Pre-litigation action as means to prevent disputes in times of crisis

Carolina Xavier da Silveira Moreira

With the lingering economic crisis – pushed by the political crisis, in a certain way -, the business class is dealing with the disruption of the invisible hand of the market, which worries the economists and instigates the jurists to find solutions in order to fulfill the principle of preservation of legal acts, in spite of such adversity.

Several long term agreements, entered into when the Brazilian economic scenario was strong, have had their performance hindered or even suspended, regardless of the parties’ will. Significant delays in fulfilling the obligation or even defaults have become usual. And the classic legal measure, which is to file action against the defaulting party (whether before the Judiciary or before the Arbitral Tribunal), has become questionable in many situations. However, said questions do not derive from possible uncertainty as to the result and effectiveness of the adjudication, but from de debtor’s poor economic situation, once said debtor would wrestle to comply with the penalty possibly imposed.

Accordingly, the dispute resolution has brought new ingredients to the routine of the legal professionals: proactive action, based on the principles of trust and cooperation, has now a preferred standing, whether by directly renegotiating with the other contracting party, whether by mediation. The search for the client’s satisfaction is no longer mute and now involves an intense dialogue with the other contracting party, which, in turn, no longer acts as the traditional “opposing party”, acting now as “party interested in finding a solution to the respective crisis”.

Active listening and worries about the economic reality faced by all those involved in that contractual relation are crucial to assess the better alternatives for negotiating an agreement between the parties. In other words, only a realistic perspective, sensitive to the factors that caused the controversy between the parties and to their economic situation, is able to boost the arrangement and signature of a sustainable agreement with enough legal and economic certainty to ensure its fulfillment by both parties.

The professional specialized in dispute resolution must be prepared to fight, but also, to the same extent, to cooperate. There is a right time for everything, and flexibility of action is a quality even more appreciated during times of crisis, when the material result is more important than the merely formal result, considering that, in the end, what the entrepreneurs of once wanted remain the same: the fulfillment of the agreement and that the parties end up satisfied with their original wishes. And if that is not possible, they want the parties to leave the contractual relation with reduced damages and still able to move on with their economic activity, in spite of the lingering crisis.