Volume 6, Number 15, Page 2

E-commerce in the Brazilian Legal System

by Luis Henrique P. Ventura

In Brazil, the Internet took hold commercially in 1995. That same year, the Communications Ministry (Ministério das Comunicações) issued Rule number 004/95, regulating the use of the public telecommunication infrastructure for the provision and utilization of services connected to the Internet.

The above Rule 004/95, defined the ‘Internet’ as the “generic name for a group of nets, or means of transmission and commutation, rotators, equipment and necessary protocols for communication among computers, as well the software and data that exists inside those computers”. The conclusion here is that the Internet is nothing more than an alternate means of communication, such as the telephone and the facsimile machine.

The categorization of the Internet as simply an alternative means of communication, according to some experts, signifies that the Internet and electronic commerce do not require any legal innovation considering that applicable legislation for other forms of communications already exists and can in turn be applied to the Internet. Essentially, they argue that it is solely a new way of accomplishing the same tasks already regulated. For example: to slander someone in a newspaper or on television would be the same as slandering someone on the Internet. However, Brazilian law clearly does not provide for the many new situations that will arise. For example, one should review the crime of damage as conceived under Brazilian law. According to the Criminal Code, ‘damage’ is the intentional destruction of someone’s movable or immovable object(s). The obvious question here is whether computer data would be considered an object under the statutory description of the crime of damage. The broad consensus is that it does not fit a strict reading of the statutory language for ‘object’. The most analogous circumstance may be found in the third paragraph of section 155 of the Brazilian Criminal Code (theft), which depicts electric energy or any other energy that has economic value as a movable object, but nowhere is computer data mentioned specifically.

Making analogies to the defendants’ detriment is not permitted in the Brazilian criminal code. Thus, if the existing law is not amended to reflect the inclusion of computer data under the rubric of ‘object,’ damage to computer data will remain an unenforceable crime.

Consumer Protection Law

In Brazil, where there exists a consumer/supplier relationship, the normal burden of proof onus is reversed. In other words, in a relationship deemed to be that of consumer/supplier (when governed solely by Brazilian law) the obligation of proving fault lies completely with the supplier. This includes cases where only the consumer makes the allegations. But, in international negotiations, the will of the parties shall prevail. This standard reflects the fact that consumer safety is one of the greatest concerns for Brazilians today.

In light of the above, sales agreements executed over the Internet are particularly vulnerable to being annulled. The rationale is that it is very difficult to identify, with precision, the person on the other end of the Internet transaction, especially when considering that the Brazilian Civil Code, only permits persons of age (i.e. older than 21) to enter into binding agreements.

It is also interesting to note that there are no legal provisions permitting the collection of taxes arising from on-line transasctions. In any event, it would be quite difficult for the government to control such activities from a tax perspective.

The Actions of the Brazilian Government

The overall understanding is that the Government must assume a more proactive stance in relation to the Internet, such as providing regulatory parameters, public information, education initiatives and, most importantly, the prevention of abuse and the misuse of the Net. However, we have yet to witness the advent of any informative campaign or conclusive legislation tackling e-commerce in Brazil.

In spite of this, the Government has used the Internet to publish normative acts, public consultations and news, particularly the National Regulatory Agencies, for example.

The Brazilian Legislation

Because e-commerce is something new for most Brazilians, even unknown to many, and because there have not been any major legal cases related to the use of the Net, there is no Brazilian law regarding e-commerce or the Internet itself.

However, in addition to said Rule number 004/95, two Resolutions (n.001 and n.002/98) were issued by the Internet Managerial Committee of Brazil (related to Bureau of Computers and Automation of the Science and Technology Ministry).

These resolutions deal only with rules for the registration of domain names, delegating the authority to register and supervise the use of such domains to the Research Support Foundation of the State of Sao Paulo (FAPESP), which charges fees comparable to those charged internationally.

The activity of FAPESP is therefore linked to Resolutions 001 and 002. The registration of names which may be confused with previously registered names is prohibited, as is the case of names which represent highly visible trademarks (when not requested by their respective owner), abbreviations of States, Ministries, etc.

On the other hand, the Resolution does specify that: “the right to use Domain Names shall be granted to the first applicant that satisfies, when required, the requirements for the registration of the name.” For this reason, it is important for people who want to register a Domain Name in Brazil, to register such names as soon as possible. {Editor’s Note: For an example of conflicts arising within the area of domain name registration in Brazil, see Marcos Canecchio’s summary of a recent lawsuit filed by America On-Line in the Recent Developments section.]

Virtual communications, technology advances and access to the Internet are all factors that have induced many countries to create legal rules providing for the integration of technology and society within each community. Many European Union countries, for instance, have begun to more closely regulate activities in the field of e-commerce, thus creating urgency within the EU to harmonize the newly developing rules. However, it’s worth mentioning that the present status of e-commerce legislation in many States of the European Community, like Austria, Denmark, Finland and the United Kingdom is not much different from the Brazilian situation, considering the fact that all those countries are still in the bill of law phase.

In Brazil there is still no bill of law before the legislative branch, but there are some studies completed aimed at drafting such a bill of law. One example based on the Model Law from the United Nations Commission on International Trade Law - UNCITRAL is at the moment being analyzed by the Ordem dos Advogados do Brasil Secção de São Paulo (the Brazilian Bar Association of São Paulo).

It is true that Brazil needs a modern law that defines, for example, the criteria of utilization and authentication of electronic signatures, customs treatment, clear rules about taxation etc.

Any legislation established in Brazil must originate from fundamental principles, including safety of transactions and the guarantee of privacy. Without such principles, electronic commerce in Brazil is unlikely to develop to its enormous potential.

Luis Henrique P. Ventura is an Attorney specilaizing Telecommunication Law at Felsberg e Associados Advogados e Consultores Legais, in São Paulo, Brazil. He welcomes your questions and comments and may be contacted at ventura@felsberg.com.br