In this edition of our Litigation and Arbitration Newsletter, we highlight recent decisions from Brazil’s Superior Court of Justice (STJ): the limitation of attorney’s fees in proof-of-claim and claim-objection proceedings within judicial reorganization and bankruptcy cases; the possibility of attaching part of the income from a leased small rural property; the reduction of the fee basis in a multimillion-dollar dispute resolved through a settlement; the upholding of a judicial auction despite a flaw in the re-publication of the auction notice; the ruling that a debtor’s bankruptcy does not undo a prior transfer made in fraud on enforcement; and the requirement of valid service of process on a deceased debtor as a condition for redirecting tax enforcement proceedings against their heirs.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Brazil’s Superior Court of Justice (STJ) limits attorney’s fees in judicial reorganization proceedings<\/span><\/h3>\n
The Second Section of Brazil’s Superior Court of Justice ruled that an award of prevailing-party attorney’s fees in proof-of-claim or claim-objection proceedings within judicial reorganization or bankruptcy cases is only warranted where there is genuine controversy between the parties. The ruling was handed down in the judgment of Topic 1,250 under the repetitive-appeals procedure and must be followed by lower courts in similar cases.<\/p>\n
The dispute concerns the proceedings set out in Law No. 11,101\/2005 for determining which claims are subject to judicial reorganization or bankruptcy. A proof-of-claim filing allows a creditor to request the inclusion of a claim that was not listed, while a claim objection allows a party to challenge the existence, amount or classification of a given claim. In the view of the majority of the Justices, the mere filing of these proceedings is not, by itself, enough to automatically trigger an award of attorney’s fees.<\/p>\n
The dissenting opinion of Justice Isabel Gallotti prevailed, holding that it must be assessed on a case-by-case basis whether there was genuine resistance to the claim brought before the court. Justice Gallotti noted that automatically imposing fees could penalize not only the company undergoing reorganization, but also the estate and the broader body of creditors affected by the economic downturn.<\/p>\n
The panel also discussed the criteria for calculating fees when they are in fact due. Under the prevailing proposal, in disputes over the existence or the amount of a claim, the calculation basis should preferably be the economic benefit corresponding to the amount actually in dispute. In disputes over the nature or classification of a claim, fees would instead be set on an equitable basis. The final wording of the holding, however, was deferred to a later session while the Justices work out further adjustments.<\/p>\n
The ruling thus limits the imposition of attorney’s fees in judicial reorganization and bankruptcy proceedings, ruling out their automatic application to every proof-of-claim filing or claim objection and requiring concrete evidence of an actual dispute. The reporting justice, Humberto Martins, was outvoted; he had argued that the mandatory involvement of counsel in these proceedings should, as a rule, justify an award of fees.<\/p>\n
Case No.: REsp No. 2,090,060\/SP<\/span><\/strong><\/a><\/p>\n
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STJ allows attachment of 30% of the income from a small rural property<\/span><\/h3>\n
The Third Panel of Brazil’s Superior Court of Justice unanimously upheld the attachment of 30% of the fruits and income arising from the lease of a small rural property, even though the property itself had been recognized as exempt from seizure. In the panel’s view, the protection afforded to the property does not necessarily extend to the income it generates.<\/p>\n
The case arose from judgment-enforcement proceedings relating to dishonored checks. In examining the dispute, the Court of Justice of Paran\u00e1 (TJ\/PR) shielded the small rural property from attachment but allowed part of the lease income to be applied toward payment of the debt. The question brought before the Superior Court of Justice was therefore whether the property’s exemption from seizure also barred attachment of the income it produced.<\/p>\n
The reporting justice, Nancy Andrighi, noted that the rural property and the income it produces are distinct assets, subject to their own legal treatment. Accordingly, recognizing the property as exempt from seizure would not automatically rule out attachment of the proceeds generated from its use.<\/p>\n
In upholding the percentage set by the TJ\/PR, Justice Andrighi found it necessary to balance preserving the debtor’s economic circumstances against the creditor’s right to satisfaction of the debt. On that basis, she held that withholding 30% of the income, while leaving the remaining 70% for the owner, strikes a proportionate balance between the interests at stake.<\/p>\n
The decision thus makes clear that protecting a small rural property does not amount to blanket protection of all the income it generates, and that partial attachment of lease proceeds is permissible so long as the measure leaves the owner with a sufficient share of the income.<\/p>\n
Case No.: REsp No. 2,268,054<\/span><\/strong><\/a><\/p>\n
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STJ <\/span>reduces the fee basis from USD13 million to USD2.3 million<\/span><\/h3>\n
Not every amount involved in a settlement can be treated as an economic benefit for purposes of calculating attorney’s fees. Applying that reasoning, the Third Panel of Brazil’s Superior Court of Justice, by majority vote, reduced from USD13 million to USD2.3 million the basis used to set attorney’s fees in a dispute that was later resolved through a settlement.<\/p>\n
The case involved a law firm originally retained to monitor proceedings, whose work, as the Court of Justice of Pernambuco (TJ\/PE) recognized, came to amount to full-scale legal representation. In setting supplemental fees, the state court fixed the fee at 15% of USD13 million, an amount it considered to correspond to the economic benefit obtained.<\/p>\n
At the Superior Court of Justice, however, the opinion of Justice Nancy Andrighi prevailed. She distinguished the amounts actually related to resolving the dispute from those arising out of other obligations assumed under the settlement. Of the USD13 million considered by the TJ\/PE, USD10.7 million corresponded to a purchase-and-sale transaction involving agricultural assets. In the Justice’s view, that portion represented a commercial investment made by the company, rather than a legal or economic benefit flowing from the litigation. Accordingly, only the USD2.3 million actually allocated to resolving the dispute should form part of the fee basis.<\/p>\n
Another point the panel considered was the involvement of more than one law firm over the course of the proceedings. The firm originally retained withdrew from the representation before the dispute was resolved, which ultimately occurred through a settlement negotiated by the firm that later took over the case. For that reason, the Superior Court of Justice ruled out attributing the entire 15% fee to a single firm.<\/p>\n
The 15% rate was upheld, to be treated as an aggregate fee calculated on the USD2.3 million and subsequently apportioned among the firms according to each one’s contribution to the outcome. That apportionment will be left to the TJ\/PE, since assessing the attorneys’ actual contribution requires a review of the facts and evidence in the case.<\/p>\n
Case No.: REsp No. 2,205,660<\/span><\/strong><\/a><\/p>\n
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STJ upholds judicial auction despite a flaw in the re-publication of the auction notice<\/span><\/h3>\n
The Third Panel of Brazil’s Superior Court of Justice, by majority vote, upheld a judicial auction, finding that a flaw in the re-publication of the auction notice was not enough to justify setting aside the winning bid. The panel held that the irregularity in the re-publication, which failed to observe the minimum five-day notice period, caused no concrete prejudice that would warrant invalidating the auction. The ruling was handed down in the judgment of Special Appeal No. 2,241,787.<\/p>\n
The dispute concerns the role of public notice as an essential requirement for the validity of a public auction, intended to ensure that all interested parties are informed, under Article 887, paragraph 1, of the Code of Civil Procedure. In the case at hand, the flaw occurred in the re-publication of the notice after a correction was made to disclose the existence of a lease on the auctioned property. The prevailing view, however, held that the irregularity in counting the notice period did not automatically render the auction void.<\/p>\n
The view put forward by Justice Moura Ribeiro prevailed, finding no defect capable of justifying annulment under Article 282 of the Code of Civil Procedure. Justice Moura Ribeiro noted that the judgment debtors could not assert, in their own name, any right potentially belonging to the lessee company. Moreover, the lessee itself later appeared in the record and neither alleged any defect nor showed any interest in exercising a right of first refusal.<\/p>\n
The panel also discussed the significance of the judgment debtor’s financial circumstances, given that its judicial reorganization petition had been accepted for processing on the eve of the auction. Although the reporting justice observed that prejudice may be found where the winning bid falls short of at least half the appraised value, in this particular case the assets were sold for amounts above the statutory minimum, which ruled out any finding of real financial harm to the debtor.<\/p>\n
The precedent establishes that irregularities in public notice do not void an auction absent concrete prejudice. The reporting justice, Ricardo Villas B\u00f4as Cueva, was outvoted; he had voted to annul the public auction on the ground that public notice is an indispensable requirement for validity. Justices Nancy Andrighi and Daniela Teixeira, along with Justice Humberto Martins, joined the dissenting opinion.<\/p>\n
Case No.: REsp No. 2,241,787<\/span><\/strong><\/a><\/p>\n
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STJ rules that a debtor’s bankruptcy does not reverse assets transferred in fraud on enforcement proceedings<\/span><\/h3>\n
The Third Panel of Brazil’s Superior Court of Justice ruled that a debtor’s bankruptcy adjudication does not return to its estate an asset previously transferred in fraud on enforcement proceedings. Under this ruling, because such a fraudulent transfer does not render the underlying transaction void, the individual enforcement action may proceed directly against the asset before the single-judge court, with title remaining with the third-party purchaser. The decision was handed down in the judgment of REsp No. 2,014,361.<\/p>\n
The dispute originated in judgment-enforcement proceedings begun in 2017 to collect amounts owed by a real estate company. Given the debtor’s sale of properties during the course of the proceedings, the courts found that this amounted to fraud on enforcement and declared the sales ineffective as against the enforcing creditors, without voiding the underlying transactions. Once the debtor was subsequently adjudicated bankrupt, the question arose as to whether the assets should revert to the company’s estate to form part of the bankruptcy estate, which would require staying the individual enforcement action and referring the matter to the bankruptcy court’s exclusive jurisdiction.<\/p>\n
The view of the reporting justice, Ricardo Villas B\u00f4as Cueva, prevailed, based on Article 792, paragraph 1, of the Code of Civil Procedure, which provides that a transfer made in fraud on enforcement is merely ineffective as against the prejudiced creditor. Justice Villas B\u00f4as Cueva noted that the sale remains fully valid as between the contracting parties and effective as against third parties, which legally precludes the asset from automatically reverting to the debtor company’s estate.<\/p>\n
The panel also discussed the legal position of the purchaser and the limits of the bankruptcy court’s exclusive jurisdiction. The reporting justice stated that the property remains subject to the individual enforcement action, without the third-party owner assuming the position of debtor in that proceeding. The panel further noted that the subsequent bankruptcy adjudication of the original debtor does not undo or otherwise affect the effects of transactions completed before the bankruptcy filing.<\/p>\n
The ruling accordingly rules out the need to file the claim in question with the bankruptcy court, and concludes by establishing that fraud on enforcement and a bankruptcy adjudication are distinct events involving different proceedings and producing different legal consequences, such that a bankruptcy adjudication cannot undo a prior fraudulent transfer.<\/p>\n
Case No.: REsp No. 2,014,361<\/span><\/strong><\/a><\/p>\n
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STJ conditions the redirection of tax enforcement proceedings on prior service of process on the deceased debtor<\/span><\/h3>\n
The First Section of Brazil’s Superior Court of Justice ruled that redirecting tax enforcement proceedings against the estate or the heirs is only permissible if the taxpayer-debtor was duly served with process before dying. The ruling was handed down under the repetitive-appeals procedure in the judgment of Topic 1,393. The resulting precedent establishes that, if death occurs before service of process, the procedural relationship is never perfected, which bars redirecting the collection action.<\/p>\n
The dispute centered on tax enforcement proceedings that were filed before the debtor’s death but in which service of process occurred afterward. As a matter of procedure, valid service is regarded as the indispensable milestone for the formation of the legal relationship before the court; absent it, the case lacks subjective perfection, which rules out a simple substitution of parties or redirection of the action against the estate and the heirs.<\/p>\n
The dissenting opinion opened by Justice Regina Helena Costa prevailed, joined by Justice Benedito Gon\u00e7alves, who noted that the case law of the First and Second Panels of Brazil’s Superior Court of Justice (STJ)conditions the heirs’ liability on prior valid service of process. Justice Costa maintained that merely filing the action is not enough to establish the procedural relationship, and highlighted the unilateral nature of the Certificate of Overdue Tax Liability (CDA) and the limits on amending it, concluding that continuing the same proceedings without prior service would result in nullity.<\/p>\n
The reporting justice, Maria Thereza de Assis Moura, had initially proposed that enforcement proceedings against a person who had already died before the action was filed should be dismissed. She argued, however, that if death occurred after the action was filed, it would constitute a subsequent event permitting the tax authority simply to amend the complaint to include the estate.<\/p>\n
The precedent adopted bars automatic redirection of the collection action in cases where there was no valid service of process on the original debtor. In light of the arguments raised in the dissent, the reporting justice herself revised her original vote to join the prevailing view. It was thus established that tax enforcement proceedings lacking valid service on the deceased debtor must be dismissed, without prejudice to the tax authority’s ability to file a new enforcement action directly against the estate or the heirs.<\/p>\n
Case No.: REsp No. 2,227,141<\/span><\/strong><\/a> and REsp No. 2,237,254<\/span><\/strong><\/a><\/p>\n
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August 2026 In this edition of our Litigation and Arbitration Newsletter, we highlight recent decisions from Brazil’s Superior Court of Justice (STJ): the limitation of attorney’s fees in proof-of-claim and claim-objection proceedings within judicial reorganization and bankruptcy cases; the possibility of attaching part of the income from a leased small rural property; the reduction of […]<\/p>\n","protected":false},"author":17,"featured_media":8639,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23,33,65],"tags":[],"class_list":["post-8712","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-informativo-arbitragem","category-destaque","category-informativo"],"_links":{"self":[{"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/posts\/8712","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/comments?post=8712"}],"version-history":[{"count":13,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/posts\/8712\/revisions"}],"predecessor-version":[{"id":8725,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/posts\/8712\/revisions\/8725"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/media\/8639"}],"wp:attachment":[{"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/media?parent=8712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/categories?post=8712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cascione.com.br\/en\/wp-json\/wp\/v2\/tags?post=8712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

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