J&F Investimentos, holding of the Batista brothers, delivered new documents to judge Renata Maciel, of the 2nd Business and Conflicts Related to Arbitration Court of the District of São Paulo, which would prove that at least one of the arbitrators that make up the court omitted information that would compromise its participation in the trial. J&F’s objective is to annul the sentence that guarantees the partner Paper Excellence (PE) the right to buy control of Eldorado Brasil.
A new hearing scheduled for today, Thursday, 17th, may reveal the decision on the request for annulment of the sentence. However, there is no expectation from both parties that this outcome will occur, especially if new documents have been attached to the process.
In practice, the arbitration award tends to be considered valid, as PE received a green light to start paying Eldorado’s debts, with a view to releasing the guarantees provided by J&F, a condition that precedes the purchase of shareholding control. The judge’s most recent decision was to maintain the suspension of all acts related to the transfer of control of the pulp producer, including the payment of these liabilities, of R$ 1.63 billion (over 318 million dollars) – the majority with the BNDES (National Development Bank Economic and Social).
The new documents accuse referee Anderson Schreiber, appointed by the PE, of suspicion. In the process in which it seeks the annulment of the arbitration, the holding claims that Schreiber should have previously disclosed information that attests to a link with the defense of the minority partner. J&F initially referred to the sharing of facilities, in Rio de Janeiro and São Paulo, with the office Stocche Forbes. The company is part of the defense of PE and appointed Adriano as co-arbitrator.
When seeking documents that could prove the potential conflict of interest, J&F would have found that the charter of the Association of Minority Investors (Aidmin), an institution that initiated an arbitration proceeding with a request for compensation of R$ 12 billion against the Batistas, had the lawyer’s signature. As in the Eldorado conflict, this information was not included in the arbitration won by BNDES against JBS – an animal protein company also controlled by J&F, which was chaired by Schreiber.
The co-arbitrator, who is an attorney for the state of Rio de Janeiro, defended himself by claiming that he did not personally know the Stocche Forbes partners, and the relationship was just the sharing of costs, according to a source heard by Valor Econômico. The lawyer reportedly revealed that he participated in another arbitration, in which one of the parties was JBS, but did not offer further details in order not to violate the principle of confidentiality.
Paper Excellence’s defense argued to the court that J&F could have spoken out about Schreiber before sentencing, and not just after losing the dispute.
Recently, J&F’s allegations also reportedly advanced on the president of the court, Spaniard Juan Fernández-Armesto, who chaired the Comisión Nacional del Mercado de Valores, the “CVM” of Spain. From 2014 to 2015, one of the partners at the Mattos Filho law firm, who is part of the PE defense, would have been an intern at the Spanish company in Madrid – information that was not revealed by the arbitrator.
In addition, in 2017, Armesto was president of a court that had Eduardo Damião, today one of the main defense lawyers of the EP as co-arbitrator – information that would also have been hidden. Sources indicate that J&F would still be seeking to prove the potential conflict of interest in these situations.
The legal fight has been dragging on for almost three years, in secret from the courts, and continues to be heated, with new developments in the International Court, according to sources close to it. After J&F appealed to the Brazilian Courts asking for the annulment of the arbitration, the PE requested ratification of the sentence by the Singapore Courts.
Although this move has no impact on the ongoing judicial process in the country, it paves the way for the PE to be able to execute J&F in Singapore in the future, if its victory in arbitration is maintained. The second step of the arbitration procedure is to discuss the losses and damages related to the conflict, and it is expected that the account will be raised to the losing side.
Sought out, J&F did not comment on the matter, and PE limited itself to talking about the action in Singapore. “Paper Excellence clarifies that, after receiving the news of its victory in arbitration, held at the International Chamber of Commerce, it took this result to the attention of the Singapore Courts, since Eldorado Celulose usually uses that market to issue bonds together to investors. With total transparency, Paper Excellence also informed the Singapore Courts, at the time, that the result of the arbitration was submitted to an annulment process in the Court of Brazil”, he informed.
According to PE, the “recognition of the arbitration by the Singapore Court does not affect the annulment action process that is in the Brazilian Courts, in which Paper trusts and believes that its right will be recognized”.
The Batista holding company controls Eldorado with 50.59% of its capital and PE has a 49.41% stake, through CA Investment (Brazil), for which it has paid R$3.8 billion in different stages since September 2017, when the purchase and sale agreement was established.