J&F’s action for annulment against the arbitration decision in favor of Paper Excellence in the purchase of Eldorado is out. The action was dismissed by Judge Renata Maciel, marking a new defeat for J&F.
The sentence of about 230 pages establishes the real value of the case at R$ 6 billion – the amount that PE agreed to pay J&F, in the contract signed in 2017, for the control of the pulp manufacturer and that the Batista brothers’ holding company wants to review . The bankruptcy fees are set at 10% of that, that is, R$ 600 million.
In the annulment action, J&F claimed that the award exceeded the limits of the arbitration agreement, that it had been spied on by the partner – a topic discussed in an extensive hearing – and that there was a conflict not revealed by the arbitrators.
— Photo: Photo: publicity
In the decision, the judge considers that the hackers who were witnesses called by J&F in the process, who allegedly had been hired by PE for the cybernetic invasion, presented illogical or contradictory versions of the facts and considered that there are inconsistencies in the police investigations about the hacking that would have suffered the J&F.
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The judge says that the diversion of emails linked to J&F (including company executives and their lawyers) appears to have actually occurred, but assesses that it is not possible to say who was the mastermind behind the espionage – amending that there are not enough elements to attribute to the PE or anyone connected with or engaged by it. She also considers that there is no way to link email diversion to arbitrage, as J&F argued.
The sentence also comments that, when the arbitration was going on, there was already a police investigation initiated by J&F into the hacking – after a lawyer from the Mattos Filho office, who advises the PE, received confidential emails from the opponent in an envelope and notified the court. The judge points out that, at that moment, J&F chose not to use the inquiry as a questioning argument for the arbitration and only did so after the defeat in the arbitration court.
“There is no ‘way’ to resolve this dispute, at least not with the consent of the Justice System, which encompasses not only the Judiciary, in the civil, business and criminal spheres, but also the Arbitration Court, a natural and competent court for the judgment of the merits of this dispute by free choice of the parties”, wrote the judge.
As nothing in this story is simple, over the course of the week, J&F had obtained a decision from a judge ordering the matter to be suspended. Therefore, in a note to Pipeline, J&F said that “it was surprised by the publication of the sentence, since the action is suspended by decision of the Court of Justice”.
The PE had asked for the inclusion of evidence in the process, lost and appealed, which generated a discussion in the judiciary about conflict of competences. J&F argued against this appeal and the judge ordered the suspension of any action related to the subject. There are questions, however, about how a specific claim in the second instance could suspend an action in the first instance, where there is no discussion of a conflict of competences, and prevent a sentence from being passed.
A source points out that Judge Renata Maciel was notified of the suspension decision and, as it would not apply to her, she followed through with her decision. And while the discussion of that grievance took place, the EP gave up the inclusion of documents, which would make a decision on the appeal innocuous, say sources.
J&F continues in the note: “If it were not void, the sentence would be reversed in a higher court, since it ignores evidence produced in the records themselves. The breach of arbitrator Anderson Scheiber’s duty of disclosure was even confessed by Paper Excellence in a document added to the process. The espionage of communications between J&F and its lawyers was confessed before the court and the police authorities and corroborated by technical evidence”, says the company.
The Batista holding company also cites the fees set by the judge. “In addition to juggling the evidence, the sentence rewards the opposing party’s lawyers with R$ 600 million in fees for succumbence, an amount higher than what they themselves requested. J&F is confident that the Brazilian Justice will not agree with such violations of law.”
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If the judge’s decision is validated, therefore, it is taken for granted that J&F will appeal. The point is that, with shares held by J&F in Eldorado and the money from the payment by PE already deposited in court, in theory the Indonesian company Jackson Wijaya could already take over Eldorado. The understanding from J&F’s side is that this could only be done after the judicial appeal, but it is not the interpretation of the other shareholder and of lawyers who follow the case from outside.
“Now follows the arbitration decision and Paper pays what was agreed back there and takes what was agreed. The arbitration leaves for a new phase, in which there will be discussion about compensation for the time that this was not done”, says one executive. For J&F, there are other chapters before that.