STF overturns injunction on land purchase by foreigners

The virtual plenary of the Federal Supreme Court (STF) last Friday (5) did not endorse the injunction issued by Minister André Mendonça that suspended all legal proceedings dealing with the purchase of rural properties by Brazilian companies with a majority participation of foreigners. The decision was made within the scope of the Argument of Non-compliance with a Fundamental Precept (ADPF) 342 and the Original Civil Action (ACO) 2463.

Minister André Mendonça, the current rapporteur for the actions, granted an injunction at the end of April at the request of the Federal Council of the Brazilian Bar Association (OAB), which alleged that there were many divergent decisions in processes that have as their object the application of Law 5.709/ 1971, on the regulation of the acquisition of rural properties by foreigners. According to Mendonça, the framework pointed out by the OAB would indicate a scenario of serious legal uncertainty, which would justify the national suspension of the processes until ADPF 342 and ACO 2463 are judged, which still does not have a date to occur. Ministers Edson Fachin, Dias Toffoli and Nunes Marques and Minister Cármen Lúcia accompanied this understanding.

In a vote against the referendum, Minister Alexandre de Moraes maintained that the suspension of all processes regarding the reception of the rule by the Federal Constitution, in order to safeguard legal certainty, is disproportionate. According to him, the suspension with no prospect of resolving the controversy causes a much more serious situation of insecurity than that pointed out by the rapporteur. Ministers Luís Roberto Barroso, Luiz Fux and Gilmar Mendes and Minister Rosa Weber (president) voted in the same direction. With the tie of votes, a provision of the Internal Regulations of the STF was applied, which determines that in the event of a tie in the judgment of a matter whose solution depends on an absolute majority, the result contrary to that proposed will prevail. Thus, the injunction proposed by Mendonça was overturned.

ADPF 342, filed by the Sociedade Rural Brasileira (SRB), discusses article 1, paragraph 1, of Law 5.709/1971, which extends the legal regime applicable to the acquisition of rural property by a foreigner to the Brazilian legal entity in which they participate, to any title, foreign individuals or legal entities that hold the majority of their share capital and reside or have their headquarters abroad. In ACO 2463, in turn, the Union and the National Institute of Colonization and Agrarian Reform (Incra) intend to annul the opinion of the Corregedoria Geral de Justiça of the State of São Paulo that exempts notaries and registry officers from applying the norm in cases in question. Precautionary decision of the original rapporteur of the action, Minister Marco Aurélio (retired), suspended the effectiveness of the opinion.