Case Name: Carbonext Tecnologia em Soluções Ambientais Ltda. vs. Amazon Imóveis (Voluntary carbon market)

Summary

This is an action for the enforcement of an obligation to perform, combined with a request for urgent relief, filed by Carbonext Tecnologia em Soluções Ambientais Ltda. against Amazon Imóveis, aiming at the fulfillment of a Carbon Credit Purchase and Sale Agreement, which is an extrajudicial enforceable instrument. Carbonext is a company dedicated to the preservation of the Amazon, operating in the development and implementation of carbon credit projects, known as REDD+ (Reducing Emissions from Deforestation and Forest Degradation), whose objective is to reduce Greenhouse Gas (GHG) emissions and prevent deforestation in the Amazon. REDD+ is a set of incentives for developing countries that adopt policies to mitigate climate change, including reducing emissions from deforestation and forest degradation, increasing forest carbon reserves, sustainable forest management, and forest conservation. The concept of carbon credits was created from the Kyoto Protocol (promulgated by Federal Decree 5.445/2005), within the framework of the United Nations Framework Convention on Climate Change - UNFCCC (promulgated by Federal Decree 2.652/1998). They are assets generated from activities that emit less greenhouse gas (GHG) compared to previous emissions. One unit of this asset represents one ton of carbon dioxide that was not emitted into the atmosphere. Individuals and legal entities can acquire carbon credits in the voluntary market for these assets in order to offset GHG emissions. The executing company, Carbonext, acquires carbon credits from projects managed by it or from assets purchased from other companies and resells them, with the aim of financing environmental preservation and the development of local communities in the Amazon. In this way, the values obtained through the purchase and sale of carbon credits finance environmental preservation and the development of local communities in the Amazon Rainforest.

The defendant company, Amazon Imóveis, holds 3% of the carbon credits generated by the REDD+ project called “The Envira Amazonia Project – A Tropical Forest Conservation Project in Acre, Brazil”. With the aim of selling these credits to the plaintiff, a Carbon Credit Purchase and Sale Agreement was signed, whereby Amazon Imóveis agreed to sell and transfer 331,080 carbon credits to the plaintiff, according to the harvest and quantities described in the contract. In return, Carbonext agreed to pay the price by December 31, 2021. According to the contract, the defendant was to transfer the assets within five business days from the signing of the contractual instrument, which occurred on February 26, 2021.

In accordance with market practice, Carbonext chose to request the transfer of carbon credits as it made sales to companies interested in offsetting GHG emissions. Initially, Amazon Imóveis transferred 5,000 credits to the plaintiff, relating to the 2017 harvest. In April of the same year, the plaintiff contacted the defendant company to request the transfer of 16,990 carbon credits, which was denied by the defendant. Given this unjustified refusal, Carbonext sent an extrajudicial notification requesting the transfer of the credits. As the transaction was not completed, Carbonext filed this lawsuit to enforce a certain, liquid, and enforceable obligation embodied in an extrajudicial executive instrument, as provided for in the Code of Civil Procedure (Federal Law 13.105/2015). Therefore, the plaintiff requests (i) the transfer of 326,080 carbon credits by Amazon Imóveis to Carbonext within a period not exceeding five business days, under penalty of fine, and (ii) an order to the carbon credit management institutions, under penalty of daily fine, to transfer the credits belonging to Amazon Imóveis, should the defendant fail to do so.

The court of first instance issued an official decision warning the defendant to fulfill the obligation within fifteen days, under penalty of a daily fine. Carbonext proceeded with physical filing at the defendant's headquarters to ensure compliance with the obligation, which Amazon failed to do. The defendant filed an objection to the enforcement (autonomous action number 1088560-57.2021.8.26.0100) and filed an interlocutory appeal with a request for preliminary injunction (2180421-19.2021.8.26.0000). This latter appeal was not admitted.

In the Execution Action proceedings, the plaintiff requested the issuance of an official letter to the custodian of the carbon credits, Carbonfund.org Foundation, so that it would transfer the credits from Amazon Imóveis to the plaintiff, which was ordered by the court through an official decision. Carbonfound transferred the credits to the plaintiff. Given the period of non-compliance with the court decision, Carbonext requested payment of the amount related to the penalty imposed by the Court. The plaintiff reported a new supervening fact to the proceedings, informing that it had prepaid the contractual price, less the amount to be received as a penalty. It requested (i) that the debt be recognized as satisfied in relation to the principal obligation and the executed penalties and (ii) that the execution be terminated due to satisfaction of the debt (principal and penalty). The court issued a ruling dismissing the case, declaring the right to appeal forfeited due to lack of procedural interest.

Amazon Imóveis filed a Motion for Clarification with modifying effects, alleging: (i) that the judgment rendered is unclear because it dismissed the case without giving the objecting/defendant the opportunity to respond to information provided by the opposing/plaintiff in its petitions; (ii) that the fine imposed in the preliminary injunction was not confirmed in the judgment and is therefore not enforceable; and (iii) that the deduction of the price made by the opposing/plaintiff is improper. It requested a new integrative/clarifying pronouncement to overcome the obscurity and annul the appealed judgment. The motion was not accepted, and the company filed an interlocutory appeal challenging the decision, requesting a declaration of nullity of the summons and the consequent return of amounts by the appellee. The appeal was granted suspensive effect and, when judged, was not upheld.

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Main norms mobilized

• Kyoto Protocol (Federal Decree 5.445/2005)
• United Nations Framework Convention on Climate Change - UNFCC (Federal Decree 2.652/1998)

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