STJ Voids Petrobras Defeat in Paragon Dispute, Orders New Trial

Overview

• By a 4–1 vote, the Superior Tribunal de Justiça annulled the TJRJ ruling that had condemned Petrobras in its dispute with Paragon Offshore.
• The STJ found a grave procedural error in the extended-panel formation under Article 942 of the Civil Procedure Code, requiring proper reconstitution of the quorum.
• The case returns to the Rio de Janeiro Court of Justice for a fresh judgment, with the superior court making no ruling on the contract merits.
• A prior attachment of credits tied to Paragon’s bankruptcy proceedings, granted by the 2nd Civil Court of Macaé, was suspended following the STJ decision.
• Petrobras informed the market that the case has an estimated exposure of R$2.9 billion, with R$154 million provisioned, while the annulled ruling had been reported at about US$275 million (R$1.48 billion).