The Brazilian Supreme Court's August 18 Ruling Presents Challenges To Brazilian Entities And Litigants

On August 18, 2025, the Brazilian Supreme Court issued a ruling holding that any foreign law, court decision, administrative act, or executive order is only applicable in Brazil if expressly recognized by Brazilian legislation or a competent judicial authority.  

The ruling was issued in a case filed by the Brazilian Mining Institute ("IBRAM"), in which IBRAM sought to prevent certain Brazilian municipalities from filing lawsuits abroad relating to events that occurred in Brazil and are governed by Brazilian law, such as the Mariana and Brumadinho accidents caused by dam failures in Brazil.  On February 22, 2025, IBRAM requested a preliminary injunction preventing the Brazilian municipalities from proceeding with their actions abroad. On March 3, 2025, those Brazilian municipalities obtained injunctive relief from an English court ordering IBRAM to withdraw its request for injunctive relief in Brazil. 

The Brazilian Supreme Court ruled that the preliminary injunction issued by the English court was ineffective.  In doing so, the Brazilian Supreme Court established a presumption that foreign laws are ineffective in Brazil, and held that this presumption may only be set aside by an express decision of the Supreme Court. 

On August 19, 2025, the Brazilian Supreme Court issued a subsequent ruling clarifying that the August 18, 2025 ruling does not apply to international bodies such as the UN, but rather to the judiciary of foreign states. 

These rulings may have significant implications for, among others, (1) Brazilian companies involved in cross-border litigation and insolvency proceedings, (2) parties seeking to enforce foreign judgments in Brazil, and (3) companies navigating foreign sanctions. 

Cross-Border Litigation And Insolvency

In recent years, there have been a growing number of attempts by Brazilian litigants and companies to seek judicial relief outside of Brazil for events that occurred in Brazil.  For example, in challenges related to the January 2023 Americanas S.A. accounting scandal, creditors and shareholders sought legal recourse against Americanas and its reference shareholders all over the world.  Quinn Emanuel represented Americanas' reference shareholders in connection with defeating requests for discovery from creditors in the Southern District of New York, as well as in connection with defeating an attempt by certain former shareholder to seek relief in the Netherlands. While those foreign actions in the Americanas cases were defeated, in many cases, portions of larger disputes proceed in parallel in various countries.  Similarly, certain Brazilian airlines in need of restructuring proceedings have sought to file a Chapter 11 proceeding in the United States rather than an equivalent recuperação judicial proceeding in Brazil. 

The Brazilian Supreme Court's August 18, 2025 ruling is likely to present challenges to litigants and companies pursuing legal strategies outside of Brazil, as they will run the risk that any victories or rulings they obtain abroad may not be recognized in Brazil, particularly where those rulings relate to activity that occurred within Brazil. 

Judgment Enforcement

The Brazilian Supreme Court's August 18, 2025 ruling does not only have implications for legal rulings relating to events that occurred in Brazil.  If strictly interpreted, the ruling arguably would protect companies that operate in Brazil from rulings abroad, even if those rulings or judgments concern wholly foreign activity.  If that interpretation is adopted, a party seeking to enforce a foreign judgment against a Brazilian company or individual will have to file a complaint before the Brazilian Supreme Court to reverse the presumption of ineffectiveness, rather than follow the long-established procedures for registering foreign judgments in Brazil. 

Under Brazil’s traditional homologação process, foreign judgments were routinely recognized by the Superior Court of Justice ("STJ") provided they met basic procedural requirements—proper service, finality, compliance with Brazilian public policy, and absence of conflicting Brazilian judgments. This has now been replaced by a presumption of ineffectiveness that may require Brazilian Supreme Court intervention to overcome.

For creditors seeking to enforce foreign judgments, the procedural landscape may become significantly more complex. Rather than filing a homologação petition with the STJ, judgment creditors may need to pursue a two-track strategy: (1) filing an extraordinary appeal or constitutional complaint (reclamação) directly with the Brazilian Supreme Court to challenge the presumption of ineffectiveness, while (2) simultaneously pursuing traditional homologação proceedings to preserve their position. This will substantially increase enforcement costs and timelines, potentially extending what was typically a 12-24 month process to several years.

The decision could also potentially affect the application of the New York Convention to the enforcement of arbitral awards. While the Brazilian Supreme Court’s decision does not explicitly address the issue, its sweeping language regarding the ineffectiveness of “any foreign law, court decision, administrative act, or executive order” raises questions about whether these enforcement mechanisms remain viable. The August 19, 2025 decision did not fully eliminate that uncertainty: while the decision did not address arbitral tribunals directly, the language restricting the effects of the August 18, 2025 ruling to decisions “issued by foreign courts that require ratification or adoption of other instruments of international cooperation to produce domestic effects,” may be read to include foreign arbitration awards, even if inadvertently, since foreign arbitration awards must be ratified by the STJ, according to article 35 of the Brazilian Arbitration Act.

Sanctions

Perhaps the most immediate effect of the Brazilian Supreme Court's August 18, 2025 ruling is that it introduces significant uncertainty for financial institutions with respect to contending with foreign sanctions. A Brazilian financial institution that follows foreign sanctions could face challenges from sanctioned individuals in Brazil, forcing them to navigate competing restrictions in different jurisdictions.  For example, Brazilian financial institutions that have operations in the United States could be forced to choose between violating a Brazilian court order or violating U.S. sanctions laws, either of which could pose significant legal risks, including criminal penalties and imprisonment in the case of violating U.S. sanctions.