The Batista brothers’ holding company and partner Paper Excellence have been in conflict in various courts since 2018
09/24/2024
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The president of the arbitration tribunal overseeing the dispute between J&F Investimentos and Paper Excellence over control of the pulp producer Eldorado, along with another arbitrator, resigned on Monday (23). According to letters reviewed by Valor, Juan Fernández-Armesto, who chaired the arbitration, and Paulo Mota Pinto stated that their decision was prompted by “direct threats” from the Batista family’s holding company, which owns meat producer JBS. The news was initially reported by columnist Malu Gaspar in the newspaper “O Globo.”
J&F did not respond to requests for comment.
“Given the direct threat against me, I no longer feel capable of making the decisions I believe to be just and in accordance with the law. Therefore, I am resigning,” Mr. Armesto stated in a document dated September 23.
These resignations are not the first in the Eldorado case and come amid new developments in a battle that has been ongoing for over six years. The latest issue revolves around a case in the Federal Regional Court of the 4th Region (TRF-4), which suspended the transfer of Eldorado shares to Paper more than a year ago.
While J&F claims that one of TRF-4’s decisions had already suspended the arbitration itself, Paper and the arbitration tribunal argue that only the transfer of controlling shares was suspended, along with the activities of the coordinating body established to balance decisions made at Eldorado. This is because Paper, which owns 49.41% of the pulp producer, has a minority stake on the board.
As a result, people familiar with the dispute said J&F had been asserting that the arbitration was violating a court ruling, risking legal penalties.
This clash of narratives was reflected in Itaú’s decision to withdraw from the dispute. The bank was the custodian of Paper’s funds for purchasing the shares of Eldorado still held by J&F, as well as the share book deposited in court by arbitration order. Itaú had sought clarification on the need to return the share book but ultimately ended the contract.
The partners were then given 60 days to find a new custodian, but no financial institution accepted the role. This deadline expired on September 16, and Itaú returned the share book to the company. According to people interviewed by Valor, J&F had sent notifications to these banks, indicating that acting as a depositary would constitute a breach of court ruling and a violation of the rights of both the holding and Eldorado.
Last week, the vice president of TRF-4, Judge João Batista Pinto Oliveira, ordered the suspension of the arbitration itself after a challenge from J&F. The president of the arbitration tribunal acknowledged this recent decision.
Judge Armesto said that the arbitration had always complied with judicial decisions, including those from TRF-4. For this reason, on September 20, he declared the arbitration suspended, following the second-instance judge’s position.
“While it is true that since the issuance of the partial ruling, J&F has adopted a confrontational approach with the Tribunal, this is the first time it has made such a brutal and ‘ad hominem’ threat, implying that I, as president, would be guilty of possible crimes of ‘malfeasance,’ ‘disobedience,’ or ‘abuse of authority,’” M. Armesto wrote.
Judge Mota Pinto, who joined the arbitration after Anderson Schreiber’s resignation—following accusations from J&F of omitting information that could indicate a conflict of interest—stated in his letter that the holding’s threats were directed not only at the presidency but at the entire tribunal.
“There are limits to the viability of establishing arbitration, which in this case have been largely exceeded concerning the president of the Arbitration Tribunal, regardless of the respect always due, asserted and practiced regarding the (better or worse) decisions of state courts,” he wrote.
“In any case, the threats directed at the Tribunal, along with the profound respect and full solidarity owed to the president…prevent me from continuing to serve as an arbitrator in this proceeding,” he added.
In a statement, Paper Excellence described the latest chapter in the dispute as “regrettable” and accused its partner of once again resorting to “criminal threats against some of the most renowned arbitrators worldwide, forcing their resignation.”
“This only confirms that J&F disregards contracts and the decisions against it, acting without the necessary seriousness and ethics in its business relationships,” it added, reiterating accusations that its partner uses “deceptive and dilatory procedural tactics to delay its inevitable defeat.”
J&F and Paper have been engaged in legal disputes across various courts since mid-2018, just before the Batista holding company annulled the purchase and sale contract for Eldorado, which was signed in September 2017. While Paper has won arbitration against its partner, it has yet to gain control of the pulp producer.
J&F is attempting to annul the arbitration ruling in a case currently proceeding in São Paulo’s judiciary. Furthermore, a TRF-4 decision has blocked the transfer of controlling shares based on legislation limiting land purchases by foreigners in the country for over a year.
*Por Stella Fontes — São Paulo
Source: Valor International