By Marcelo Blecher

At the end of September, the Superior Court of Justice (“STJ”) began judging the Conflict of Jurisdiction (“CC”) 149,622/RJ, to determine whether it is up to the 1st Section, of Public Law, specialized in taxes and tax executions, or the 2nd Section, of Private Law, specialized in bankruptcies and judicial recoveries (“RJ”), to assess requests for suspension of tax executions, even with seizure of assets and rights, brought against companies in judicial recovery.

The conflict of jurisdiction is related to the operator Oi and reached the STJ after the Federal Court of the 6th Tax Enforcement Court of Rio de Janeiro/RJ and the 7th Business Court of Rio de Janeiro/RJ, the latter responsible for the judicial recovery process, declared themselves competent to judge the suspension of the tax enforcement process brought against Oi in the case in which there are restrictive measures of assets and rights.

According to the Court responsible for tax enforcement, “The Court of the 7th Business Court of Rio de Janeiro exceeded its jurisdiction by attempting to determine the suspension of this tax execution; this decision is the exclusive responsibility of this Court, as provided for in art. 6, § 7, of Law 11.101/05.[1] in systemic coherence with articles 5 and 29 of Law 6,830/80, thus verifying the positive conflict of jurisdiction in this topic (suspension of tax execution), as provided for in article 66, item I, of the Code of Civil Procedure.”

On the other hand, the understanding of the Court responsible for the RJ process is that the tax enforcement should be suspended for 2 (two) main reasons, namely (i) the fines demanded by ANATEL already amount to more than R$10 billion and represent a significant portion of Oi's liabilities, so that the continuation of the tax enforcement would render the RJ process unfeasible; and (ii) said penalties represent administrative fines and, even if they are collected through tax enforcement, they are not of a tax nature, which is why art. 6, § 7, of Law 11.101/2005 would be inapplicable.

The Rapporteur, Min. Laurita Vaz, did not recognize the conflict of jurisdiction, consequently ordering its distribution to the 2nd Section. According to the understanding adopted by the Rapporteur, the Special Court could reanalyze which Section is competent to assess conflicts of jurisdiction when there is no ruling by the judicial reorganization court on the incompatibility of the freezing of assets with the reorganization plan. However, in the case at hand, the reorganization court has already ruled on the potential harm of the freezing. The trial was suspended after Min. Mauro Campbell and Nancy Andrighi requested a review.

The Mazzucco & Mello Advogados tax team is available to provide any clarification on this topic.

[1] Art. 6. The declaration of bankruptcy or the approval of the processing of judicial recovery suspends the course of prescription and all actions and executions against the debtor, including those of the private creditors of the joint partner. (…)

• 7º Tax enforcement actions are not suspended by the granting of judicial recovery, except for the granting of installments under the terms of the National Tax Code and specific ordinary legislation.