An injunction has suspended all ongoing judicial proceedings related to the subject.
On April 26, 2023, through an injunction granted by Justice André Mendonça, the Brazilian Supreme Federal Court (STF) accepted a request made by the Federal Council of the Brazilian Bar Association (CFOAB) for the immediate, nationwide suspension of all ongoing legal proceedings involving the validity (or lack thereof) of paragraph 1 of article 1 of Law No. 5,709/1971.
However, transactions related to rural properties remain authorized, provided that they are submitted to the applicable authorization procedures with the National Institute of Colonization and Agrarian Reform (INCRA) and relevant agencies.
HISTORY OF THE MATTER
Paragraph 1 of Article 1 of Law No. 5,709/1971 provides that the restrictions applicable to foreigners for the acquisition of rural properties also apply to Brazilian legal entities in which the majority of the share capital is held by foreign individuals who reside abroad or legal entities that are headquartered abroad.
This legal provision is currently the subject of two actions brought before the STF, namely:
(i) the Action for the Declaration of the Unconstitutionality of a Fundamental Precept (ADPF) No. 342 filed by the Brazilian Rural Society (SRB). The action alleges that the legal provision is incompatible with the Federal Constitution of 1988 and challenges the AGU Opinion No. 01/2008-RVJ, which is related to the matter; and
(ii) the Original Civil Action (ACO) No. 2,463 filed by the Federal Government and INCRA. The action seeks the declaration of nullity of the Opinion No. 461-12-E issued by the Court of Justice of the State of São Paulo, which holds that the referred legal provision is incompatible with the Federal Constitution of 1988.
Since neither action has reached a final decision, the CFOAB, in its filing of April 10, 2023, petitioning to join the ACO as an amicus curiae, has requested the suspension of all ongoing judicial proceedings and legal transactions related to the subject in order to preserve legal certainty until the matter is definitively decided.
Following the injunction granted by the STF, all judicial proceedings related to the subject will remain suspended until final decisions are issued in the ongoing ADPF and ACO proceedings.
Our team is available to discuss the matter and provide any additional clarifications needed.
