PEC dos Precatórios locks the Judiciary and turns Brazil into a deadbeat country, says OAB commission

Eduardo Gouvêa, president of the National OAB’s Commission on Precatório, says that the PEC dos Precatório, in its current form, is unconstitutional, it will impede the functioning of the Judiciary and transform Brazil definitively into a deadbeat country.

He says that the solution to the problem the government classifies as a “meteor” on public accounts is to remove these debts from the spending ceiling.

He also says that the Senate has the opportunity to change the text coming from the Chamber to create tools to end the very existence of court orders, something that only exists in countries where the government, unlike taxpayers, has no obligation to pay their debts.

“If we create a situation in which the creditor can adhere with legal certainty, we can even improve the scenario for the financial market, evolving into a situation that would culminate in the destruction of this perverse system of court orders that is there to kill people in line “he says.

The government chose precatório as an expense that will be cut to make possible several expenses within the spending ceiling in 2022. Was it a wrong choice? Who will be harmed? It is a wrong choice, because a court decision is not an expense, it is a debt, and the debt has to be paid. It is an interference between Powers. The biggest losers are the Judiciary and State creditors, who will no longer receive final and unappealable credits, often for decades, and who queue up without the slightest idea of ​​when they will be paid.

The Precatório Commission pointed out several unconstitutionalities in the PEC. What are the main problems? These are the two stone clauses, the separation of Powers and individual rights and guarantees. You go to the Judiciary, win a lawsuit, have a final and unappealable judgment with term and amount to be paid. Failure to do so in the manner determined by the Judiciary is a breach of a fundamental clause in the Constitution, which are individual rights and guarantees. And you are acting against the judiciary. There is interference from the Legislative, because it is ordering a court decision not to be complied with.

Do you intend to sue the STF (Supreme Federal Court) if the rule is approved as it stands today? Including a request for an injunction to suspend immediately. As bad as keeping the amendment in force is taking a long time to judge its unconstitutionality. If the Supreme Court does not quickly take a stand, suspending some of these very serious provisions, creating an endless queue, passing certain types of credit to the detriment of others, we will already have a problem of very serious proportions.

The OAB listed a number of attempts to defer these payments. Should the STF again take a stand against it? The Supreme Court has always taken a stand for the unconstitutionality of any change in court convictions, whether by moratorium or by imposing mandatory compensations on creditors of court orders. Modifying what was determined in court is unconstitutional. This new initiative is much worse than the others. If the Supreme Court did not allow installments of precatory orders, even in the transitional provisions, it will not allow this in the body of the Constitution, which would determine that Brazil becomes a deadbeat country definitively.

One of the discussions in the Senate is the possibility of carrying out an audit of court orders. Is it a good initiative? It’s one more way of trying to interrupt the enforcement of court decisions. This audit does not make any sense, because the decisions passed under the scrutiny of the Judiciary in several instances and, in the end, were conferred by the presidents of the courts, whether state, federal, the Supreme or the STJ (Superior Court of Justice). It makes no sense to audit something that has already become final.

Would the court have difficulty managing the queue that will form? The judiciary will permanently cease to function. In most processes, the public power is on one side, the other or both. Today, the Judiciary manages the judicial liabilities of 24 states and around 1,000 municipalities [inadimplentes com precatórios]. If you bring in all the municipalities, states and the Union, then it won’t do it. The Judiciary will become a mere process stamper, because, in the end, no one will pay.

And the way the amendment is put, with Fundef/Fundeb cutting the line, it is impractical. All court orders must be issued by the 1st of July of one year to enter the following year’s Budget. Will you tell all the judges to wait and, on July 1st, when Fundeb comes out, if there is a limit, will the judges have to send everything on the same day? This doesn’t make any sense.

Will the PEC also affect states and municipalities? Obviously, the cities and states that can access it will. Why is the mayor going to pay precatório if the Constitution says he doesn’t have to?

You made suggestions for compensation to make it possible to receive these debts that entered the project, such as the settlement of debts and purchase of government assets, but this was an obligation and not an option for the creditor. The government cannot impose compensation on creditors. Now, if an alternative settlement program is created, not only for court orders, but one that does not even allow court orders to be issued…. The person who has a credit to receive that has not yet become precatory is uncertain about the term. This person or company is more likely to want to anticipate this credit, via discount, payment of late taxes, sale in the financial market, whatever the solution.

What alternatives would the government have to resolve the issue of increased spending on court orders in 2022? Money to pay the Union has. The problem is the ceiling. The first action that would solve the government’s problem today and would have no one to oppose it is to exclude the precatory item from the spending ceiling. Court decision cannot be subject to any limitation. It removed the precatório debt from the ceiling, equated it to the securities debt, which is also not in the ceiling, that problem would have been solved.

What increased in precatory from one year to the next, the big scare, was R$ 40 billion. That’s 0.7% of Brazil’s public securities debt. That’s 0.7% to keep a country serious, pay its legal debts, and not snowball, not destroy public finances. It’s a very low cost.

Can the Senate still improve the text? The PEC could get better through the Senate filter. Conversations with senators are being productive. Discussions about taking food out, taking Fundef off the roof, started from there. If you don’t approve the PEC, all the better. When approving, there is an advantage if you remove the court orders from the spending ceiling. It is an important demand of us now. Otherwise, every year there will be this discussion.

In theory, it didn’t even need a PEC to say that the government can negotiate to pay at a discount. And we have the tax transaction, you can include precatório in Refis, there are several tools that are common law. We need to resolve this and allow the government to have more strength to manage the stock that has not yet become precarious. There is a big gain for the government, which has already realized this.

If we create a situation in which the creditor can adhere with legal certainty, we can even improve the scenario for the financial market, evolving into a situation that would culminate in the destruction of this perverse system of court orders that is there to kill people in line.

Is the precatório a Brazilian problem? How does this work elsewhere in the world? The problem with the precatório is the precatório itself. If you ended it, using the constitutional principle of isonomy, that the creditor has the same rights and the same obligations as the debtor, we weren’t discussing that. Everyone would have been paid less back there, they wouldn’t have lined up for 20 years, and the debt wouldn’t grow as much. The great solution is to end this entire system. All over the world, the legal debts of the public authorities are paid. It became final, the judge orders a subpoena. Summoned, deposited and released the money to the creditor.

The government has said several times that there is a precatory industry. How do you see the issue? What exists in Brazil is an industry of the public power that violates the law and the Constitution and causes damage to citizens and companies. The public authorities, governors, mayors and presidents who did not want to pay their debts caused this. What they call super precatório I call super injuries to public property. If you analyze how much it cost public entities, how many times they failed to pay a pension correctly and how many went to court, it was a much smaller number. It was worth, in quotes, causing this injury, and that is the big problem. I know families who were destroyed because of these lawsuits, who were waiting, thinking they were going to receive, here came another appeal, and after 40 years, the great-grandson received the credit.

It’s a destructive system. You are taking wealth and burying it in the Judiciary. That’s why compensation is a great solution. It unearths the wealth of both sides, both from the government that manages not to pay a debt, and from the private creditor who manages to receive it. It’s the big opportunity that few people are seeing. These liabilities have all built up over decades. We can dig up all this and put it in the economy, in the hands of companies and families, to generate growth, and not this recession that we are causing with this measure.

X-ray

Eduardo Gouvea