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Itaipu Binacional submits only to treaty signed between Brazil and Paraguay

09/14/2020

The Plenary of the Brazilian Federal Supreme Court (STF) unanimously decided that the legal nature of Itaipu Binacional prevents its submission to Brazilian legislation, and the treaty signed on April 26, 1973 between Brazil and Paraguay for the hydroelectric use of the Paraná River resources should prevail. The decision was made in the joint trial of the Original Civil Actions (ACOs) 1904, 1905 and 1957, in a virtual session of the Plenary finalized on September 4, under the terms of the vote of the rapporteur, Justice Marco Aurélio. In the lawsuits, the Federal Public Attorney's Office (MPF) intended the application to Itaipu of the national legislation on hydroelectric power plants for taking accounts, contracting works, services and goods and managing personnel. But, according to the rapporteur, under the terms of the company's founding treaty, "there is no escaping the supranational configuration of the hydroelectric plant, which rules out any attempt to have it as a member of the Brazilian public administration.

Bidding and public tender

At ACO 1904, the reporter noted that Itaipu's contracts for the execution of works, services, purchases, leases and sales are subject to the General Bidding Standard, approved by the Board of Directors of Itaipu Binacional through Resolution RCS - 002/2001. The rule establishes, with exceptions, that all the procedures for hiring services and the like are preceded by a bidding process, aimed at selecting the most advantageous proposal for the company.

In the ACO 1957, the MPF defended that Itaipu belongs to the Brazilian public administration and should follow the constitutional precepts regarding the selection of employees by public tendering. However, the rapporteur stated that article 37, II of the Federal Constitution does not apply to the company, but article XX of the constitutional treaty does. He noted that the international instrument signed between Brazil and Paraguay does not contain "any mention of the need to select employees by public tender" and that consulting the hydroelectric plant's website on July 11, 2007 revealed 19 selection processes between 2005 and 2014.

AR/CR//CF - CG/FB/GL

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