Dino reacts to Trump and claims Supreme Sovereignty against Magnitsky Law

In a direct response to Donald Trump’s government threats against Minister Alexandre de Moraes, the Federal Supreme Court (STF) tightly reaffirmed Brazilian legal sovereignty. Minister Flávio Dino determined that court orders and executives of foreign governments – such as the sanctions imposed by magnitsky law – do not produce automatic effects on the national territory and depend on STF validation to be fulfilled.

Dino stressed that only the Supreme Court could authorize accounts, transfers or contract restrictions determined outside the country. The measure, taken in a process on the breaking of the Mariana Dam (MG), works in response to the White House offensive against Moraes, the target of the magnitsky law.

The US has the illegal and abusive practice of proceeding to unilateral measures, regardless of the science and agreement of foreign judiciary. But, according to Dino, laws and administrative acts from other countries do not produce automatic effects on citizens or companies operating in the national territory. The decision places financial institutions in an unprecedented dilemma: obeying the White House and risking punishments in Brazil, or abiding the STF and potentially facing “heavy” secondary sanctions from the United States.

Banks between two pressures

The STF’s decision does not nullify the magnitsky law, but creates a procedural shield in Brazil. Now, if a bank freezes assets or restrict operations of a sanctioned following only one American order, it will be breaking a direct determination of the supreme and subject to punishments.

For former PGR international cooperation secretary Vladimir Aras, the choice for banks is “purely economic” and, whatever the option, will bring losses. “In the Brazilian case, the fine may be low, but the risk is immediate. In the American case, the secondary sanction may take time, but if it comes, it will be heavy,” says Aras, in an interview with UOL. The ghost that surrounds the financial system is the case of the French bank BNP Paribas, fined US $ 8.8 billion in 2014 for violating US embargoes.

Although Dino’s decision creates a barrier in the Brazilian territory, she does not blunde Moraes outside the country. The effects of magnitsky law are broad and can reach trips, international transactions and credit cards linked to US banks.

Moraes said he did not have the habit of going to the US or possessing goods there, which mitigates the direct impact of sanctions, which include blockade of assets In the country, prohibition of entry and veto to transactions with Americans. In addition, Brazilian banks are unlikely to be directly punished without evidence that the minister has dollar assets under American jurisdiction.

Possible STF retaliation

Behind the scenes of the Supreme Court, the climate is indignation. Ministers would have been annoyed by the suggestion of bankers in meetings that “there was nothing to do but obey” US restrictions. “Do you think we’re guys… Don’t Americans also have companies in Brazil? They think they are immune?” Said one minister, suggesting the possibility of reprisals against US companies in the country if the scale offensive.

STF ministers consider that Dino’s decision was only the first movement. US companies’ assets could be blocking in the future.

A few hours after the STF’s decision, the US State Department stated that “no foreign court can nullify the sanctions imposed by the US” and classified Moraes as “toxic to companies and individuals seeking access to the US market.”

To consolidate the debate, Dino summoned a public hearing in the Supreme Court on the application of foreign decisions in Brazil. The meeting should gather representatives of the three powers and the financial sector, but has no date set yet.