Influence of brazilian judges’ behavior over jurisdictional incertitude: an empirical test

Abstract

This article discusses the concept of jurisdictional uncertainty, which means, the uncertainties associated to the settlement of contracts in the brazilian Jurisdiction, and that manifest itself predominantly as an anti-saver and anti-creditor bias. According to Arida et al (2005), brazilian judges tend to favor the weak part in the claim, not the just, as a form of social justice and redistribution of income in favor of the poor. The article shows that there is no point for the judge in deciding against the law to favor the poor. A utility function is discussed, taking into account the advantages the judge could gain from this behavior, outweighed by the penalties such as professional criticism and the reversal by a higher court. As a result, its predicted that the judge will refrain itself from deciding disregarding the original tenor of legislation, and this behavior could favor wealthy and politically powerful. An empirical test is conducted, analyzing 181 judicial decisions, and the results are supportive to the main ideas, showing that a contract has 45% more of chances of being maintained if it is beneficial to the richer. The Judiciary disregards the contract only in the areas that the Legislative decided to protect the weaker part, such in labor contracts, social security and environment. In such areas as financial contracts, commercial transactions and landlord-tenant relations, the judges do not interfere.