On July 1, 2024, Law 14,905/24 was enacted, amending the Civil Code to standardize the monetary update and interest rates applicable to civil obligations. This change is the result of a project presented by the Ministry of Economy and aims to standardize the indices and rates used, bringing more clarity and predictability for debtors and creditors. Key Changes:
- Losses and Damages: The law reiterates that if the obligation is not fulfilled, the debtor must be liable for losses and damages, including interest, monetary update, and legal fees.
- Monetary Update: In the absence of a previously agreed or legally specified index, the Broad Consumer Price Index (IPCA), calculated by IBGE, or the index that may replace it, will be used.
- Legal Interest: When interest is not agreed upon or a rate is not stipulated, the legal rate, corresponding to the Selic rate minus the monetary update index, will be applied. The methodology for calculating and applying the legal rate will be defined by the National Monetary Council and published by the Central Bank.
- Negative Legal Rate: In cases where the legal rate results in a negative value, it will be considered zero for the purpose of calculating interest for the reference period.
Resolution of the Selic Rate Issue: With the new law, the application of the Selic rate to civil debts, which had been widely debated in the Superior Court of Justice (STJ), finds a definitive solution. In March this year, the Special Court of the STJ decided to apply the Selic rate in place of the traditional model of monetary correction plus late payment interest. However, the judgment was interrupted after a request for review by Minister Luis Felipe Salomão, due to the absence of two ministers, resulting in a tie. The president of the STJ, Minister Maria Thereza, proceeded with the judgment to break the tie, but the case was suspended by Minister Campbell’s request for review.
Therefore, Law 14,905/24 not only standardizes monetary updates and interest rates but also resolves the issue of applying the Selic rate to civil debts, providing greater legal certainty and predictability for all parties involved in civil obligations.