At the end last year, the Superior Court of Appeals (STJ) changed its understanding on conflicts of jurisdiction presented by companies under judicial reorganization that have assets pledged in the scope of tax executions for payment of taxes.

The court began to hold that conflicts of jurisdiction should not even be considered in cases in which the judicial reorganization court has not yet ruled on the seizure of assets ordered by the tax foreclosure court. The change in understanding occurred after the 2nd Section of the STJ decided Conflict of Jurisdiction 181.190/AC (CC 181.190). Until then, the court accepted and decided all conflicts presented involving the courts of tax foreclosure and judicial reorganization, even if there was no actual conflict between these courts due to divergent decisions.

Companies under judicial reorganization frequently claimed conflicts of jurisdiction when they became aware of decisions handed down by a tax foreclosure court ordering attachment of their assets, without a prior ruling to the contrary from the judicial reorganization court. It was argued that the judicial reorganization court was the "universal court" that should decide on any and all issues related to the debtor company's assets.

According to the new position, in order for a conflict of jurisdiction between the judicial reorganization court and the tax foreclosure court to be cognizable and decided in the case of confiscation of essential assets of a company under judicial reorganization, it is necessary to have conflicting decisions handed down by the courts.

According to the reporting judge of CC 181.190, Justice Marco Aurélio Belizze, the reason why so many companies claimed a conflict of jurisdiction even before any ruling by the judicial reorganization court was lack of clarity regarding the delimitation of jurisdiction of the tax foreclosure court and the judicial reorganization court, a topic that was not clearly addressed by the Reorganization and Bankruptcy Law (LRF).

For the reporting Justice, however, the change brought about by Law 14,112/20, which included paragraph  7-B in article 6 of the LRF, seems to clarify the issue. The change establishes, on the one hand, the jurisdiction of the tax foreclosure court to order attachment of the debtor company's assets and, on the other hand, safeguards the jurisdiction of the judicial reorganization court to order substitution of the attachment acts that fall on the company's essential assets.

Law 14,112/20, however, according to the reporting Justice in his opinion, does not detail how these competencies are concretized in practice, and it is precisely the role of the STJ to give a direction so that conflict of jurisdiction stops being unduly used as a subterfuge for companies in crisis to suspend tax executions.

Given this situation, the reporting Justice determined that the tax foreclosure court can communicate the content of the decision on the seizure of assets directly to the judicial reorganization court, so that it has control over the assets considered essential to the seizure. The measure meets the principle of cooperation provided for in article 69 of the Code of Civil Procedure (CPC).

Thus, as highlighted in the opinion, for it to be possible to initiate a conflict of jurisdiction in situations such as the one dealt with in the decision, it is necessary that the tax foreclosure court have issued a decision that expressly opposes the decision issued by the judicial reorganization court on the matter.

The importance of the STJ's decision is indisputable because, besides guiding the behavior of companies under judicial reorganization with ongoing tax foreclosures, it directs the courts to act cooperatively, thus avoiding unnecessary conflicts of jurisdiction, which only burden the judicial system.

A search on the STJ website indicated that since 2005 (the year the LRF went into effect), more than seven thousand conflicts involving judicial reorganization and tax foreclosure judgments have been decided.

After the judgment of CC 181.190, several sole-judge decisions and judgments have already been rendered denying cognizance to the conflicts raised, when the absence of opposition by the tax foreclosure court to the order by the judicial reorganization court on the release of the seizure of an essential asset or substitution of the seizure for another asset is found.

Justice Marco Buzzi, when decided on February 24 of this year conflict of jurisdiction 186.196/RJ (CC 181.196), clearly clarified that:

"(...) to establish a conflict of jurisdiction before this Court of Appeals, it is necessary to demonstrate: i) an effective order for the constrictive act issued by the Tax Court to the detriment of the assets of the debtor in possession; ii) a decision by the Judicial Reorganization Court exercising the respective examination of control (maintenance and/or substitution) over the constrictive act issued by the Tax Court, making use of the judicial cooperation established in article 69 of the Code of Civil Procedure of 2015; iii) resolution of the Tax Enforcement Court opposing, concretely, the resolution of the Judicial Reorganization Court regarding the judicial constriction."

The idea of cooperation between different courts is already being applied by courts Brazil. In the judicial reorganization of the Oi Group, on September 13 of last year, for example, the judicial reorganization court created a mechanism to avoid the issuance of conflicting decisions and reduce the number of inquiries routinely addressed to it regarding constrictive acts originating in tax foreclosures.

Based on the principle of cooperation, it was ordered that a notice be sent to all federal regional court judges and state courts of appeal regarding the mechanism created, which allows in advance the attachment on certain Oi Group accounts for claims of up to R$20,000. Claims above this amount may be satisfied by attachment of assets that are not listed in the reorganization plan of the group under judicial reorganization.

However, even after the creation of this mechanism, it was found that it was necessary to instigate conflicts of jurisdiction (in total, we identified four), considering that the tax foreclosure courts were not following the system created by the judicial reorganization court for the Grupo Oi.

The first two conflicts of jurisdiction[1] were heard before the judgment of CC 181.190, so that both were found cognizable. In CC 184.077/RJ, an injunction was granted to suspend the constrictive measures ordered by the tax foreclosure courts, while in CC 183.507/RJ there was a sole judge decision on the merits recognizing the jurisdiction of the judicial reorganization court, with the decision having already become final and unappealable.

The other two conflicts of jurisdiction[2] identified were heard after the judgment of CC 181.190, and both were not found cognizable, as it was found that they did not meet the requirements set out in the judgment - the decision of the judicial reorganization court exercising control and the subsequent decision of the tax foreclosure court denying fulfillment of the control.

In one of the latter two cases, CC 186.196, a motion for clarification was filed against the decision to not recognize the aforementioned conflict, clarifying that:

  • there was already a decision by the judicial reorganization court ordering the replacement of any and all encumbrances on the Oi Group in amounts exceeding R$ 20,000,000; and
  • the tax foreclosure court was already aware of this decision.

Therefore, the system established by the STJ in the judgment of CC 181.190 was observed. A decision is currently pending on the motions for clarification filed in CC 186.196, which, in our opinion, should prevail in the face of the conflict expressed in the opposition of the tax foreclosure court to complying with the order of the judicial reorganization court.

It is expected that with the CC 181.190 decision other judicial reorganization courts will use their creativity, seeking solutions and mechanisms that effectively put into practice jurisdictional cooperation and assistance to unburden the judicial system. But it is also necessary for the STJ itself to mature in its understanding, detaching itself from excessive formalism, under penalty of making even access to justice unfeasible.  


[1]Conflict of jurisdiction 183.507/RJ (CC 183.507), filed on October 13, 2021, of the authorship of Justice Marco Buzzi; and Conflict of Jurisdiction 184.077/RJ (CC 184.077), filed on November 3, 2021, of the authorship of Justice Marco Buzzi.

[2] Conflict of jurisdiction 185.176/RJ (CC 185.176), of the authorship of Justice Marco Buzzi, decided on December 17, 2021; and CC 186.196.