants and retailers, in general, may be subject, as in the last few months new rules have been published across the country that must be followed to ensure the safety of customers. And such rules will certainly result in fines (which can be very high) to companies, if not followed, in order to guarantee the safety and health of all. In this respect, the lack of coordination by the federal government will cause serious legal uncertainty for companies spread around different cities, as in each city there is a different rule that must be weighed against the rules of each of the States of the Federation.
The pandemic also brought discussions between companies and individuals related to private contracts concerning delivery of money, in which, in the vast majority of cases, the intention is to obtain a reduction in these deliveries in face of the sudden change in the national economic scenario, or in certain obligations in order to seek an extension of the terms or modification of the conditions for the performance of the contracts. Such discussions will extend into the post-pandemic phase, especially in the claims of creditors to receive what they were contractually promised, collection suits, actions to review, termination of contracts for default, among others.
The first round of this dispute was limited to the analysis of preliminary injunctions, whose scope is much more restricted, focused on the analysis of the periculum in mora (danger of delay), the fumus boni juris (likelihood of success in the lawsuit), and its legal variants. On the merits, the verification of the impact of the effects of the pandemic on contracts will be much more profound and technical, which may generate relevant contingencies for the reversal of injunctions, the determination of losses and damages, or contractual penalties.
In addition, the shutdown of several sectors in the economy will also have a major impact on the insurance area, especially when it comes to large companies or complex contracts protected by insurers. This is because the interruption of countless activities caused delays in the performance of contracts, execution of works, made it impossible to conclude others, and many companies will certainly file insurance claims to their insurers to minimize their losses. The point of attention is to verify if the policy contracted effectively covers the damages intended by the insured.
There is also a risk that companies will seek compensation for the outages that occurred during the pandemic period. The reliance on courts and judicial means of the theme already occurs in European countries and the United States, and it may also appear in Brazilian courts in the coming months.
Another relevant issue will be the increase in requests for judicial restructuring and bankruptcies after the pandemic. According to Sebrae’s data, more than 600 thousand companies closed their doors from the beginning of the pandemic until April this year. The closure of so many companies may result in numerous corporate disputes, discussions about the determination of assets and indicates an increase in insolvency-related procedures. In this regard, it is important to note that there is a movement in Congress to accelerate changes in the Brazilian Judicial Restructuring and Bankruptcy Law in order to better adapt the Law to small companies and the need for the procedures to be faster.
As can be seen, it is already possible to foresee and map the main points of attention for companies in the post-pandemic scenario and seek to implement preventive measures now to minimize the legal effects caused by acts that are already known and to protect companies from contingencies that may arise from demands related to the pandemic.