Law Insider India

Legal News, Current Trends and Legal Insight | Supreme Court of India and High Courts

Trial on acquisition of rural land by foreigners: Brazil Supreme Court

2 min read

Jass Kaur Bindra

The Federal Supreme Court of Brazil will start trial on the acquisition of rural lands by foreigners. This news of the beginning of trial is startling for the Agriculture Business in Brazil. 2 motions trial began which deals with the Restrictions Imposed by Federal Bill 5.709/1917.

Justice Alexander de Morales demanded the re-viewing of the constitutionality of, “Provisions equating Brazilian Companies with over 50% foreign capital participation to foreign companies, with regards to acquiring rural land in Brazil.”

The provision states that a maximum of 25% of Municipality’s territory can be acquired. Moreover, an individual or company cannot acquire more than 10% of the land area if they are the citizens of the same nation.

The ADPF (Allegations of Disobedience of Fundamental Precepts) 342 agriculture business association Sociedade Rural Business SRB stated, “The federal bill 5.709/ 1917 violates the fundamental principles of the initiative National development equality, property and freedom of association as well as well as the federal Constitution by not mentioning National company with foreign capital.”

The ACO (Original Civil Action) 2463, filed by the Union and Incra (National Institute for Colonization and Agrarian Reform), however, the Attorney General’s Office requests the annulment of a legal opinion issued by the Internal Affairs Office of the State of São Paulo which requested “that notaries and registration officers dismiss the regulation of Bill 5.709/1971 regarding national companies mostly constituted by foreign capital. Before this opinion, in 2012, the Special Body of the São Paulo State Court had decided that this legal provision was not aligned with the Constitution. Despite the different context of the claims, the proceedings were united due to conflicts within the same legal provision”

The provision of restriction must stay the same, said Justice Marco Aurelio Mello. He clarified that the current principles of the provision which deal with the Restrictions over holding the land area especially in rural area are in accordance with the constitution of Brazil. The restriction supports the principles of national security, protection of the environment, maintenance of economic stability as well as sovereignty.

Marco Aurelio Mello mentioned, “The indiscriminate acquisition of rural properties by foreigners and, indirectly, by companies constituted under national law, but controlled by foreign capital, can result in the violation of the country’s independence. The absence of regulation compromises the external aspect of sovereignty, as it allows a portion of national territory to be submitted to the will of outsiders.”

Aldo de Cresci stated, “My expectation is that the Supreme Court will consider the Attorney General’s opinion as unconstitutional and, subsequently, according to several studies, an avalanche of investments in Brazil should begin.

Therefore, a variation of opinion is visible amongst the experts on different contentions in regards to the constitutionality of Federal Bill.