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Federal Supreme Court decides to suspend processes involving the acquisition of land by Brazilian companies with a foreign majority shareholder
On April 26, 2023, the Minister of the Federal Supreme Court (STF), André Mendonça, issued a preliminary decision suspending the judicial proceedings related to the validity of article 1, paragraph 1 of the Federal Law No. 5,709 of 1971 that address the restrictions for the acquisition of rural properties by Brazilian companies that have majority participation of foreigners. The decision was based on a request from the Federal Council of the Brazilian Bar Association (OAB), in the context of the action for breach of fundamental precept (ADPF) No. 342 and the Original Civil Action (ACO) No. 2,463 (ACO).
The request highlights the importance of unfirming judicial decisions and preserve legal certainty. In this context, according to OAB, there are many divergent judicial decisions, regarding the application of Federal Law No. 5,709 of 1971.
The Minister found that the scenario indicated by the OAB exposes relevant legal uncertainty, which justifies the national suspension of the processes related to the matter.
Several votes with relevant legal basis were presented with significantly divergent conclusions about the constitutionality of the norm. In this sense, as there are legal coherent and divergent positions, until the STF manifests itself on the subject, there is a great risk of conflict with the principle of isonomy, considering that certain companies could be subject to the application of the restrictions provided by Law No. 5,709 of 1971, and, others, with a similar shareholder composition, could not be subject to the same restrictions.
Dias Carneiro Advogados is entirely available to provide any clarifications and to assist with this matter.
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