Product Liability & Safety 2022 Comparisons

The main laws and regulation on the product safety legal regime in Brazil are as follows:

• Law No 8,078/1990, known as Consumer Protection Code, which governs all processes connected with the production and placement of goods and services on the market.
• Ordinance No 618/2019 of the Ministry of Justice and Public Safety, which regulates the recall campaigns of defective goods and services.
• Ordinance No 3/2019 of the Ministry of Justice and Public Safety and the Ministry of Infrastructure, which regulates the recall campaigns of vehicles.
• Board Resolution No 551/2021 of the Brazilian Health Surveillance Agency (ANVISA), which applies to medical products and devices (other than medicines).
• Board Resolution No 625/2022 of ANVISA, which requires suppliers of medicines to communicate to the health authorities and consumers details of any potential health risk arising from their products.
• Board Resolution No 655/2022 of ANVISA, which regulates the collection of food and the packaging or any other materials in contact with food, among other things.
• Ordinance No 333/2012 of the National Institute of Metrology, Standards, and Industrial Quality (INMETRO), which applies to products subject to compulsory conformity assessment by the Brazilian Conformity Assessment System.

SENACON

In Brazil, the National Consumer Secretariat (Secretaria Nacional do Consumidor– SENACON), which is part of the Ministry of Justice and Public Safety, is responsible for examining claims involving relevant general and national interests, as well as assessing administrative sanctions, and has the power to undertake preliminary investigations and administrative proceedings. SENACON is the main authority with responsibility for defending consumers’ interest in product safety.

Procons

Additionally, the state, federal district, and city agencies (Procuradoria de Proteção e Defesa do Consumidor – Procons) are responsible for consumer protection within the scope of their jurisdiction and authority.

Sector-Specific Regulators

Besides SENACON, there are several other regulators with responsibility for product safety issues depending on the industry or the type of product at stake.

For instance, ANVISA is the competent authority with regard to control and regulation of pharmaceutical products, medicines, and food.

The competent authority for safety issues relating to vehicles is the National Transport Department (Departamento Estadual de Trânsito – DENATRAN).

Products placed on the consumer market must meet with the requirements of safety. If issuing the marketed product can put consumer safety or health at risk, then the supplier must recall the product and immediately notify SENACON and the respective regulatory agencies, if applicable.

Notification to SENACON must be in writing and in Portuguese and must meet with the requirements established in Ordinance No 618/2019 (see 1.1 Product Safety Legal Framework). Also, for pharmaceutical products, medicines and food, the notice to ANVISA must meet the requirement of its Board Resolutions.

The obligation to notify SENACON is triggered when any risk that the product may pose a health or safety hazard to consumers is discovered, regardless of the level of that risk. The law does not provide any distinction related to the level of risk.

Ordinance No 618/2019 establishes that the supplier must inform SENACON and the respective regulatory agency (if applicable) once it becomes aware of the harmfulness or dangerousness of the product/service introduced in the market, within two working days, counted from the decision to launch the recall.

The notice to SENACON should include detailed information, such as:

• detailed information about the supplier;
• the existence, if any, of representatives of the supplier in member countries of the Mercosur (the South American trade bloc), indicating their identification and contact details;
• a detailed description of the defective products, including the characteristics necessary to identify them;
• a detailed description of the defect and the date when the hazardousness or harmfulness was discovered;
• the risks and implications for consumers;
• the number of defective products placed on the Brazilian market, including those still in stock, and the number of consumers affected;
• the geographic distribution of defective products placed on the Brazilian market, per federate state, and countries where the products were exported;
• the measures already adopted and those proposed to remedy the defect and mitigate the risks;
• a description of accidents related to the defective product, where applicable;
• a media plan (to advertise the dangers and the intended recall);
• a consumer support plan; and
• a form of risk notice to consumers.

When a supplier fails to comply with the reporting obligations and recall procedures, despite being aware of the fact that a product may be dangerous for human health and safety, the supplier risks administrative, criminal, and civil penalties.

Administrative Penalties

If consumer authorities consider that a supplier violated the Consumer Protection Code, they can initiate a procedure for verifying violations and applying penalties (which can be imposed separately or together) including:

• fines;
• product seizures;
• destruction of the product;
• cancellation of product registration with the competent authorities;
• prohibition of product manufacture;
• suspension of product or service supply;
• temporary suspension of activity;
• revocation of concession or permission for use;
• cancellation of the permit for the establishment or activity;
• total or partial closure of the establishment, work, or activity;
• administrative intervention; and
• counter-advertising.

The public authorities can impose fines of up to BRL10 million, depending on the severity of the infraction, the advantage obtained, and the economic status of the supplier.

Criminal Penalties

A criminal investigation can also be started against anyone who contributed to failure to notify, late notification, or insufficient notification. Failure to inform the competent authorities or to withdraw harmful or hazardous products from the market can lead to a prison sentence of six months to two years as well as a fine.

Civil Penalties

Without prejudice to administrative and criminal penalties, civil actions before the courts can be started to compel the supplier, whether jointly or severally, to answer for property or moral damages caused to consumers in connection with defective products.

All legal consumer relations in Brazil are regulated by Law No 8,078/1990, known as the Consumer Protection Code. The Brazilian Consumer Protection Code distinguishes two types of liability: (i) liability as regards the product itself and (ii) liability for a flaw in the product.

Liability as regards the product itself is related to the concept of a consumption accident (product liability).

On the other hand, liability arising from a flaw in the product does not arise from any damage caused to the consumer. In this case, liability arises from the flaw itself which renders the product improper or inadequate for consumption, or from a reduction in its value or quantity.

In both cases (product liability and liability for a flaw in the product), the liability is strict. Whether it arises from a contractual or non-contractual relationship is of no relevance.

Regarding a consumption accident (product liability), a product is considered defective when it does not offer the safety reasonably expected of it, taking relevant circumstances into consideration, including the presentation of the product, the uses and risks reasonably expected of it, and the time when it was distributed.

Where Responsibility Lies

The responsibility as regards the defective product is borne by the manufacturer, producer or builder, whether domestic or foreign, and by the importer.

The importer is answerable in its capacity as presumed supplier, whilst the remaining are answerable in their capacity of effective supplier.

The retail supplier (also a presumed supplier) has been excluded from the general rule and is only answerable in a supplementary manner when the manufacturer cannot be identified or the product does not contain a clear identification of the manufacturer, or when the merchant does not adequately store perishable products.

As a general rule, the injured party is entitled to compensation for damages caused by a third party (Article 186 of the Brazilian Civil Code).

In product liability cases, any person who suffers bodily injury, or damage to products other than the defective product itself, has standing to bring claims for product liability.

Furthermore, according to Article 82 of the Brazilian Consumer Protection Code, the Public Prosecution Offices; federal, state and municipal governments, and the Federal District; consumer protection government bodies and entities; and duly declared consumer associations may also bring collective civil actions.

The right to demand indemnification for damages caused by the defective product becomes time barred after a term of five years, to be calculated as from the time the damage and its authorship becomes known.

Article 101, I, of the Brazilian Consumer Protection Code allows a consumer to bring an action before the court of the place where they are domiciled.

No mandatory steps must be taken before proceedings can be commenced formally for product liability cases. The plaintiff must simply summon the defendant to appear before the court.

According to Article 334 of the Brazilian Code of Civil Procedure, the judge may schedule a conciliation or mediation hearing. The lawsuit will only proceed if parties have failed to reach a settlement during the conciliation or mediation hearing.

In product liability cases, there are no specific rules for the preservation of evidence. Each party must preserve materially relevant evidence supporting their claims before submitting them to the court. According to Article 373 of the Brazilian Code of Civil Procedure, the burden of proof lies on the plaintiff, as to the facts supporting their case, and on the defendant, as to the existence of any facts that impede, modify or extinguish the plaintiff’s case.

However, in cases involving consumer rights, the burden of proof may be shifted by the judge by means of a reasoned decision, if the allegation is likely or the consumer is at a disadvantage in accordance with the ordinary rules of experience (Article 6, VIII, of the Brazilian Consumer Protection Code).

Furthermore, a party that is concerned about the perishing of evidence may request its advance production in court (Article 381 of the Brazilian Code of Civil Procedure), since, as a rule, the evidence shall be presented throughout the process until the end of the discovery phase. In such cases, the court may order investigative measures for the advanced collection of evidence. This way, a party has the possibility to preserve or establish crucial evidence for use in a possible trial.

Unlike other jurisdictions, the Brazilian system does not provide for full disclosure and therefore does not allow a party to oblige its opponent to disclose a vast number of documents and information as evidence in litigation. However, a party can request the disclosure of documents or objects in court if it is likely that this evidence is in the other party’s possession and that such evidence is relevant to the case (Article 396 of the Brazilian Code of Civil Procedure).

The requested party shall disclose the document or expose the reasons why the document cannot be disclosed. The judge cannot accept a refusal to disclose the document in any of the following cases:

• the party has the legal duty to disclose it;
• the document was mentioned in the proceedings by the party; and
• the document is common to both parties.

If the other party remains silent, the facts stated by the applicant are presumed to be true and correct. If a party refuses to comply with the exhibition order without an acceptable reason, a search and seizure order can be issued.

The main methods of producing evidence are through court-appointed experts and oral hearings. The expert examination will be conducted by an expert appointed by the court directly, and the parties will be granted the possibility of appointing their own experts to assist the court expert in the production of the technical evidence.

Each party pays the costs of its experts. The party that requested the expert opinion must pay the court expert’s fees initially. If both parties or the judge requested the expert opinion, the expenses will be divided (Article 95, CPC). In the final award, the losing party will be ordered to reimburse all paid expenses of the court expert.

The burden of proof rests, in principle, on the plaintiff with respect to the facts supporting its case; and on the defendant, with respect to the existence of any facts that impair, modify or extinguish the plaintiff’s case.

In product liability cases, the consumer does not have the burden of proving negligence, imprudence or a lack of skilfulness of the supplier, since the liability for the product itself is strict; ie, it does not depend on a fault of the supplier. However, the consumer must prove (i) the damage arising from the defective product, as well as (ii) a chain of causation.

The burden of proof may be shifted to the supplier, at the court’s discretion, when (i) the claim brought by the consumer is found to be plausible, or (ii) in the event the supplier is found to hold a stronger position in its relationship with the consumer. Whenever technical aspects are involved, the courts may order the suppliers – in lieu of the consumers – to submit proper evidence.

The injury party, the public authorities and consumer protection associations can bring civil lawsuits against a supplier seeking redress for any damages caused by the defective product.

The lawsuit shall be filed before a first instance State Court and a single judge shall preside over the trial. The judge’s award can be appealed, and the second instance court (Court of Appeals) affords the parties a new trial before a panel of three judges. In some cases, review by the Superior Court of Justice is permitted.

The Federal Constitution has reserved for trial by jury all crimes wilfully committed against life, therein including homicide, infanticide, assistance or instigation to suicide and abortion, which is not the case in product liability claims.

Product Liability Damages

The indemnity to the injured consumer is to be calculated on losses and damages actually borne by the aggrieved party.

It is important to stress that, although the Brazilian legal system does not admit the concept of punitive damages, recently there have been some court decision recognising the application of the theory of discouragement, according to which the amount of the award for pain and suffering must be set at a level sufficient to discourage it repetition.

The following types of appeal are available:

• appeal of the award rendered by the first instance judge;
• interlocutory appeal (seeking review of interlocutory decisions such as injunctions);
• a motion for clarification;
• special appeal (brought before the Superior Court of Justice as a last instance against an award rendered by the Court of Appeals that is contrary to a treaty or a federal law); and
• extraordinary appeal (brought before the Supreme Federal Court if the award rendered by the Court of Appeals is contrary to the Federal Constitution).

The Brazilian Consumer Protection Code holds the supplier – ie, the manufacturer, producer, builder or importer – safe from liability if it is proven that:

• the defective product was not put on the market;
• although it put the product on the market, there was no defect; or
• the accident occurred as a consequence of the exclusive fault of the consumer (Article 12, Section 3).

In product liability cases, adherence to regulatory requirements is mandatory. Indeed, according to Article 39, VIII, of the Brazilian Consumer Protection Code, non-compliance with the rules issued by the competent official bodies is considered a deceptive practice.

It is important to note that, although mere adherence to regulatory requirements does not cannot constitute a proper defence, there are some court precedents recognising the application of the “regulatory compliance defence”.

The losing party shall pay all court costs, as well as the other side’s attorneys’ fees. Attorneys’ fees are normally fixed at 10–20% of the amount of the award. Recovery of the party’s own costs does not follow automatically from success at trial and will, at all times, be subject to the reasonability criterion and to effective proof that it represents material damage.

Public funding is limited to very specific situations in Brazil; legal aid is one of these. Legal aid will only be granted to those who need it in the manner established by law and is restricted to a limited budget.

On the other hand, third-party funding is not, as such, forbidden by Brazilian law. However, third-party funding is not yet common practice in Brazil even if it is growing.

Arrangements based on contingency fees or “no win, no fee” agreements are not allowed in Brazil.

Class actions are allowed in Brazil, even to discuss a product liability issue in the interest of a class of consumers. Such class actions may be filed by entities legally recognised as legitimate entities, such as the Public Prosecution Office; federal, state and municipal governments, and the Federal District; consumer protection government bodies; and entities and associations legally set up to protect consumers.

Salmonella in Kinder Chocolates

In May 2022, a European chocolate manufacturer initiated the recall campaign of one of its products manufactured in Belgium. According to the company, the recall is preventive and voluntary due to a potential salmonella contamination. Cases of the disease have been reported in Europe after consumption of the brand’s chocolates.

Even though the specific product is not officially sold in Brazil, the Brazilian company’s branch states that third parties import the chocolates and sell them in Brazil, which caused the recall announcement. Thus, ANVISA ordered the recall, in the Brazilian market, of all products manufactured in Belgium by the chocolate manufacturer.

Hazardous Beer Bottles

In 2020, a Brazilian brewery found a design flaw in the packaging of its long-necked beer bottles. Usually, the brand’s long-necked beer bottles must be opened by being unscrewed by hand. If opened with a bottle-opener, this design flaw could cause a small sliver of glass to come loose from the nozzle when opening, which could lead to injury or accidental ingestion. More than one million units of the long-necked bottles were affected by the recall conducted by the brewery.

Although they are low value-added products, the company had significant success in recalling the beer bottles through the use of behavioural inducers and an active recall campaign.

Contamination of Backer Beers

In 2019, another brewery announced the recall of its products, after finding contamination in the production line by diethylene glycol. The toxic substance caused the death of ten people and had significant repercussions.

Recently, SENACON imposed a fine of approximately BRL12 million, because it considered that the brewery had committed a health and safety violation, endangering consumers, because it had not conducted a prompt recall campaign or at least encouraged consumers to stop drinking its products.

There are growing calls in Brazil for consumers to commence conciliatory proceedings at administrative level before bringing lawsuits to reduce the number of ongoing proceedings and resolve cases. In this regard, there is a bill being considered by the Legislative Branch of the Brazilian government that seeks to include in the Code of Civil Procedure a requirement to demonstrate that the plaintiff sought to resolve the conflict before filing a lawsuit with the Judiciary (Bill No 533/19).

Also, since the adoption of Ordinance No 618/2019, SENACON has taken several measures and published technical opinions to improve the effectiveness of recall procedures. In this sense, SENACON edited a rule making the media plan more flexible (Technical Note No 4/2020). Thus, depending on the traceability of the product to be recalled, the company promoting the recall campaign may agree with SENACON which media the recall notice to consumers should be broadcast in.

There are currently no proposals for reform relating to product liability. The current challenge is to make existing recall campaigns more effective.

In the context of the pandemic caused by COVID-19, it was even more challenging to promote effective recall campaigns. Companies have designed, together with SENACON, alternative channels for the return of defective products to discourage potentially infection-spreading crowds.

In 2020, SENACON started to promote the dividing of a recall campaign into two stages. For defects found before 10 March 2020 (the day immediately before the World Health Organization issued the pandemic alert), the company should present the recall campaign, preferably in two stages (first the communication and then the recall/correction of the defect). For defects found after 10 March 2020, the deadlines for submitting the risk investigation communication and the recall campaign were suspended. In this case, a company may present a recall campaign if it has the necessary elements to do so.

In addition, SENACON has instructed companies to adjust old recall campaigns (Order No 266/2020 from SENACON).