#CaseSTUDY

1. Introduction

The Provisional Measure No. 1,153, which came into force on December 29, 2022, provides, among other aspects related to cargo transportation, on how to contract cargo insurance. Article 3 of the Provisional Measure promoted important changes in Brazilian Law No. 11,442/07, which deals with the road transport of cargo on behalf of third parties and for remuneration.

Although the object of the Provisional Measure under discussion was greater than that referring to cargo insurance, the present study will address the analysis of the constitutionality, per se, of the normative modality, in addition to the potential impacts of changes in the commercial mechanisms for contracting cargo insurance
(subject to road transport) in Brazil.

2. On the Constitutionality of the Provisional Measure: relevance and
urgency?

It is known that, in the experience of the game of powers, there was a transfiguration of the law initiative by the Executive Power. Provisional measures, according to specialized doctrine, have become the most common way of initiating the legislative process, when originated by the Executive. This is a faster way of processing the legislative interest arising from the Presidency of the Republic, when in comparison with the ordinary form, which would be the presentation of the bill, under the terms of art. 64 of the Federal Constitution. Although the 1st paragraph of the aforementioned article allows the urgent processing of projects proposed by the Presidency, it is to be recognized that the Provisional Measure is even faster, because its effects can be immediate, from the moment of its publication.

This does not, however, prevent a thorough analysis of the requirements of relevance and urgency that must be present in any and all provisional measures, however much the Legislative Power itself, when analyzing the content of such amendments, tends to appreciate its content more and less its abstract requirements. The provisional measure under analysis must, therefore, be submitted to the scrutiny of investigation regarding both of the aforementioned requirements.

As for the first of them (relevance), it seems to us that there is no doubt about its existence. Well, road freight transport is notoriously one of the main (if not the main) way of transporting goods and values in the Brazilian economy. In this way, any measure that aims to develop such a market niche will, almost presumably, be relevant. In such a way, it seems to us that there is not much obstacle to the recognition of the fulfillment of the first requirement.

A slightly different situation concerns the fulfillment of the urgency requirement. Although contracting insurance for cargo subjected to road transport has several nuances and legal obstacles (which will be explored in the next topic), the fact is that the main agents involved (shippers, consignees, transporters and insurers) have already consolidated forms of contracting the modalities of insurance, whether optional (those that can be freely chosen by the carrier or the shipper), or mandatory (those that, by law, the carrier must have when subjecting the cargo to road transport). Although the issue is absolutely relevant for the national economy, there was no full demonstration of the urgency requirement, which ended up being trivialized by the Executive Branch and ignored by the Legislative Branch, when deciding on the approval of provisional measures.

Art. 62 (Brazilian Federal Constitution). In case of relevance and urgency, the President of the Republic may adopt provisional measures, with the force of law, and must submit them immediately to the National Congress.

3. The eternal tension: contractual dirigisme and legislative organization of mercantile activity – the problem contained in the novel § 5 of art. 5°-B, of Law 11.442/07

The first proposed amendment immediately inaugurates a serious tension. The provisional measure amended paragraph 5 of article 5-B of the Road Transport Law, which came into force with the following wording:
§ 5o. It is prohibited for the contractor or subcontractor of cargo transport services to act, in the same operation, as administrator of the transport services referred to in the caput, directly or indirectly, including through a company to which he is linked as administrator or partner or belonging to the same economic group.”

Note that the aforementioned paragraph is linked to art. 5°-B, which deals with the power that the Autonomous Cargo Carrier (TAC) has to hire a legal entity to manage its rights related to the provision of transport services.

Thus, at the same time that the legislation allows the Autonomous Cargo Carrier, which is the natural person who has in the transport of loads their professional activity, the free hiring of companies to manage their commercial activity, now the Provisional Measure creates an important limitation: the service taker (usually the shipper of the goods), which is the person (individual or legal) who signs the transport contract with the carrier, cannot act as manager of the activities of the self- employed carrier.

The purpose of the reform proposed by the Provisional Measure is to prevent the transport service taker from having full control of the transport operation, placing him in a situation of clear advantage vis-à-vis the Autonomous Carrier, in order to subject him to standards (including freight value) abusive, resulting from the disparity of forces.

While the purpose of the Provisional Measure is commendable, the legislative reform would lack an ontological basis, because the underlying factual situation (disparity of forces between the borrower and the self-employed carrier) will continue to exist, so that the consequence may be an even greater increase in the level of precariousness of the formalization of the activity to be provided by the self-employed transporter. It is worth mentioning that the agents involved (takers and Autonomous Carriers) will be able to find alternatives to transform the very nature of the autonomous transporter. Since the same obstacle does not exist in the figure of the ETC (Cargo Transport Company), borrowers may demand from the Autonomous Carriers to open a company so that they can then start receiving contracts and freight, which could increase bureaucratization of the activity and the precariousness of salaries to be received by the self-employed transporter. Although the legislative effort is evident, the consequence can be serious for the self-employed carrier.

More than that, the legislation must be analyzed under the abstract prism of the principle of free enterprise, which prevents, as a rule, the State from meddling in contracts between private agents. In the existing tension between these interests, the form of solution would have to be the mercantile one, with the increase of the value of the freight in the measure of the offer of the service and its demand. In such a way, it cannot be left aside that this first proposal for alteration can be understood as a violation of the principle of free initiative, provided for in the final part of item I of art. 1 and also in art. 170, both of the Federal Constitution.

4. The new wording of art. 13 and its (in)compatibility with civil relations
and rights

Notoriously problematic, in sequence, is the new wording of art. 13, promoted by the Provisional Measure under discussion. It is necessary to transcribe the device in its entirety, for consequent analysis.
“Art. 13. The following are exclusively contracted by carriers, individuals or legal entities, providers of road freight transport services:
I – mandatory civil liability insurance for road freight carriers, to cover losses or damages caused to the transported cargo as a result of road accidents;
II – optional civil liability insurance for the road freight carrier, to cover theft of cargo, when established in the contract or bill of lading; It is
III – optional civil liability insurance for vehicles and property damage and personal injury, to cover damage caused to third parties by the motor vehicle used in road freight transport.

Article 13 seems to fulminate the elementary logic of cooperation between the members of the logistical plexus. If, up to the present moment, the shipper could collaborate with the carrier, with the purpose of seeking to contract insurance under more advantageous conditions for the carrier itself, with greater bargaining power before the insurance companies, with the advent of such reform there would be a obvious contractual limitation.

One of the main attributes of any contract in civil life is the duty of cooperation, a natural corollary of the principle of objective good faith. The duty of cooperation can be translated, in the niche under analysis, by the way in which shippers and carriers would act jointly, in order to seek the best price in the premium (that is, in the amount paid to the insurer to obtain insurance coverage), from in order to burden transport logistics as little as possible (eventually being able to guarantee even greater breath in the payment of the freight or even in the costs of the journey).

Although the mens legis has been to prevent carriers from being subjected to the interests of shippers with greater economic power, having to accept coverage conditions imposed by transport service takers (possibly with insurance contracts that may not guarantee the safe development of the activity, in its economic aspect), the fact is that the amendment disregards the fact that large shippers, precisely because of the volume shipped, have much greater bargaining power vis-à-vis insurance companies. And it is as a result of this greater bargaining power that the value of the premium can be better measured, from an actuarial point of view, being potentially lower, which generates a direct benefit to the carrier itself (which could have a greater chance of increasing freight). and, more than that, with a total decrease in the added values of transport, generating a lower cost of the product to the final consumer. The higher the cost of the logistics process, the higher the value of the product tends to be at the end of the operation.

Thus, even if the Provisional Measure was based on the assumption of good intentions, its economic impacts were completely outside of a perceptive analysis, which problematizes its constitutionality. It should be noted, more than that, that the limitation of forms of contracting in particular also constitutes, per se, a violation of the principle of free initiative, making it difficult to recognize the constitutionality of the article.

5. Brief analysis of § 1: limitation of choice of the insurance company by the
service taker Continuing with the idea of protecting the disparity of forces between carrier and shipper, § 1 of art. 13 establishes the prohibition of choosing the insurer by the service taker. It is, again, a legislative effort to protect the carrier’s interest, with potentially serious consequences for the carrier itself. If transport service borrowers have a structured operation with a certain insurance company, they do so because they intend to obtain the greatest possible reduction in the product’s logistical costs, in order to guarantee a better price at the end. From the moment when there is a ban on contracting by shippers, the natural consequence may be an
increase in the value of the premium, with a consequent increase in the value of the product at the end. With an increase in the product, the consequence may be less commercialization. With less commercialization, less is the number of celebration of transport contracts. Again, the paragraph reiterates the risk of negative impacts on the cost of transport logistics, requiring deeper studies regarding the economic impacts of the measure.

6. The implicit prohibition of civil liability contained in § 2

A situation that is evidently even more serious is the one contained in § 2 of art. 13. Although the reform allows the service taker to take out compulsory insurance (RCTR-C) for the benefit of the Autonomous Carrier (exclusively), it prevents the carrier from being personally liable for losses. Type of insurance contract that aims to protect the carrier’s liability in case of road accidents (such as overturning or fire) – this insurance is mandatory in Brazil.

The first problem is the lack of clarity of the device. If the mandatory insurance of the RCTR-C modality has the purpose precisely of preventing the transporter from being held liable for losses arising from the hypotheses of coverage (such as landslides and fires), what would be the hypotheses in which the Autonomous Transporter would be free of being personally liable? The answer only has to be the following: it would be free to respond for any and all losses during transport (including claims not covered by mandatory insurance, such as theft), and there is also the impossibility that the insurer, when paying the indemnity , make use of your right of recourse, provided for in art. 786 of the Civil Code, against the carrier, and the shipper must respond. In this way, could the insurer convey compensation against the insured, whenever the claim is not covered by the RCTR-C insurance? It seems to us a manifest contradiction that the service taker will be held responsible for non-compliance with the transport contract by the self-employed carrier, especially when he has collaborated with the TAC and concluded the insurance contract for its benefit. For breaking the lines of proportionality, for invading the right of reimbursement of the subrogated insurer, for unbalancing the contract and for violating the principle of free enterprise – and, why not say, for translating into an affront to the elementary logic of reasonableness , it is concluded that the aforementioned device is flagrantly unconstitutional.

7. The blatant unconstitutionality of § 3 of novel art. 13

Paragraph 3, in turn, is based on an assumption that usually does not exist in the context of contracting cargo insurance. Simultaneous contracting of more than one coverage for the same risk. let’s highlight:
§ 3 o. By purchasing additional insurance coverage against risks already covered by the carrier’s policies […].

The incongruity is manifest. It is inconceivable that the writer of the aforementioned paragraph does not know how to take out insurance to effect such an impoverished reduction. Insurance (compulsory or optional) for the civil liability of the carrier has a very well-defined purpose (that is, a risk): that of preventing the carrier, if it fails to deliver the goods to the destination, from being civilly liable and condemned to indemnify the losses caused to the service taker or to the subrogated insurer in the interests of the taker.

In turn, when shippers (service takers) contract insurance on the cargo, the object (ie, the risk) protected by the contract is notoriously different: the property of the good is protected, preventing the taker from suffering loss cost as a result of the potential default of the insurance contract by the shipper.

Although, therefore, more than one insurance contract is entered into in the same operation, the risks are clearly different. For no other reason, it is evidently incongruous for the legislator to start from the assumption that the contracting party for the transport service (taker) may conclude insurance for the same risk as the
carrier. Unless there are, in the real world, shippers who are taking out “Civil Liability for breach of the transport obligation” insurance in their own name, without them being the taker, the cargo carrier. A situation that has certainly never been seen.

Having made this preliminary clarification (denoting the lack of knowledge of the person responsible for drafting the Provisional Measure), it can even be assumed that the mens legis is to prevent the existence of the waiver of the right of recovery.

As a guide and clarification, the waiver of the right of recovery is usually a benefit granted by the insurers of the shipper (taker of the transport service) to the road transport company, due to risks not covered by compulsory insurance (RCTR-C). This is the possibility that the insurer waives the possibility of ask the reimbursement of the insurance indemnity to the carrier, after paying it to the shipper, provided that the person responsible for the transport has taken certain precautionary measures provided for, usually, in two separate but complementary documents: (i) the
right of recovery waiver letter itself and also (ii) the risk management plan.

The essential purpose of waiving the right of recovery is to expand the scope of coverage (which, originally, was intended to ensure only the risk related to the loss of cargo, to the benefit of the shipper), also to the carrier. The legal nature would therefore be that of a stipulation in favor of a third party, because the carrier, by agreeing with the content of the waiver (usually by signing the letter), knows which
terms it needs to comply with in order to have the benefit of the waiver of right of return. The waiver serves, therefore, as a substitute for contracting the carrier’s optional insurance, as it grants the waiver of return (similar, in essence, to coverage) to the carrier, whenever it complies with care requirements. And this substitution takes place exclusively in the face of optional insurance because the legislation itself already prohibits the waiver of the right of recourse to occur in the face of facts supported by the carrier’s compulsory insurance.

Ultimately, the purpose of the paragraph is to prevent the carrier from being obliged to comply with the measures provided for in a waiver of right of recourse or in a risk management plan, preventing it from being responsible for compensating the losses incurred during the transport. It happens, however, that the aforementioned amendment proposed by § 3 would practically fulminate the possibility that the shipper and even the subrogated insurer seek reimbursement for that damage caused by the carrier that, negligently, facilitated the occurrence of claims not covered by compulsory insurance (especially theft). In conclusion, the idea of the legislation is, clearly, to prohibit the existence of the waiver of the right of return and even the risk management plan, submitting all transport risk management to the carrier.

By so providing, the legislation simply tries to throw a lime shovel over all the joint effort, produced by shippers, insurers, risk management companies and transporters, with the purpose of building a series of measures to lessen the chances of occurrence of thefts or your success. It was precisely by obtaining knowledge, over decades of logistical operations, that shippers and insurers denoted the best ways to prevent the successful occurrence of criminal undertakings, stipulating, in the letters waiving the right of recourse and in the risk management plan , what measures of zeal must the transporter observe along the route. If the measures are, in any way, excessive or onerous, the carrier usually informs this to the policyholder and the insurer, who end up lowering the level of demand. The greater the value shipped, the greater the risk, the value of freight and the premium. And, whenever the transporter finds itself in a situation and excessive demand, it refuses to provide the service, so that the compatibility of forces occurs naturally between all the agents involved.

By interfering in the way in which road transport rules are contracted, especially those relating to the safe transport of cargo, preventing policyholders and insurers from stipulating rules to be complied with, under penalty of liability, the natural (and manifestly harmful) consequence of the law is decrease the degree of zeal during transport, increasing the interest of criminality in continuing to perpetrate aggressive measures to the carrier, with a greater chance of losses to the shipper himself, which may increase the cost of the final product.

Again, what is perceived is the intention of the law to seek a mechanism to protect the interest of the road haulage, exclusively, with the consequent and potential risk of increasing the price of the final product.

More than that, usually the waiver of the right of recourse is just an addition to the policy contracted by the shipper with the insurer. An additive that benefits the carrier, without implying the need to take out new insurance. By preventing the waiver of the right of recovery, the movement of the insurance market will most likely be as follows:
a) limit the scope of coverage of the shipper’s policy, so as not to provide protection against losses resulting from theft;
b) if, in order to grant coverage to the shipper in the event of theft, the insurer is unable to participate in the construction of transport care mechanisms (with an increased chance of success for criminal undertakings and a consequent increase in the loss ratio), the value of the premium to be paid by the shipper will be significantly higher;
c) finally, if the shipper does not intend to bear the burden of contracting coverage for the theft, he may transfer to the carrier the obligation to contract optional civil liability insurance, guaranteeing insurance coverage arising from the breach of the obligation to deliver the cargo to the destination in as a result of the theft – in these cases, the insurance company contracted by the carrier may require measures of zeal, as it usually does when waiving the right of reimbursement; however, it will establish such requirements in the policy.

The maneuver attempted by the aforementioned paragraph tried to remove the liability of the carrier, but the consequence will undeniably be the same:

the carrier who is negligent will continue to be responsible for indemnifying; either because he failed to comply with the rules provided for in the waiver of the right of recovery and in the risk management plan, or because he was unable to obtain coverage in the optional theft insurance policy (RCF-DC), if the requirements set out in the policy were not met).

It is clear, as a result, that the hasty and imprecise legislative amendment derives from a lack of knowledge of the way in which cargo insurance is contracted in Brazil, whose economic effects and impacts may generate an increase in logistical costs, without any practical impact on the within the civil liability of the road haulier. Changing the coverage contracting mechanism (whether by waiving the right of recourse or by means of an RCF-DC policy) will in no way change the obligation to comply with precautionary requirements to be observed during transport.

Whenever the transporter is cautious and fulfills the obligations agreed upon, he will be free to respond personally, applying the institute of force majeure to the claim; on the other hand, whenever the carrier acts recklessly, failing to comply with previously agreed obligations (whether those provided for in the “DDR” or those provided for in the RCF-DC policy), it must respond with its own assets, because the institute of force majeure will not apply.

By way of conclusion, if the validity of the aforementioned article is definitively maintained, there will be an emptying of the meaning of the existence of the waiver of the right of recourse.

However, as the risk (civil liability arising from the theft in which the carrier acted recklessly) will continue to exist, coverage must be obtained by contracting insurance under the RCF-DC modality, a contract that will certainly stipulate conditions for the safe transport of the goods, as is usually done within the scope of the DDR, under penalty of losing the right to insurance coverage. The agents involved in logistics (service takers, carriers, insurance companies and risk management companies) will try to rebalance the contractual imbalance generated by the ill-fated and unconstitutional provisional.

Furthermore, the same criticism already made to the other devices remains in force, and with much more force, to the paragraph under discussion. When trying to direct the conclusion of the contract, the legislator unbalanced the relations and built a normative body manifestly unreasonable, which fulminates its constitutionality.

8. Possibilities of additional coverage

Finally, paragraphs 4 and 5 establish the carrier’s right to take out additional insurance coverage. While § 4 establishes that, within the scope of the optional civil liability insurance policy, coverage may be contracted for various cases of loss of cargo (such as theft and misappropriations), § 5 allows the contracting of global insurance for non-contractual civil liability arising from accidents caused by any vehicle in a fleet, when the accident causes damage to third parties. While § 4° is already fully observed by market agents (an existing figure in RCF-DC policies), § 5° only consolidates contractual freedom, so that insurers can grant global coverage to carriers. The fourth paragraph does not innovate and the fifth would not even need a legal provision.

9. Conclusions

In the light of all the above, what can be seen is that the Provisional Measure lacks constitutionality both in its reason for existing (with no unequivocal demonstration of the urgency requirement) and in its content (given the unconstitutionalities measured in almost all of its devices, either by encroaching on contractual freedom, or by lack of reasonableness, or, moreover, by the lack of prognosis in the economic impacts of the changes and limitations promoted). For this very reason, it is expected that the National Congress will not ratify it, under penalty of increasing litigation among the agents directly involved in the changes promoted by the Measure (insurers, shippers, transporters and risk management companies).

São Paulo, April 11, 2023.