ILO/Lexology: How to charge interest in lease renewal lawsuits according to STJ

*This article was originally published in the Litigation-Brazil Newsletter of the International Law Office – www.lexology.com/commentary

 

Introduction

In late December 2021, Brazil’s Supreme Court of Justice (STJ) decided on the initial date of interest for leases set up in renewal lawsuits.(1)

When a lease is judicially renewed under Law No. 8.245/1991, interest shall be paid considering the date after the end of the previous agreement, if there is any difference between the previous value of the lease and the new one.

 

Facts

One of Brazil’s largest telecoms companies claimed that, under Law No. 8.245/1991, interest can only be deemed as due in a renewal lawsuit after the end of such a lawsuit.

Law No. 8.245/1991 provides the lessee with the right to impose the renewal of a lease to its lessor, through the payment of a new lease at the current market values, provided that certain legal requirements are complied with (eg, a five-year minimum lease, a minimum of three years with the same business and the existence of a written agreement with a set date).

After the telecoms company claimed the renewal of the lease for the area of its phone antennas, the lessor stated that interest was also due by the telecoms company from the end of the prior lease.

The local court ruled that the new lease established at current market value should be followed by the payment of interest during the renewal lawsuit.

The telecoms company appealed to the STJ, alleging that section 74 of Law No. 8.245/1991 and section 397 of Brazil’s Civil Code established that interest in renewal lawsuits can only be set after the end of such a lawsuit (ie, res judicata). The company also stated that previous STJ case law contradicted the lower court’s ruling and set interest only after the end of the lawsuit.

 

Decision

The appeal was reviewed by Justice Nancy Andrighi and STJ’s Third Chamber. The judgment took place at the beginning of December 2021.

Justice Andrighi and the other Third Chamber justices reinstated the previous case law ruling (referred to by the telecoms company) and held that renewal lawsuits are of:

  • a “constitutive nature” since they create a new lease agreement; and
  • a “condemnatory nature” since the lessee shall pay the new lease.

Due to fact that a lease will be due after the effective date of the ruling that renders it, the interest cannot be paid automatically as requested by the lessor (ie, automatically after the end of the previous lease). Specifically for the matter in review, the interest could only be claimed after the end of the lawsuit and in the event of difference between the previous value of the lease and the new one.

In this sense, according to Justice Andrighi, the difference will be subject to a later collection by the lessor.

 

Comment

Although lease lawsuits are fairly common, the establishment of interest follows different approaches in different jurisdictions. Discussions such as the matter referred to in this article are not often reviewed by the STJ. Usually, such matters are strictly reviewed by local and state courts.

The reinstatement of the STJ’s case law will help to protect any lessee (and even the lessor, to a certain extent) that is about to file for renewal. It establishes a safe and clear standard and allows for suitable risk management relating to the lawsuit.

For further information on this topic please contact Paulo Guilherme de Mendonça Lopes or Alexandre Paranhos Tacla Abbruzzini at Leite Tosto E Barros Advogados Associados by telephone (+55 11 3847 3939) or email (paulogml@tostoadv.com or alexandrepta@tostoadv.com). The Leite Tosto E Barros Advogados Associados website can be accessed at www.tostoadv.com.

 

Endnotes

(1) STJ – Third Turma, REsp 1929806/SP, Rel Min NANCY ANDRIGHI, j 07 December 21, DJe 13 December 21.

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