STF issues provisional decision related to land acquisition by foreigners

The plenary session of the Federal Supreme Court (STF) did not endorse the decision given by minister André Mendonça suspending all court proceedings regarding the purchase of rural properties by Brazilian companies with majority participation by quota holders or foreign shareholders. The issue is under discussion in ADPF 342 and ACO 2463.

Minister Alexandre de Moraes disagreed with the rapporteur. He was accompanied by four other ministers: Roberto Barroso, Luiz Fux, Gilmar Mendes and the president of the Federal Supreme Court, Minister Rosa Weber. Five ministers voted to maintain the suspension. Thus, the virtual trial ended in a draw.

Article 146 of the Internal Regulations of the STF determines that “if there is, due to the absence or absence of a Minister, under the terms of art. 13, IX, a tie in the vote on a matter whose solution depends on an absolute majority, the issue will be considered judged by proclaiming the solution contrary to the one intended or proposed”.

The request had been made by the Federal Council of the Brazilian Bar Association (OAB), alleging the need to preserve legal certainty and the uniformity of judicial decisions. According to the OAB, there are many divergent judicial decisions in processes aimed at applying Law 5.709/1971, which regulates the matter.

Minister Alexandre de Moraes stated that the injunction could result in incalculable losses. “Despite the suspension of ongoing legal transactions being understood as unnecessary, it is certain that various business relationships are being interfered with, with economic impacts that have not even been estimated. Given this perspective, the decision submitted to a referendum causes a situation of legal uncertainty substantially greater than the maintenance of the previous state”, says Moraes in his vote.

ADPF 342, filed by the Brazilian Rural Society (SRB), discusses the reception by the 1988 Federal Constitution of article 1, paragraph 1, of Law 5.709/1971, which extends the legal regime applicable to the acquisition of rural property by foreigners, established in same law, to the Brazilian legal entity in which foreign individuals or legal entities that have the majority of their share capital and reside or have headquarters abroad participate, in any capacity.

In ACO 2463, in turn, the Union and the National Institute of Colonization and Agrarian Reform (Incra) ask for the declaration of nullity of the opinion of the General Inspectorate of Justice of the State of São Paulo that exempts notaries and registration officers from the state of applying the norm in the cases in question. A precautionary decision by the original rapporteur of the action, minister Marco Aurélio (retired), suspended the effectiveness of the opinion.

The request made by the OAB to suspend all legal processes and transactions involving ownership of rural properties for companies with foreign capital could have repercussions on several foreign investments in the country. In the petition, the case involving the transfer of Eldorado to Paper Excellence by J&F Investimentos is cited as an example. It is a dispute that has been going on for five years, in which the Batista brothers were defeated in arbitration and before the São Paulo Court.

For Francisco de Godoy Bueno, founding partner of the firm Bueno, Mesquita e Advogados, who has acted in the process as "amicus curiae" since 2015, and helped to articulate ADPF 342 as a lawyer for Sociedade Rural Brasileira (SRB), there is no reason why for the OAB to act as "amicus curiae" in this matter, and also present a request that would paralyze all ongoing business, causing incalculable losses.

“All companies established in the national territory are conditioned to follow the obligations of Brazilian legislation regarding labor, environmental and tax aspects. Therefore, once subject to internal laws, Brazilian companies with foreign capital must have equal treatment with Brazilian companies with national capital”, says Bueno.