Justice Gilmar Mendes of Brazil's Supreme Federal Court (STF) has decided to send a dispute over how court-ordered debt payments to the sugar and ethanol industry are calculated to the court's full 11-member bench. The case could involve R$ 103.4 billion in compensation claimed from the federal government by producers of sugar and ethanol, according to news site g1 and Mônica Bergamo's column in Folha de S.Paulo. The justices vote on Friday (25) on whether to accept the move.
The case asks whether companies that have already won in court the right to compensation can have the amount they are owed recalculated through an individual expert examination. Raízen Energia, the largest player in Brazil's sugar-ethanol sector, is among the companies involved, according to Folha. The dispute now leaves the Second Panel, a chamber of five justices, for the full bench. The payments at stake are precatórios, debts that Brazil's federal, state and municipal governments must settle after losing a lawsuit with no remaining appeal.
The minister's reasoning
In the order cited by g1, Mendes says the government classifies the amounts owed to the sector as a probable risk of R$ 103.4 billion. A liability of that size, he argues, would pressure the fiscal target directly and shrink the room for discretionary spending, the budget line where public investment sits. He also wrote that rulings issued under the court's general repercussion system are meant to guide the other branches and the judiciary, and that misapplied precedents erode the court's authority.
"If each judge, court or panel starts to apply this Supreme Court's precedents in the wrong way, the system itself loses strength and undermines its own authority. For these reasons, I submit the judgment of this case to the full bench of the Supreme Federal Court," the order reads.
According to sources heard by g1, if any justice asks for more time to review the case or moves to pull it from the agenda, it still goes to the full bench. It would stay in the Second Panel only if a majority of the justices rejects Mendes's proposal.
The Banco Master backdrop
The case is tied to one of the fronts of the Banco Master scandal that has cited STF justices, g1 reports. On Wednesday (23), Brazil's national justice inspector, Benedito Gonçalves, ordered the cancellation of R$ 4.7 billion in sector payments and the return of the money to the Treasury's single account. The ruling granted a request by the AGU, the federal government's legal office, and covers 16 payments tied to three mills listed on the phone of former banker Daniel Vorcaro as "payments to collect": Companhia Açucareira Usina Capricho, Una Agroindustrial and Companhia Açucareira Vale do Ceará Mirim. The money had sat in judicial accounts since 2023. The now-defunct bank bought stakes in payments that federal police suspect were issued before the lawsuits had ended, while the government could still appeal and contest the amounts.
For the producers, the ruling will decide whether court-awarded amounts are paid as they stand or can be cut through fresh expert reviews. For taxpayers, who fund the bill on the government's side, the risk flagged by the government itself is pressure on the fiscal target and less room for discretionary spending in the budget.