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January 20, 2020

Anticrime Package introduces a relevant alteration in the Improbity Act by expressly establishing the possibility of settlement agreements

Litigation | Government Contracts and Projects - Administrative Law

Law No. 13,964/2019 will come into force on January 23, 2020 and derives from the Anticrime Package originally proposed by the Minister of Justice and Public Security. Besides modifying provisions of the Criminal and Criminal Procedure Code, referred law also brought a relevant change to the improbity claims by expressly allowing the execution of settlement agreements for non-civil prosecution in relation to the lawsuits subject to Law No. 8,429/1992 (Improbity Act).

Article 17, paragraph 1st, of the Improbity Act banned settlements, agreements or conciliation of any kind in relation to class actions filed for the investigation of improbity acts. In view of this legal prohibition, the effects of settlements based on other laws and the risk of the filing of an improbity claim were intensively debated.

Despite the explicit legal prohibition, in order to avoid distortions in the punitive system, different entities were already accepting the execution of settlement agreements with the Public Prosecution Office in relation to improbity acts, as long as they provided for the full reimbursement of damages caused to the public entity. Also, some judicial decisions already recognized the need of termination of improbity claims when a Leniency Agreement was signed, but there was still no consensus in case law and doctrine on the execution of settlement agreements related to improbity claims.

Law No. 13,964/2009, as it seems, will likely provide greater confidence in the validity of settlement agreements involving conducts subject to the Improbity Act, either in relation to the public entity that has filed the complaint or in relation to the party against which the lawsuit was filed. Even though there is still room for controversies mainly about the need of full reimbursement to the public treasury and about the interpretation of the provision newly introduced, this legislative change certainly represents an important progress in terms of legal certainty.

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