On 4 November 2013, Decree 8.135/2013 was published. Under the decree, data communication services for the federal public administration can no longer be performed by private parties but only by bodies or entities owned by the administration itself, including public and government-controlled companies.

This has a direct effect on agreements currently in force. The decree stipulates that an act must be issued by the state ministers of Defense, Planning, Budget and Management, and Communications in order to outline the regulatory procedures, scope, and terms of implementation of the new prohibition, and to address the following:

  • the characteristics of the data communications services needed
  • the ability of the administrative bodies and entities of the federal public administration provide them appropriately.

So far, no information about the particulars of the act has been forthcoming, although the decree came into effect 120 days after publication, on 2 March 2014.

If the consequences for existing agreements are not clarified, those agreements could be terminated. Alternatively, a phased-in implementation is possible.

The decree can also be considered an “act of state,” however, meaning a state determination that, while not directly related to any administrative agreement, carries indirect consequences that make its performance too expensive or even impossible.

If, due to an act of state, existing agreements are terminated, full compensation would be due to the private party – here the data service providers. Such compensation might include damage to property, incidental damages, loss of profits, and so forth.

Brazilian case law has determined that an act of state does not preclude the administration’s obligation to compensate the affected person or entity (TRF3, 3rd Panel, Reporting Justice Valdeci dos Santos, Appeal 0013091320054036127, judgment 14 January 2011). The doctrine of the act of state “upholds the right of compensation to the private party in view of a regular and proper act issued by the State,” according to Brazilian law professor Marçal Justen Filho.

Thus, if the consequences of the decree for data communications services agreements currently in force are not in turn regulated by a state ministers’ act, it is possible that the provisions of the decree may themselves be terminated, given the impossibility of its performance by private parties.