Barroso: Excessive judicialization wages business environment and removes investments

During a lecture at the 2nd Brazilian Congress of Capital Market Law, this Friday (30), in Rio de Janeiro, the president of the Supreme Federal Court (STF), Luís Roberto Barroso, said that excessive judicialization in the tax and labor areas makes the business environment difficult and removes international investments.

“The Brazilian tax system is the most complex in the world,” said Barroso, citing World Bank studies. According to him, there are “several GDP being litigated in the judiciary”, which generates legal uncertainty and reduces investors’ appetite – especially foreigners.

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Tax executions

Barroso highlighted recent measures adopted by the National Council of Justice (CNJ), such as the protest of active debt before tax enforcement and the extinction of processes stopped for more than one year, which have already resulted in the elimination of about 10 million shares and increasing municipal collection by more than 124%.

According to the minister, the slow in the judgment of major tax causes causes damage to both the public and private sector. “When the big questions come to an end, many years later, there is always a ‘corpse in the closet’ – whether from the government or the company,” he said.

Labor insecurity

In the labor area, Barroso stated that more than half of the proceedings result from disputes on severance pay. He pointed out that labor liabilities inhibit mergers, acquisitions and judicial recovery operations as it represents a difficult risk to measure.

In response, the CNJ issued a resolution that allows the judicial approval of termination agreements signed consensually, with the presence of lawyers. “If fundamental rights are being respected, the judiciary should not intervene in the merits of the agreement,” he said.

“Exaggerated perception”

Despite the challenging scenario, Barroso stressed that Brazil was, in 2024, the second largest destination of foreign direct investment, behind only the United States. According to him, the funds were mostly directed to productive investments, not just financial.

For the minister, the idea that the country offers legal risks above the global average is disconnected from reality. “There is an exaggerated perception of insecurity. The data show something else,” he said.

At the end of his speech, Barroso emphasized that the main uncertainties of the Brazilian business environment do not result from the performance of the STF or the judiciary in general. “The insecurities that exist in Brazilian life – as in other countries – are not direct product of legislation, let alone their interpretation by the supreme,” he concluded.