On January 16, 2020, Decree No. 10,201/2020 ("Decree") entered into force to set forth new rules for the settlement of judicial and administrative proceedings on behalf of federal legal public entities and state-owned companies. In general, the Decree increased the limit of the judicial and administrative proceedings that the federal Attorney General's Office (Advocacia-Geral da União – "AGU") can settle without any other specific authorization. 

Under the previous regime, the AGU only had pre-approval to settle judicial or administrative proceedings that did not exceed BRL 50,000.

With the new Decree, the AGU does not need specific authorization to settle disputes over up to (a) BRL 50 million, if the federal government is involved, or (b) BRL 10 million  on behalf of federal state-owned companies. 

Regarding the representation of the federal government, if the value of the dispute exceeds BRL 50 million, a settlement will also require prior and express authorization of the competent Minister of State, which will vary depending on the subject of the dispute. Settlements on behalf of federal state-owned companies will also require authorization of the top management of the company, along with the approval of the statutory officer of the area to which the dispute is related, and of the Minister of State to whom the company is linked.

It is noteworthy that the new authorization regime is not applicable to state-owned companies that do not depend on the resources of the Public Treasury to cover personnel expenses or general costs. Thus, entities such as Petrobras, Caixa Econômica Federal and Banco do Brasil are not subject to the provisions of the Decree.

In addition, the Decree provides that disputes of interest to the bodies of the legislative or judiciary branches, the Federal Audit Court (Tribunal de Contas da União – "TCU"), the Federal Public Prosecutor's Office (Ministério Público da União – "MPU") or the Federal Public Defender's Office (Defensoria Pública da União – "DPU") will require, in each case, prior and express approval from the Speaker of the House of Representatives (Câmara dos Deputados) or the Senate, chairman of the TCU, chairman of the Court or Council of the Federal Prosecutor-General, or chairman of the DPU, each within their competences, to settle cases worth BRL 50 million or more to be granted jointly with the AGU's authorization. 

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2020. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.