Rodrigo Jansen — Leal Cotrim Advogados

One of the most recurrent issues in disputes between contractors and Petrobras concerns the practice, adopted by the state-owned enterprise, of unilaterally withholding payments owed to its contractors in order to offset contractual penalties still under dispute. This conduct, which directly impacts the cash flow of contracting companies and may compromise their financial health, has been systematically repudiated by the Court of Justice of the State of Rio de Janeiro.

The absence of self-enforcement authority for Petrobras

The central foundation of this case law is clear: Petrobras, although part of the Indirect Public Administration, is a mixed-economy company engaged in economic activity and, by virtue of Article 173, §1, subsection II, of the Federal Constitution, is subject to the legal regime applicable to private enterprises. It does not possess police power nor does it enjoy the attributes of self-protection and self-enforcement inherent to the sovereign power of the State. It cannot, therefore, unilaterally impose and enforce its punitive decisions as if it were a direct administrative body.

The lack of liquidity of the disputed penalty

To this constitutional argument is added a civil law obstacle. Article 369 of the Civil Code requires, for set-off, that debts be liquidated, due, and fungible. As Arnaldo Rizzardo teaches:

“Only debts that are perfectly calculated, with the amount properly indicated and certain, are subject to set-off. (…) Set-off of debts operates between liquidated and due debts. It is not possible to effect set-off of disputed debts that are pending judgment.” (Direito das Obrigações, Rio de Janeiro, Forense, 1999, p. 420)

Now, contractual penalties contested by the contractor — whether as to the occurrence of the breach or as to the amount — do not constitute liquidated debts and cannot, for that reason, be the subject of unilateral set-off.

TJRJ precedents

The TJRJ has been applying this understanding consistently over the years, in decisions rendered by various civil chambers. Below, we present the headnotes of the principal precedents that consolidate this jurisprudential orientation.

As early as 2016, the then 22nd Civil Chamber ruled that the state-owned company cannot, manu militari, effect set-off of a penalty when controversy persists regarding responsibility for delays:

INTERLOCUTORY APPEAL. PRELIMINARY INJUNCTION. PETROBRAS. SERVICE AGREEMENT. FAILURE TO MEET DEADLINES. IMPOSITION OF FINE AND SET-OFF AGAINST AMOUNTS OWED TO THE CONTRACTOR. PROHIBITION OF SELF-ENFORCEMENT. DISPUTE OVER THE APPROPRIATENESS OF THE FINE. DECISION GRANTING THE INJUNCTION. UPHELD, BY MAJORITY. 1. Interlocutory appeal against a decision that granted a preliminary injunction ordering the defendant to refrain from collecting fines related to the facts described in the complaint, as well as from deducting such amounts from the credits owed to the plaintiff. (…) 3. State-owned enterprise that does not enjoy the prerogatives of administrative self-enforcement and self-executability, and cannot, manu militari, set off the fine when there is still a dispute regarding responsibility for the delays. Set-off requires certainty as to the existence and amount of the debt. The possibility of withholding is conditioned upon the exercise of the right to a full defense and adversarial proceedings. 4. Lower court decision upheld.

(TJRJ, 22ª Câmara Cível, AI 0023297-75.2016.8.19.0000, Rel. Des. Carlos Santos de Oliveira, j. 01/11/2016)

In the following year, the 1st Civil Chamber adopted the same orientation in a case involving a maritime vessel contract, stressing that the improper collection of a contractual penalty may affect the business operations of the contracting company:

INTERLOCUTORY APPEAL. PRELIMINARY INJUNCTION. MARITIME VESSEL CONTRACT. IMPOSITION OF CONTRACTUAL FINE. ALLEGED VIOLATION OF ANP RESOLUTION No. 19/2013. DECISION GRANTING PRELIMINARY INJUNCTION TO PREVENT THE DEFENDANT FROM SETTING OFF THE PLAINTIFF’S CREDITS AGAINST THE FINE AMOUNTS. (…) THE IMPROPER COLLECTION OF A CONTRACTUAL FINE MAY AFFECT THE BUSINESS OPERATIONS OF THE APPELLEE COMPANY. MATTER TO BE EXAMINED IN GREATER DEPTH ON THE MERITS. (…) PRECEDENT 59 OF THE TJERJ. APPEAL DENIED.

(TJRJ, 1ª Câmara Cível, AI 0041391-37.2017.8.19.0000, Rel. Des. Sérgio Ricardo de Arruda Fernandes, j. 31/10/2017)

In 2022, the 11th Private Law Chamber reinforced this understanding, emphasizing that the withholding of a multimillion-dollar penalty may seriously impair the very execution of the contract entered into between the parties:

INTERLOCUTORY APPEAL. CONTESTED DECISION WHICH, UPON ANALYZING THE REQUEST FOR ANTICIPATORY RELIEF FILED BY THE APPELLANT, DENIED THE REQUEST FOR THE APPELLEE COMPANY TO REFRAIN FROM WITHHOLDING AMOUNTS AS A GUARANTEE FOR THE PAYMENT OF CONTRACTUAL FINES. – Mixed-economy company (appellee) that does not enjoy the prerogatives of administrative self-enforcement and self-executability, and therefore cannot set off the fine, especially when there is a legal dispute regarding the appellant’s responsibility for the alleged delay in making the vessel available. Precedents of this Court. – Withholding of a multimillion-dollar fine that may seriously impair the performance of the very contract entered into between the parties, in addition to causing severe harm to the contracting company (appellant).

(TJRJ, 11ª Câmara de Direito Privado, AI 0037119-58.2021.8.19.0000, Rel. Des. Tereza Cristina Sobral Bittencourt Sampaio, j. 23/03/2022)

In October 2023, the 20th Private Law Chamber upheld a decision that ordered Petrobras to refrain from collecting penalties through set-off or withholding of amounts, reaffirming that penalties still under dispute are not certain as to their existence and amount:

INTERLOCUTORY APPEAL. ACTION FOR CONTRACT TERMINATION AND DAMAGES. SERVICE AGREEMENT WITH PETROBRAS. CHALLENGE TO FINE IMPOSED BY PETROBRAS DUE TO ALLEGED FAILURES IN THE CONTRACTED SERVICE AND SET-OFF AGAINST AMOUNTS OWED TO THE PLAINTIFF. PRELIMINARY INJUNCTION PARTIALLY GRANTED, ORDERING PETROBRAS TO REFRAIN FROM COLLECTING THE FINES IMPOSED THROUGH SET-OFF OR WITHHOLDING OF AMOUNTS OWED TO THE PLAINTIFF. (…) Fines that are not yet certain as to their existence and amount. Discovery required. (…) No risk of harm to the Appellant, given that it is a well-known business entity with robust and solid financial capacity. APPEAL DENIED.

(TJRJ, 20ª Câmara de Direito Privado, AI 0053112-73.2023.8.19.0000, Rel. Des. Fernando Cerqueira Chagas, j. 25/10/2023)

In May 2024, the 2nd Private Law Chamber granted an interlocutory appeal filed by a contractor against a decision that had denied provisional relief, ordering Petrobras to refrain from withholding payments:

INTERLOCUTORY APPEAL. CIVIL PROCEDURE. PROVISIONAL RELIEF. SERVICE PROVISION TO PETROBRAS. INSTALLATION OF METALLIC AND OPTICAL CABLING. ALLEGED IRREGULARITY. IMPOSITION OF CONTRACTUAL FINE. WITHHOLDING OF PAYMENT OF AMOUNTS DUE. (…) Appellee is not a public-law entity, but rather a mixed-economy company engaged in economic activity. The practice of withholding payments to collect contractual penalties constitutes an exercise of self-enforcement of questionable legality. (…) Under Article 369 of the Civil Code, set-off is effected between debts that are liquidated, due, and fungible. (…) The fine in question is still disputed and cannot be subject to set-off, much less to self-enforcement by Petrobras. APPEAL GRANTED, by majority.

(TJRJ, 2ª Câmara de Direito Privado, AI 0021050-43.2024.8.19.0000, Rel. Des. Carlos Santos de Oliveira, j. 06/05/2024)

More recently, in 2024, the 6th Civil Chamber denied an interlocutory appeal filed by Petrobras itself against a decision that had granted emergency relief to suspend the enforcement of a contractual penalty and order the return of withheld amounts:

INTERLOCUTORY APPEAL. ORDINARY ACTION FILED BY JSL S/A AGAINST PETRÓLEO BRASILEIRO S/A – PETROBRAS. LOWER COURT DECISION GRANTING PRELIMINARY INJUNCTION TO SUSPEND THE ENFORCEMENT OF THE CONTRACTUAL FINE (…) PETROBRAS ORDERED TO RETURN WITHIN 48 HOURS ALL AMOUNTS WITHHELD FOR DEDUCTION FROM THE PLAINTIFF. (…) EVEN THOUGH THE CONTRACT CONTAINS CLAUSES PROVIDING FOR CONVENTIONAL SET-OFF, THE REQUIREMENTS FOR SET-OFF OF THE FINE ARE NOT MET IN THIS CASE, SINCE, UNDER ARTICLE 369 OF THE CIVIL CODE, SET-OFF IS EFFECTED BETWEEN DEBTS THAT ARE LIQUIDATED, DUE, AND FUNGIBLE. (…) THE FINE IN QUESTION IS STILL DISPUTED AND THEREFORE CANNOT BE SUBJECT TO SET-OFF, MUCH LESS TO SELF-ENFORCEMENT, WHICH IS AN ATTRIBUTE OF THE STATE’S SOVEREIGN POWER AND CANNOT BE EXERCISED BY A PRIVATE COMPANY, EVEN IF IT IS A MIXED-ECONOMY COMPANY SUCH AS PETROBRAS. (…) NO RISK OF REVERSE HARM TO THE APPELLANT. PRECEDENT No. 59 OF THE TJERJ. INTERLOCUTORY APPEAL DENIED.

(TJRJ, 6ª Câmara de Direito Privado, AI 0085255-81.2024.8.19.0000, Rel. Des. Juarez Fernandes Folhes, 2024)

The jurisprudential landscape is, therefore, consistent and unequivocal. In decisions rendered over nearly a decade, the TJRJ has repeatedly affirmed that Petrobras cannot rely on self-enforcement authority to withhold payments by way of set-off against disputed contractual penalties. This orientation is further supported by Precedent 59 of the Court itself, which limits reversal of decisions granting emergency relief to cases that are aberrational or contrary to law.